Doing the State some service

A Political Life 1987-1990: Mr Haughey's final period as taoiseach was widely regarded as his most productive, writes Mark Brennock, Chief Political Correspondent.

The Unlikely Lads: Partners in Coalition Mr Des O’Malley, leader of the Progresive Democrats, Mr Haughey and Mr Albert Reynolds.

Two seats short of an overall majority, Mr Haughey was elected Taoiseach for the third time in March, 1987, with the help of Mr Neil Blaney's vote, Mr Tony Gregory's abstention and the casting vote of the Ceann Comhairle, Mr Sean Treacy. He had failed to win an overall majority for the fourth time in a row.

He began what is seen by many as his best period in government. Helping him on his way, Fine Gael in opposition operated its so-called "Tallaght Strategy", named after a speech in the Dublin suburb where the then party leader, Mr Alan Dukes, promised his party's support for the minority government so long as it pursued spending cutbacks designed to reduce borrowing.

Mr Haughey also set about designing a more presidential style of government, with his department expanding its section dealing with EU affairs and taking tighter control of Northern Ireland policy.

He moved quickly to dispel a number of Opposition concerns. In his first budget, less than two months after coming to office, he implemented fiscal measures largely designed by Fine Gael before leaving office. He showed substantial commitment to operating the Anglo-Irish Agreement which he had opposed when in Opposition. And he steered the Single European Act through a difficult referendum campaign despite having criticised it while in Opposition.

His policy messages were that spending and borrowing targets had to be met even if this meant cuts in state services, that a new dialogue was to be established with the British government in relation to Northern Ireland, and that major benefits would come to Ireland through the EU Structural Funds.

In October, 1987, his government negotiated the first of the modern series of partnership agreements with trade unions and employers. The Programme for National Recovery provided the basis for industrial peace and modest pay rises as the Government agreed public spending cuts of £485 million at the end of 1987, described as the most severe public spending retrenchment in 30 years.

Mr Haughey also launched one of his pet projects, the International Financial Services Centre promoted by his friend, the financier and businessman, Mr Dermot Desmond. All red tape and obstacles were cleared out of the way by, or on behalf of, the Taoiseach to ensure the project went ahead quickly.

Controversy began to surface concerning favouritism shown by Mr Haughey towards the beef company, Goodman International. The question of alleged fraud of the EU as well as the granting of high-risk export credit insurance to the company was raised regularly in the press and in the Dáil, and the issue continued to cause controversy up to, and beyond, Mr Haughey's 1992 resignation as Taoiseach.

During the period of this government, the health of the Minister for Foreign Affairs and old Haughey ally, Mr Brian Lenihan, worsened, and it became clear that he would need a liver transplant. Mr Lenihan went to the Mayo Clinic in the United States for the operation in May and June of 1989.

Mr Haughey was centrally involved in receiving large donations from business people to be put towards Mr Lenihan's medical expenses, with substantial sums being channelled into the Fianna Fáil party leader's account, controlled by Mr Haughey, for this purpose. The ultimate destination of some of this money is being inquired into by the Moriarty Tribunal.

The minority government rode a number of controversies, such as those over an angling rod licence and a proposed marina in Dun Laoghaire, for which Mr Haughey had enormous personal enthusiasm. But by and large, Mr Haughey's government showed a clear sense of broad political strategy, despite several Dáil defeats on private members' motions.

Fianna Fáil rode high in opinion polls during this time, and in May, 1989, the temptation to call an election in the hope of that elusive overall majority proved too much. It was a major miscalculation whose outcome started the resentment of him at senior levels in the party that ultimately brought him down.

Fianna Fáil lost four Dáil seats and for the first time, the Dáil failed to elect a Taoiseach when it convened. After a period of seeming to believe everything could go on as before, Mr Haughey finally paid the price of retaining power. He agreed to abandon what some in his party called the "core principle" of not going into coalition, and did a deal with the Progressive Democrats.

The two Cabinet posts given to Mr Desmond O'Malley and Mr Robert Molloy - personifications of the disloyal enemy in older Fianna Fáil eyes - caused deep resentment. During the Fianna Fáil/PD government's lifetime, some in the party never came to terms with what had happened.

Mr Haughey was soon to be cast into a role which he truly relished: that of President of the European Council of Ministers during Ireland's EU Presidency in the first half of 1990. With the collapse of the communist regimes throughout Eastern and Central Europe, Mr Haughey found himself in the driver's seat as the EU was fundamentally re-examining itself to decide how best to cope with the momentous changes.

Two major EU summit meetings in Dublin gave EU approval to German reunification and launched an Inter-Governmental Conference on European political union to run alongside one on economic and monetary union.

In the second half of 1990, however, Mr Haughey's political life was dominated by a less uplifting affair - the Presidential election. Mr Brian Lenihan, his old political ally, Tánaiste and Minister for Defence had initially seemed the favourite to win the post against challenges from Mr Austin Currie, of Fine Gael, and Mrs Mary Robinson, supported by the Labour Party and others.

A storm of controversy erupted about telephone calls made to Aras an Uachtarain in 1982, after the Fine Gael/Labour coalition had been defeated in the Dáil in a budget vote. Mr Lenihan gave contradictory accounts as to whether he had phoned the Aras to seek to persuade the then President, Dr Patrick Hillery, not to dissolve the Dáil but to call on Mr Haughey to form a government instead.

Under intense pressure from his coalition partners, the Progressive Democrats, Mr Haughey sacked Mr Lenihan from Cabinet. Mr Lenihan went on to lose the presidential election to Mrs Robinson. The whole affair was deeply upsetting to Fianna Fáil grassroots, and contributed further to the erosion of Mr Haughey's position as party leader.

The first Fianna Fáil leader to fail to win an overall Dáil majority, to lead his party into coalition and to lose a Presidential election now faced significant rumblings of discontent on the backbenches. In government he was working on the successful construction of the successor partnership agreement to the PNR, the Programme for Economic and Social Progress.

Questions continued to emerge about Mr Haughey's relationship with senior business people, with ITV's World in Action programme in 1991 further opening up questions concerning the Government's relationship with Goodman International. The Government agreed to set up a tribunal to investigate the matter.

June, 1991, provoked further talk of the "Haughey factor" on the backbenches, as Fianna Fáil lost control of 13 councils in the local government elections. Summer saw the eruption of controversy over irregular business transactions in Irish Sugar, subsequently Greencore. This was followed swiftly by the controversy over the Telecom Eireann site in Ballsbridge. The phrase "golden circle" was used by Mr Desmond O'Malley at this time to describe the belief that a small elite had access to inside information that was making them very rich.

September saw the first public move against Mr Haughey, with the "Gang of Four" backbenchers - Mr Noel Dempsey, Mr M.J. Nolan, Mr Liam Fitzgerald and Mr Sean Power - issuing a statement critical of Mr Haughey. Two months later Mr Albert Reynolds threw his weight behind a failed attempt to oust Mr Haughey at a parliamentary party meeting.

There was more political drama when Mr Haughey, in seeking to fill the Cabinet places vacated by Mr Reynolds and Mr Padraig Flynn before the failed heave, nominated Dr Jim McDaid as Minister for Defence. Dr McDaid withdrew his name after an extraordinarily acrimonious day in the Dáil.

Yet another controversy - over Mr Haughey's alleged role in encouraging UCD to purchase Carysfort, the site of the former teacher training college, from businessman Mr Pino Harris - emerged to cause Mr Haughey further damage.

It was believed by some in the party that Mr Haughey had privately agreed a "time- frame" within which he would step down as Taoiseach.

However, the situation was finally forced in January, 1991, by Mr Haughey's old ally, Mr Sean Doherty. Mr Doherty called a press conference to say that Mr Haughey had known in 1982 that journalists' phones were being tapped. Mr Haughey denied it, but his leadership was over. The Progressive Democrats made it clear they would bring down the government unless he went. Within a few days he was gone, famously quoting Shakespeare to say: "I have done the State some service."