Feeling anxious? Well it is almost the end of the affair

The sovereignty that will be returned in December is a much reduced thing

Peter Breuer (left) and Craig Beaumount of the IMF

Peter Breuer (left) and Craig Beaumount of the IMF

Wed, Oct 30, 2013, 06:22

They’re back. International inspectors are in Merrion Street for the 12th time since the bailout began: their final visit. Yet if the Coalition is heartily pleased about its imminent release from the troika’s clutches, the affair ain’t over yet.

Increased confidence
The end of the bailout on December 15th draws ever closer. It’s too early for fanfare and any triumphalism once the time comes would be woefully misplaced. Still, there’s no mistaking the increased sense of confidence in Government circles about the looming return of Ireland’s economic sovereignty to its rightful owners.

Not so fast, say troika types. While the Government never ceases to declare that its execution of the recovery programme is complete and unwavering, the inspectors are unhappy about shortcomings and backsliding on several fronts.

At issue is an all-too familiar shopping list of anxieties around the effort to settle the banks, to prise more from the health system with less money, to overhaul the legal profession and to ensure unemployed people pursue job opportunities.

It doesn’t end there, but the net point is clear. Almost three years into a humiliating bailout, glaring problems that should have been sorted early on remain to be settled. All of this might be explained away by unavoidable realpolitik and ever-tight financial strictures but important business remains unfinished.

Political cover
There was always a sense in troika circles that the very presence of the external bodies gave ample political cover to the Government to execute the trickiest reforms.

If there is anxiety now that this is slipping away, there is further concern that the failure to take advantage of reform momentum earlier could rebound later on the Government if volatility returns.

In its own defence, the Coalition would point to a multitude of achievements under the programme. But that’s not the whole story. Outsiders fret over the lingering crisis in the banks. They struggle too to understand years of political delay over important legal reforms. They look disapprovingly at the State’s wasteful overspend on medicines and the slow execution of welfare reforms.

Gravest emergency
This being the gravest emergency faced by the State since the 1940s, the argument goes that more should be done. With little more than six weeks to go before exit day, we must await the outcome of the mission to see what promises the Government now makes to the troika and which pledges it renews.

If all of this is very intrusive and unappealing for the Coalition, it helps explain the push for minimal conditionality in any post-bailout emergency credit line. By the same token, the troika’s concerns about reform fatigue in Dublin go a long way towards explaining the insistence on tough conditionality in return for any such scheme.

Most telling of all, however, is the argument that the final decision on whether Ireland goes it alone on private markets or opts for a precautionary loan programme must await the arrival in office of the new German government.

The sovereignty that will be returned in December is a much reduced thing.