There is an element of hype in Enda Kenny’s presentation of the bailout exit
Opinion: Our economic sovereignty remains limited as a result of European changes
Enda Kenny: it could be unwise to make any ’mission accomplished’ statement. Photograph: PA
Three years ago the politics of Ireland’s entry into the EU-IMF bailout was disastrously handled. The fact that the government led by Brian Cowen was in negotiations with the troika was ineptly communicated within government and to the wider public. The manner in which it was mishandled did much to compound the impact on an already traumatised Irish public. It also sealed the fate of that government. For their feeble efforts both Fianna Fáil and the Green Party were severely punished in the subsequent general election.
Historical perspective is likely to improve little on the verdict offered by Donal Donovan and Antoin Murphy in their recent book The Fall of the Celtic Tiger that the political communication around the bailout was abysmal.
Donovan and Murphy acknowledge, however, that the motives for delaying the public announcement of a bailout were benign. Cowen and Brian Lenihan were hoping to obtain some alternative support mechanism short of a formal bailout. They also felt that delaying a formal letter of application would strengthen the government’s hand in the subsequent negotiations. In this they were no different from other countries on the verge of bailouts. As the authors write: “Government will often resist to the very end, hoping against hope that some other solution might somehow emerge before capitulating.”
Donovan and Murphy also argue that talking up the stigma of being forced into a bailout magnified our sense of humiliation, whereas in reality most of the measures in the memorandum were akin to those the government was planning to implement.
The current Government also the stigma of having the troika oversee our financial affairs. Having to sign up to a bailout in November 2010 was of course a moment of national humiliation. It revealed the full extent of our economic crisis and the collapse of our standing in the international economic system.
Entering the bailout, however, also marked the start of a programme of intensive treatment that, though extremely painful, averted a complete collapse and has set us on recovery. Ireland lost its economic sovereignty not in November 2010 but over the previous decade when public policy tolerated and encouraged an unsustainable lifestyle.
The Government repeatedly talks in terms of how we will be liberated once the current bailout is over, notwithstanding the fact that the very open nature of our economy and the stricter controls on our budgets required under the most recent EU treaties will severely limit our economic sovereignty in any case.
Speaking to the Fine Gael conference last month, Enda Kenny said:“Tonight I can confirm that Ireland is on track to exit the EU-IMF bailout on December 15th. And we won’t go back.”
It is of course understandable that the Taoiseach would choose to make the exit from the bailout the centrepiece of his address, coming as it did a week after he got a wallop in the Seanad referendum and in the days before the budget.
Political opponents have, as you might expect, criticised the manner in which the bailout exit has been hyped. It has also been dismissed by independent commentators such as RTÉ business editor David Murphy.
In the light of stories since about how the troika wants Ireland to accept some kind of “backstop” facility, Kenny’s address is beginning to echo of US president George W Bush’s “Mission accomplished” pronouncements six weeks into the Iraq war.
Of course at one level the Government and the people are entitled to a quiet moment of self-congratulation. The bailout programme, with some negotiated adjustments, has been implemented. When they first came to power many, including Leo Varadkar, spoke of how a second bailout might be necessary. A further phase of support of that order will now not be required. Some safety net is likely to have to be accepted, however, and some budgetary terms and conditions will be applied in return.
In seeking to finalise negotiations on the precise nature of our exit, Michael Noonan and his officials may be seeking to minimise the extent and terms of any backstop by suggesting we don’t need it. The rhetoric may be part of a choreographed strategy to that effect. It is more likely, however, that is simply political posturing for domestic political gain. It could be counterproductive.
It is important now that the reality of the current situation be communicated to the people by the Government early, often and honestly. Enda Kenny and his colleagues don’t have to look far back to recognise the risks of being less than frank with voters about the country’s dealings with our international financiers.