Troika ‘started with view Ireland deserved what it got’

Tánaiste marks bailout end and says Coalition eventually gained trust

Tánaiste Eamon Gilmore sharing his views on Ireland’s exit from the EU-IMF programme at the Institute of International and European Affairs in Dublin on Friday. Photograph: Frank Miller/The Irish Times

Tánaiste Eamon Gilmore sharing his views on Ireland’s exit from the EU-IMF programme at the Institute of International and European Affairs in Dublin on Friday. Photograph: Frank Miller/The Irish Times

Sat, Dec 14, 2013, 18:16

The troika leaders who arrived for bailout talks three years ago initially took a view that “Ireland, to some extent, deserved what it got”, Tánaiste Eamon Gilmore said.

Marking the exit from the bailout programme this weekend, Mr Gilmore said today he believed the troika “ kind of had a view of Ireland that was not very sympathetic” but that this had changed over time.

“They saw it as a country where this property bubble, this mad speculation had gone on, lack of regulation in banking. To some extent I think they felt that we were the authors of our own misfortune,” he said.

Speaking on RTÉ’s The Business programme, he said that had changed over time as the troika leaders “built a trust in us”.

“They saw that we were serious about the recovery, that we were serious about working the programme, that we were serious about doing it within the timeframe, that we were serious about this exit and that we were going to do what was necessary, we were going to take the difficult decisions.

“And as they became more confident that we were serious about economic recovery, they became more relaxed and more willing to make changes in the programme itself and indeed to make it a bit easier for us to do it, ultimately.”

Mr Gilmore also insisted the Government coult not be accused of “opportunist politics”.

Questioned about possible income tax cuts in the wake of Ireland’s exit from the EU-IMF bailout tomorrow.

Mr Gilmore said the Coalition had taken some of the most difficult decisions that any government had had to take in the history of the State, in order to save the economy and turn it around.

“We are not going to put that recovery at risk. We are going to see that that recovery is embedded,” he said.

“We have to be careful about what is said at this stage. We have to look at the work that now needs to be done. To work to complete the reduction of the deficit and to increase employment.

The Coalition would also see that the recovery is not used “for some tiny elite or not going back to days of speculation, but that the recovery is used to benefit the broad section of the Irish population who bore the burden of the retrenchment that had to be made to make it possible”.

He said that “that means that people have to be able to have employment, have to be able to see that they can aspire again to an improved living standard”.

The Tánaisted said that as the finances of the State improved they would be able to lift the burden of taxation on hard-pressed workers.

When it was suggested to him that meant “a giveaway budget just in time for the next election”, Mr Gilmore said:“No, no. The one thing this Government cannot be accused of is opportunist politics.”

He said “the people whose sacrifices and hard work made the exit from the bailout possible have to be able to share in the gains of recovery”.

That could be reflected in increased opportunities for employment, he said.

“And yes, as the State’s finances improve then we will be looking to see how we can ease the pressure in terms of taxation on families who have been under a lot of pressure as a result of what happened to the economy in the last few years.

Asked about the increasingly unlikely prospect of retrospective capitalisation, Mr Gilmore insisted the Government would continue to pursue it.

Yesterday Minister for Finance Michael Noonan made repeated references to reduction of the debt burden without capitalisation, during events to mark the ending of the EU-IMF rescue package.

But Mr Gilmore said “there was a very clear decision made at the EU council that there would be a separation of banking and sovereign debt, that a banking union would be established and that various pieces of architecture would be put in place around that”.

Putting the architecture in place was ongoing and that was part of making the debt sustainable. “I have a confidence because we now have a record of success in these matters.”

He also questioned the model the ESRI used when he defended the Government against the findings of a report by the institute that the most recent budget was felt most keenly by those on the lowest incomes and not by the much touted squeezed middle.

“The ESRI itself acknowledges that the model it uses does not pick up all of the budgetary measures. It hasn’t over the years been able to pick up the changes in capital taxation and some of the measures that tend to impact on people with higher incomes.”

Mr Gilmore added: “The ESRI would acknowledge that the model is still not a perfect one in terms of measuring the distribution effects of the budget.”