All the work remains to be done on improving Ireland's image


EUROPEAN DIARY:The majority view in Brussels is that Ireland is in a mess of its own making, and is not coming out of it

IN THE heady days before he became Taoiseach, Enda Kenny acknowledged “suspicions” about Ireland in Europe.

When all is said and done over the bailout and the banks, those suspicions will still have to be banished.

In the EU milieu, Ireland’s appalling implosion still elicits a sense of astonishment. By far the prime response is to wonder how things became so bad so quickly in a country which seemed not long ago to have been doing so well. A small country held out as an exemplar for others is now quite the opposite. Changing that perception won’t be easy.

This is particularly the case when the Irish question comes up outside the relatively small cadre of international officials, diplomats and journalists who have had reason to track the debacle in all its ugly detail.

Most people in Brussels do not, of course. Among them the simple view dominates that Ireland is bogged down in a grim fix of its own making and not coming out of it.

There is no reason for the narrative to move out of that particular groove, even if there have been huge changes in domestic politics in the period since the bailout deal was done 17 weeks ago. The Cowen administration’s collapse, the election and appointment of the new Taoiseach made for extraordinary drama. Yet the conditions are not ripe for recovery talk. Far from it.

That much is clear in the two events which stand out since the new Government took office: the firefight over corporate tax; and the ringing of alarm bells over new bank stress tests. If only it were not the case. Each presents a most serious challenge to the new Taoiseach and his ministers.

Kenny doggedly held the line at his first EU summit 10 days ago. But his refusal to offer “any” concession in return for lower bailout interest went down very badly indeed with some of his counterparts. In some eyes, this was recklessly out of step with the give-and-take which is a feature of European negotiation.

If the view holds that a two-way contract cannot be unilaterally changed, then Kenny will have to come up with some form of a quid pro quo on Thursday or Friday if he is to make any headway. He can no longer say he is a total newcomer to the daunting summit room.

Leave aside the change of Government personnel and the story on the banks remains much the same: that of a very bad crisis steadily becoming worse. Even if they are not tracking every turn and twist on the road, that’s what people see outside Ireland.

In spite of the Government’s laudable objective of publicly confronting the true scale of the crisis, there’s nothing in that to dissuade those of a suspicious mind. This is all the more so in a scenario is which Ireland is seeking additional help from the European Central Bank and other EU bodies.

Hence Michael Noonan’s warnings last week about the stress tests were inevitably cast as “more bad news from Ireland”. For a host of reasons it is in the minister’s interest to say the problem he now faces is worse than feared. From the domestic and European perspectives, there is nothing to be gained by downplaying the problem and hoping for the best.

The drawback from the optics point of view is that the story now is little different from the same old tale from Dublin once the banks were guaranteed in September 2008. Ireland told Europe and the world several times since then that the banking problem was finally under control. It was never the case, and the revisions were as frequent as they were dire.

With that comes an image of incompetence which will take a good many years to shake off. That this is seen by some through the prism of Irish cockiness when times were good makes it all the worse. The arrival of a new Government – no matter what it says – doesn’t change that.

Lost in some of the present debate is Ireland’s utter reliance on its European partners. Around the same time that Barack Obama was declaring his intention to visit Ireland, the EU Commission raised €3.4 billion on international markets for the Irish bailout. This money, to be delivered within days, will be used to pay public wages, pensions and social welfare cheques.

The scrap over the terms of the rescue merely emphasises the sense of dependence. With the world’s attention transfixed by Libya and Japan, opinion about Ireland will not be changing any time soon.