Forming a government: Anatomy of a deal

Analysis: Kenny spent 60 days stuck between an election and giving in on Irish Water

In the end, they’ll fall over the finishing line.

Fine Gael and Fianna Fáil teams have faced one another across the negotiating table since April 11th, trying to agree the terms under which Fianna Fáil would facilitate a Fine Gael-led government. The talks have been complex, testy and tough. They broke down, and were resurrected, more than once.

Last night, they still had some way to go. But the breakthrough had come on Tuesday when Fine Gael conceded on issues relating to Irish Water which had brought the talks to the brink of collapse and the country to the verge of another general election.

There are details to be finalised, and deals with the Independents to be squared, before Enda Kenny becomes taoiseach for the second time. But the big beasts have made their peace. For now. But it’s hardly the partnership imagined by Kenny.



Long before the two parties sat down to talk, it was clear the future of Irish Water would be a roadblock on the way to any agreement between them.

It was also clear some people in Fine Gael understood they would have to give ground on the issue. And that it would not be easy for them.

Only a few days after the general election, Minister for Agriculture Simon Coveney told RTÉ that Fine Gael would “certainly be willing to talk about water” during negotiations on the formation of a new government. It was no more than a statement of the obvious, and it would turn out to be absolutely right.

However, Fine Gael TDs, who had defended Irish Water through thick and thin, and seen many of their colleagues lose their Dáil seats partly as a result of that, were outraged. They rounded on Coveney and, in doing so, sent a signal to Kenny he would not have a completely free hand in negotiating a new government, of whatever type.

But if Fine Gael was outraged by Coveney's apparent willingness to run up the white flag on water, Fianna Fáil was, if anything, more incensed at Irish Water's lobbying to keep itself afloat. The day after Coveney's comments on Prime Time, The Irish Times published the utility's estimate of the cost to the State of its abolition: €7 billion. Among the ancillary costs, it pointed out, were 400 jobs in Fianna Fáil leader Micheál Martin's constituency.

Subtle, it wasn’t. Martin’s advisers discussed it. One of them characterised the response: “F*** them.”

Rising distraction

The weeks after the general election moved slowly. Kenny and Martin both opened talks with Independent TDs, while events for St Patrick’s Day and the Easter Rising commemorations distracted everybody from the stalemate.

By the end of March, more than a month after the election, the formation of a new government seemed no closer than it had been on count day. Talking to the Independents at one of the final negotiating sessions in March, the acting Taoiseach told them the choice was between supporting a Fine Gael minority government or another election.

Privately, however, Kenny was sceptical the Independents would ever sign up to a binding deal. He knew how tough it could be in government when ministers were presented with a series of unpalatable and unpopular alternatives and had to pick one.

Regularly, the Fine Gael negotiators would return to their debriefing sessions and throw their eyes up to heaven about the positions taken by the Independents. At the first meeting with the Independent Alliance, Shane Ross spoke at great length about judicial appointments and how they had to be “depoliticised” through an independent process. It went on and on.

“You could see Michael Fitzmaurice tapping his shoes on the floor, thinking, ‘why did I bother coming up to Dublin?’” said one person present.

Ross wanted an independent body to appoint judges, he told the meeting. Fine Gael asked him who would appoint that body, so Ross suggested it could be appointed by another independent body. They resisted the temptation to ask him who should appoint that body, but Fine Gael were beginning to think Ross would never do a deal and stick to it.

But in politics, processes are important. Once people get into them, often it’s hard to get out.

Stuttering and staggering

The talks with the Independents stuttered and staggered. Dáil votes for taoiseach indicated little progress. A month of talks produced one extra Dáil vote for Kenny, that of Katherine Zappone.

The Independents struggled to reach a common position on anything – they were Independents, after all – and also found it difficult to balance their demands on national issues (which they talked about in public all the time) with their local priorities (which tended to be discussed in private).

Meanwhile, Kenny nursed a hope the Labour Party would reverse engines and opt to join a new government, undercutting the power of the Independents and giving him the votes he needed, assuming he could persuade Fianna Fáil to abstain. Repeatedly he pleaded with Joan Burton and Brendan Howlin: come back, we need you.

Labour toyed with the idea. It was clear to many of them that government provided advantages in the party rebuilding process unavailable in a crowded opposition. Most in the party leadership wanted to get back to government, but couldn’t figure out a way to get there. The level of dysfunction, suspicion and indecision among the party’s leadership made it impossible to act decisively. Instead, Labour just drifted towards its fate, whatever that may be.

The big move

Kenny’s big move was to offer Martin a “full partnership” government, which he sprang on him at a late-night meeting on April 6th. The response was as he must have expected; Fianna Fáil had pledged throughout the general election campaign not to enter coalition with Fine Gael. Even if Martin judged such a move to be in Fianna Fáil’s best interests, his party organisation would not sanction it.

A few days of bad-tempered exchanges followed the rejection until Leo Varadkar sat down with Fianna Fáil TD and party legal adviser Jim O’Callaghan at O’Callaghan’s kitchen table in Ranelagh early the following Saturday. Acting for their leaders, they agreed formal talks would begin on the Monday. The final phase had begun.

Kenny had established a loose group of deputies and advisers to conduct and direct the talks with the Independents, to which the negotiators would return after sessions for debriefing, research, analysis and strategising.

His two most important advisers – chief of staff Mark Kennelly and economic and policy adviser Andrew McDowell – attended, as did, occasionally, policy adviser Paul O’Brien. Ministers Leo Varadkar, Simon Coveney, Richard Bruton and junior finance minister Simon Harris were joined by backbencher Eoghan Murphy, whose work on Dáil reform and slight distance from the Kenny leadership enabled him to reach out effectively to the Independents. Later, Minister for Justice Frances Fitzgerald joined the team and new Dublin TD Josepha Madigan was also drafted in.

Kenny and his senior staff directed the group which was later joined by Minister for Finance Michael Noonan. Kenny’s side had asked for the negotiating teams to be expanded to allow for Noonan’s inclusion, but Fianna Fáil refused, preferring to keep the existing personnel intact. Noonan came anyway, with Fine Gael explaining this was the “personal request” of the Taoiseach. Those on both sides of the table realised the significance of his arrival. “Noonan came in to do the deal,” said one Fine Gael source involved in the process. Fianna Fáil thought the same thing.

Gear change

Noonan’s arrival coincided with a gear change in the process. He rumbled down to Trinity for the talks with customary bon mots and serious intent. Outside he joked to reporters that the civilised surroundings of the university might “calm the savage propensities of politicians”; inside he made clear to Fianna Fáil that the Taoiseach wanted a deal.

But not any deal. Kenny and Noonan knew the Fine Gael TDs and Ministers had defended Irish Water and water charges time and time again, at great political cost. Dozens of their colleagues in Fine Gael and Labour had lost their seats. Water charges were borne out of necessity, sure, but they were also a policy that the party believed in – or at least came to believe in – and in which they had invested a great deal of their political credibility.

And how else was Ireland’s creaking water infrastructure going to be fixed, if not by a new national body with water charges to fund it?

They knew more than anyone about Irish Water’s shortcomings. But, fundamentally, they believed dumping the model was the wrong thing to do. Coveney and Varadkar took this view, as did the Taoiseach’s adviser, McDowell.

To them, it was a classic case of Fine Gael trying to do the right thing, while Fianna Fail played politics.

Below the surface

There was another dynamic bubbling below the surface in the Fine Gael team. It was clear to everyone since the election result that Kenny’s days as party leader were numbered.

There is no desire to eject Kenny but few, if any, TDs believe he can stay on as leader. However, he is the man in possession, and it is he who is trying to put together a government. If he can do so successfully, he will remain – at least for a time – as party leader. He will also become the first Fine Gael leader in history to be re-elected taoiseach. For a man nearing the end of his career, the difference in the shape of his legacy is significant.

But Fine Gael Ministers and deputies were acutely aware that, while a deal might be in Kenny’s interests, it might not be in the party’s. In other words, there might come a point at which Kenny’s priorities and his Fine Gael’s diverged. They discussed it in private. In public, they would only say – as Coveney did on Monday – that Fine Gael wanted a deal. But not at any price.

Fianna Fáil watched the proceedings closely, probing for the fault line.

‘This is crazy!’

But the talks did not go well. The sides were further apart in private than they were in public. “This is crazy!” one Fine Gael Minister almost shouted down the phone. “Fianna Fáil is in favour of water charges.”

A few minutes later, a Fianna Fáil source shook his head at Fine Gael’s political myopia.

“If Fine Gael really believes that their future depends on Irish Water then they really have drunk their Kool-Aid,” he said.

Central to Fianna Fáil’s hardline approach was its belief that the party had made a great concession to Fine Gael in offering to facilitate the party in forming a minority government.

In politics, government is the prize. Fianna Fáil has always understood power and its uses, and abuses, better than any other party. So to facilitate their great rivals to acquire power was a bigger concession for Fianna Fáil than Fine Gael understood. And having handed the prize to Fine Gael, Fianna Fáilers wanted something in return – something big. They decided Irish Water and water charges were the price.

Kenny met Martin again last Saturday and tabled another offer: a temporary suspension of water charges while a commission examined the future of Irish Water and a future charging model. In return, Fine Gael wanted a clear commitment that Fianna Fáil would support a reintroduction of the charges after the commission reported. But Martin reiterated the Fianna Fáil position: no return of water charges during the lifetime of the 32nd Dáil.

Martin was adamant on the point. Just as Fianna Fáil had held out on their promise not to join a coalition with Fine Gael – because that is what the party promised its voters – so it should stick to its promise on water charges. Never mind that it has previously considered implementing charges, or that it is not opposed to the principle of charging consumers for water, or that it might do just that in the 33rd Dáil.

Martin has made a very public virtue of Fianna Fáil’s determination to keep its election promises to its voters. Everyone else would just have to accommodate themselves to that.

Darkening mood

The mood darkened over last weekend. Though media reports that all contact had been broken off between the two parties were exaggerated sources on both sides wondered if there was any point to further contacts. The issue had proved intractable to the teams, so they had kicked it upstairs to the leaders. That had now failed. Where else was there to go?

The answer was back downstairs again. On Monday, the teams met once more. Fine Gael’s gambit to was repeat the offer that Kenny had made to Martin on Saturday – temporary suspension in return for the resumption of the charges.

But Fianna Fáil’s answer didn’t change: no water charges in the lifetime of this Dáil.

Noonan asked if they knew what that meant. They did. The talks broke up early that evening. One participant was asked if they would restart the following day. “To talk about what?” he replied.

On Monday evening, as the choice before them clarified, Fine Gaelers were going through a long night of the soul. Fianna Fáil would not, it was clear, give ground. Both inside and outside the talks the message was the same: we are not bluffing. You decide.

Fine Gael realised it was stuck between the rock of a general election and the hard place of giving in to Fianna Fáil’s demands on Irish Water.

“I don’t know if we will be forgiven for conceding,” said one Fine Gaeler. “But then, do we end up regretting more losing control of government? I’m really stuck on it. I think everyone is. Dying in the ditch for Irish Water?”

One Fine Gael Minister said it was a choice between two bad options. So which was the least bad? “That’s what we have to decide.” Another Minister muttered about not serving in government if Fine Gael gave up on water charges. Kenny’s backroom staff were said to be horrified.

It was a choice between two unappealing alternatives. But government often is. Late on Monday night, RTÉ's Claire Byrne Live programme reported on a poll it had commissioned from Amárach Research, who count Fine Gael among their clients. Support for suspension of water charges was running at 65 per cent, versus 29 per cent against. Texts bounced around Fine Gael phones.

Kenny’s choice

On Tuesday, day 60 after the general election, Kenny made his choice. Perhaps it was the only choice he could make. By teatime, Noonan was circulating among backbenchers, telling them that the deal was the best they could get. It put Fine Gael back into government, for one thing. That meant Kenny would be handing out ministerial jobs soon, for another. Kenny worked the phones himself.

The negotiating teams reassembled in Trinity and agreed to look grave and non-committal for the cameras. But as details seeped out, it became clear that Fine Gael had conceded on most of its key points.

Irish Water will continue, but its days as an independent, self-financed commercial semi-State company are over and its future is likely to be as a public utility run by the State. Water charges will be suspended. A commission will recommend on future structures and a possible new charging model. However, crucially, Fianna Fáil made no commitment to support the reintroduction of charges if the commission so recommends. It was galling for many Fine Gaelers. But it was a price most were willing to pay for government.

Fianna Fáilers resolved not to claim victory in public. In private however, their glee was unmistakable. One texted: “That’s partnership, baby”.