Reality bites in the first 100 days

 

Next week, Brian Cowen marks 100 difficult days in office. Now he faces the greatest political challenge of his career as he attempts to rescue a battered economy and resolve the Lisbon conundrum, writes Stephen CollinsPolitical Editor

AS HE APPROACHES his first 100 days in charge of the country, it appears that everything that could go wrong has gone wrong for Brian Cowen since his elevation to the Taoiseach's office on May 7th. He now faces the challenge of his political life as he attempts to cope with dangerous problems that threaten to undermine the country's prosperity and its place in the world.

When he returns from his summer holidays in the west of Ireland later in the month, Cowen will have to confront two daunting challenges, either of which would tax his political skills to the limit. Combined, they have the capacity to swamp his Government and set the country back decades.

The task facing the Taoiseach is to devise a strategy to deal with the frighteningly rapid deterioration in the public finances while simultaneously trying to restore the country's shattered international reputation, following the rejection of the Lisbon Treaty. The two issues are likely to feed into each other, making a solution even more difficult to find.

In fairness to Cowen, the two storms swept down on him immediately after he assumed office and he has hardly had time to think as things have got steadily worse. The collapse of the national pay talks has added to his woes, but that is just a symptom of the underlying problem rather than its cause. A winter of industrial discontent in the public service, though, would put the tin hat on it.

IT IS ALL such a far cry from the fanfare that greeted the new Taoiseach's assumption of office three months ago when he returned home to his native Offaly in triumph. While the storm clouds were gathering at that stage, he can hardly, even in his darkest nightmares, have expected that things would get so bad so quickly.

The real test of Cowen's worth as a politician will be how he deals with the problems thrown up in his first 100 days. It will probably take 1,000 days before that question can be answered; only then will it become clear whether he has proved himself capable of steering the country through the storm and into calmer waters.

One big problem for Cowen is that he was directly involved in the formulation of the policies that have contributed to the scale of the current crisis. As Minister for Finance since 2004, he presided over an unsustainable increase in public spending that was inappropriate for good times, never mind bad. Even more critically, he did nothing to cool a property boom that was obviously out of control and heading towards a bust of enormous proportions. It is the scale of the property crash that has made the economic downturn in Ireland so much more serious than in most other western countries.

The Taoiseach's misfortune was that the chickens came home to roost just as he took over the highest office in the land, with the international downturn and the credit crunch finally tipping the Irish economy over the edge. However, the omens were there for almost a year before that. One significant straw in the wind was the way the Irish banking sector suffered an astonishing loss of around 70 per cent in its value. The international money markets clearly knew something was fundamentally wrong here a long time before the Government or the Department of Finance woke up to reality.

It took the sharp and sudden slowdown in tax revenue for the first six months of the year to bring it home to Cowen and his colleagues in Government that they were in the middle of a real mess which required urgent action. A package of "savings" in public spending was introduced at the beginning of July as a first step to deal with the problems facing the exchequer.

It is now clear that this exercise was akin to dipping a toe in the water rather than a full-blooded step towards dealing with the problem. Really tough decisions involving cuts in public spending, allied to substantially increased borrowing and increases in taxation, will have to be taken in the second half of the year if there is to be any chance of turning the tide in 2009.

As if that was not going to be difficult enough, Cowen also has to devise a strategy to deal with the Lisbon Treaty defeat. Our EU partners are expecting a detailed analysis of the Irish problem from the Government by October and a solution in time for the December meeting of the European Council. Whatever he decides to do, the Taoiseach will have to display courage and skill to bring the country with him and he will also need as much luck as he can get.

A failure to get the Lisbon Treaty ratified by Ireland will amount to probably the greatest setback suffered by any Taoiseach in the history of the state and will have profound consequences for future generations, as well as for Cowen's political reputation.

What must be galling from his point of view is that the referendum defeat was an unforced error for which he has to take some responsibility. While he only took over the reins of power with a month left in the referendum campaign, he had already committed the gaffe of telling a reporter that he had not read the treaty. That mistake came back to haunt him in the later stages of the campaign when the EU Commissioner, Charlie McCreevy, blundered into the debate to say the same thing in much more colourful language.

THE UNDERLYING malaise that crippled the Yes campaign can be traced back to the long, drawn-out departure of Bertie Ahern. The month-long lap of honour by the former taoiseach, culminating in an address to the United States Congress at the end of April, was a huge distraction at a critical time as the referendum campaign got into its stride. The embarrassing revelations about Ahern's personal finances only added to the public's disillusionment with politicians and fuelled the No campaign's negative message.

By the time he took over, it was already clear that the Yes campaign was on the back foot. Instead of getting to grips with his own party's utter disengagement from the campaign, Cowen appeared to suggest that Fine Gael was not pulling its weight. That only served to incite a segment of the Fine Gael support to vote No at a time when every last potential Yes voter needed to be wooed. The Taoiseach's confused response to the IFA's position on the world trade talks made matters worse. Although the IFA's bullying and misleading campaign on the WTO deserved short shrift, Cowen left it far too late in the campaign to make his position clear.

WHAT WAS UTTERLY baffling, though, was that when an Irish Times poll a week before the referendum alerted the country to the fact that a No vote was on the cards, Cowen was unable to rouse his own party to campaign for the treaty. Astonishingly, most Fianna Fáil TDs and even some ministers didn't bother to campaign at all. The result was that Fianna Fáil voters made up the biggest component of the No vote on polling day.

It was a dreadful failure of political leadership by the semi-permanent party of Government and trying to reverse it will test every fibre of the Taoiseach's ability. Doing it while simultaneously administering a dose of unpalatable economic medicine won't be easy, particularly if it is accompanied by industrial strife.

It would be hard to conceive a worse or more unlucky start to a Taoiseach's term of office than Cowen's first 100 days. It has already prompted commentators to dust down the famous quote from Napoleon about the need for a lucky general. The inference is that bad luck will continue to dog the Taoiseach.

Yet a cursory glance back at recent political history shows that most of Cowen's predecessors suffered a pretty grim time of it in the early stages. After talking over as taoiseach for the first time, in December 1979, Charles Haughey made his infamous television address to the nation, encouraging people to tighten their belts but then went to do the exact opposite with both the public finances and his personal spending habits.

Garret FitzGerald first took over as taoiseach in June 1981 on a programme of tax reform and new spending programmes. Instead, his Government had to abandon many of its pledges during its first month in office and introduce a mini-budget to clear up the mess left by Haughey.

Even Bertie Ahern, who is widely regarded as the luckiest general of all, had a terrible time during his first 100 days. Having put together an apparently precarious coalition supported by a motley group of independents, he was dogged by the controversy over payments to Ray Burke, whom he had made Minister for Foreign Affairs.

Burke was forced to resign a little over 100 days into the life of the first Ahern government. It was widely regarded in political circles as the beginning of the end for that Fianna Fail-Progressive Democrat government but, of course, it was simply the end of the beginning, as it went on to win two more elections.

Cowen is facing far more fundamental problems than Ahern but he does have the luxury of time to get it right. He made the right call in the social partnership talks by refusing to sanction an unaffordable public service pay deal and by taking the short-term hit that involved.

With time to contemplate his difficulties over the summer, the Taoiseach will have the opportunity to come back in the autumn and present the country with his vision of the future. If he can appeal to the innate patriotism of the silent majority, and convince voters of the need for sacrifice and forbearance to pull the country through its difficulties, he may be able in time to look back on his first 100 days as a bad dream.

• Next week in The Irish Times: Beating the Downturn, a four-part series in which Ireland's leading entrepreneurs explain what needs to be done to turn the economy around