Cowen fiddled in summer Ireland burned
OPINION:The Taoiseach played Nero during the incredible weeks from July to September 2008, writes ELAINE BYRNE
NERO FIDDLED while Rome burned. The infamous inaction of the Roman emporer finds an echo in Brian Cowen’s time as Taoiseach.
Nero occupied himself with unimportant matters and neglected priorities during a crisis – that has been the distinguishing feature of Cowen’s tenure.
A timeline of events from the July golf outing to the September bank guarantee paints a picture of incompetence and a deep failure to realise the severity of Ireland’s economic crisis.
It began with the Taoiseach “just shooting the breeze” and playing golf with Seán FitzPatrick, chairman of Anglo Irish Bank, on July 28th, 2008. Anglo was then on the verge of collapse with shares at €5.30 on that fateful day in July, compared to a €14.40 high the previous October. The bank was putting together a list of names, the infamous Maple 10, to buy a stake and boost the share price.
Yet Cowen apparently never discussed any of these matters while dining with two directors of Anglo, a recently resigned director and a director of the Central Bank that night. Alan Gray, appointed in 2007 by Cowen as a director of the Central Bank, said the purpose of the informal dinner “was to provide independent ideas to stimulate economic growth and to reduce unemployment in Ireland”.
What a disaster that advice, if given and accepted, proved to be.
That was the summer Cowen decided not to introduce a mini-budget in fear of “talking down the economy”.
A year later the Murphy report would introduce Irish public life to the language of “mental reservation”: the creative concept which allowed those in authority to justify saying one thing and meaning another, without consequences, in order to protect the reputation of powerful individuals.
The timing of events that summer was as incredible as the events themselves. The Standards in Public Office Commission issued its annual report a day after the Taoiseach’s golf game with FitzPatrick. The commission said it “regrets” Cowen’s refusal to heed its recommendations to make it easier to investigate politicians. “It is not known,” the commission said, “how the parties financed their election campaigns in 2007.”
Political parties spent over €11 million on that election, yet disclosed just €1.12 million in donations.
The next day, Cowen was enjoying the Galway races. He told Frank McNally of this newspaper there was a “media fixation” with the Fianna Fáil tent.
In July the Government tax intake was €776 million below its expectations for that month. However, sources within Government said that no decisions on revising projections or otherwise would be taken until September. By September, tax revenues were an extraordinary €2.8 billion below target, raising fears that borrowing would breach EU guidelines of 3 per cent of GDP. Unemployment rose by 73,800 or 42 per cent in the 12 months to August – the highest annual increase then on record. High-profile multinationals Pfizer and Boston Scientific shed 180 and 240 jobs that summer. Calls for a state-of-the-nation address by the Taoiseach grew louder.
In the last week of August, Cowen sang the emigration song Paddy’s Green Shamrock Shore on the Fleadh Cheoil main stage in Tullamore.
At the end of that same week, Ibec – deeply frustrated at the non-response to rapidly rising unemployment, a deterioration in tax revenues, a worsening economic situation and with social partnership pay talks stalled for August – issued a press release. The employers’ federation called on the Government “to show leadership and to cut their own cloth to fit”.
On that same day, Cowen officially opened the Connemara Golf Club in Ballyconneely, Co Galway, where he had holidayed in his caravan that summer.
The response to the Lehman Brothers collapse of September 15th by Anglo Irish Bank was the attempt, four days later, to acquire Irish Nationwide Building Society – a bank in a worse state than Anglo, with an 80 per cent loan book exposed to commercial property and development.
Anglo told The Irish Timesthat it believed it had the blessing of the Government if it wished to proceed with the transaction. On that very same day, Cowen told those assembled for the launch of the Irish operations of Australian bank Macquarie, that the Irish financial services sector had “weathered developments well to date” and that the Financial Regulator was “liaising closely with the industry”.
And all was well in Nero’s land.
The Dáil convened after its 11-week summer recess on September 24th. Cowen was at the National Ploughing Championships the next day. The CSO released data the following day that showed the Irish economy had “technically” entered a recession.
Four days later, the Government offered a blanket bank guarantee over all €440 billion of Irish bank liabilities. This decision not only damaged the Government’s credit rating but led ultimately to the €85 billion bailout by the International Monetary Fund and the European Union.
This was Brian Cowen’s first 150 days as Taoiseach.
Like Nero, he will be remembered as an ineffectual and neglectful leader. Anglo has ruined a country, so why not the career of a Taoiseach that presided over it?
Elaine Byrne is an adjunct lecturer in politics in Trinity College Dublin