Surrender of sovereignty highlights political failings

ANALYSIS: IMF/EU intervention means that rational decisions will be forced on those who stymied response to crisis

TAOISEACH BRIAN Cowen may not have been prepared to admit it in the Dáil yesterday, but there is no way around the fact that control of the country’s economic affairs has passed outside the hands of our elected politicians.

After close to 90 years of independence, it is a sad day for the country that it has squandered its sovereignty through sheer economic mismanagement. What makes it even worse is that this has happened at a time when we are still, on paper at least, one of the wealthiest nations in the world.

The profligacy of the boom years is the direct cause of the calamity, but the inability of the political system, the social partners and society in general to get to grips with the tough choices that were needed since the bubble burst two years ago has helped bring us to the pass.

The immediate trigger for the decision of our European Union partners to force Ireland into the EU/International Monetary Fund (IMF) bailout is the state of our banks, but the impact on the country is likely to be felt across all aspects of Government policy and at every level of society. On one level, intervention by the EU and the IMF is no bad thing. It means that rational decisions on how we can live within our means will now be forced down the throats of the competing interests who have stymied any genuine national response to the crisis.

That, however, does not mitigate the failure of those who were charged with running the country for the past decade. The electorate who kept putting them back despite mounting evidence of danger cannot be absolved of responsibility either. The fact that we have simply not been able to deal adequately in a unified way with the consequences of our actions had compounded the problem as others lost confidence in the ability of our institutions to deal with our bad behaviour.

In the Dáil yesterday, Cowen took issue with the Opposition for using the word “bailout” and repeatedly referred to the fund as a “facility” that could be of benefit to Ireland and our partners in the euro zone.

He also insisted the Government did not mislead anyone at the weekend when Ministers kept insisting that no application had been made to the EU. While he did not get much of a hearing for his views, he was probably being truthful. The storm that developed at the weekend took most people by surprise and Ministers like Dermot Ahern simply did not know that the European Central Bank had decided that the game was up for Ireland.

In hindsight, a leak from Brussels of a conversation between ECB officials and the Central Bank in Dublin on Friday was a signal that the EU’s patience had run out. At the time though, a game of poker was being played with our EU partners and Cowen and his colleagues were desperately trying to bluff their way through. Still, the episode only compounded the image of a government making another wrong call and being forced to swallow a bitter pill by our EU partners.

Fine Gael leader Enda Kenny was not in the mood for excuses and he lambasted the Taoiseach and his Ministers for not giving the full facts over the weekend. “Well now we know the truth. The white flag has been raised, the towel has been thrown in and like the prowler waves off the west coast, they’re coming on Thursday,” said Kenny.

Talks with the EU and IMF officials will begin in Dublin today and hopefully they will result in clarity being brought to the whole sorry mess in quick time. The knowledge that the core issues are being dealt with will at least give the people of the country some respite from the constant uncertainty which has been so damaging for national morale.

The course of events has also reduced the level of political uncertainty about the budget which dominated Government thinking last week. The four-year plan and the budget will now simply have to be accepted by the Dáil because our democratic representatives are no longer in a position to reject them without making complete fools of themselves.

Olli Rehn and his officials have already had a serious input into the budget decisions that have to be taken between now and 2014. Our TDs no longer have the luxury of refusing to accept those decisions unless they want to draw attention to their own powerlessness.

The question of when the general election will take place and who is likely to emerge as the next government is of less relevance. With a four-year budgetary framework set in stone, whoever is in power will have little choice but to press ahead and implement decisions already taken over their heads. They may have some discretion about the precise detail of where the cuts should fall, but that is all.

The real danger is that some other EU states will try to tamper with major national policy issues like the 12.5 per cent corporate tax rate, so the sooner we get through the pain of the four-year plan and out the other side, the better. On a party political level, the events of recent days are a disaster for Fianna Fáil. The party, which always thought of itself as being a national movement rather than a mere political party, has presided over the surrender of Irish sovereignty as a direct result of its own mismanagement.

In the longer run, that is likely to be devastating for the party that has never spent more than one term out of office. The voters who rewarded it for being so irresponsible in the good times are likely to be merciless now that everything has gone so badly wrong.

Stephen Collins is Political Editor