Re-negotiation of EU/IMF programme is a process, not a single event.

5th May 2011

The Dáil debated the revised EU/IMF programme this week, in advance of the publication next Tuesday of the Jobs Initiative. The debate was good, if a little surreal at times, with some people appearing to believe that we can wish away our problems. This is going to take a lot of time and effort. It is nothing short of the biggest challenge ever faced by an Irish government and people. Some real changes have been made in the bailout programme. I believe that more changes will follow through patient and dogged negotiation. Re-negotiation is a process, not a single event. How we get out of the terrible bind we are in will dominate our politics and public life for years to come. This is some of what I said in the Dail today:

I detect from Deputy Calleary and some of his colleagues mounting frustration over the extent to which Members on the Government side and, perhaps, public commentators argue that policies promulgated by the previous Government are at the heart of our problems. But that argument is unanswerable. I will not repeat it; suffice it to say it goes way beyond the normal rhetoric people somewhat cynically expect from any new Government, the kind that every new Government allows itself to indulge for a few weeks or months.

What happened over the past 12 to 15 months and also the past 12 to 15 years has created a legacy not only of incompetence but also of manifestly failed policies. These were then matched with even worse failure in the attempt to reverse the effects of the decisions that were made. We have discovered that every decision made from the guarantee onwards was not only substantially wrong in itself, but actually had the effect of reducing the options the Government would have available subsequently in seeking to rectify what had been done. This was the case right up the bailout. Yesterday Deputy Michael McGrath said that before Christmas the then Opposition parties described the bailout as an “obscenity” and a “disaster” and stated those parties are not saying that now they are in government.

Not so. In truth, it remains the case that what was done constituted an obscenity and a disaster.

There is no use in criticising people for using the word “straitjacket”, which is not a word discovered only after the election. I distinctly remember the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, using it prior to the election when assessing what had been done in respect of the bailout and agreement. I remember using the term myself. We stated the bailout would constitute an enormous constraint on the economic independence of the country for years. Deputy Brian Lenihan, who was Minister for Finance, told me in the Seanad that he had written the next four budgets for this country. He was revelling in this. Let me quote him almost exactly verbatim: “I have written the budgets for the next four years in this country and you will depart from them at your peril.” He did not tell us at that stage what he told us later, namely, that he was not actually holding the pen when writing those budgets, and that the budgets and economic decision-making were being done outside the country. That government surrendered the economic independence of the country on key budgetary and economic issues in the course of the bailout they entered into.

The new Government is criticised for embracing the bailout in a manner that suggests we think it is a good thing. This is not the case at all. What the Government must do is live in the real world. That is what it is doing in addition to setting up a track of renegotiation, pursuing changes in the agreement and seriously raising the question of burden-sharing. The government was told that burden-sharing would not be countenanced by the European Central Bank, or our “Frankfurt masters” as Deputy O’Dea described them yesterday, but it pushed it in a robust way. By the way, whose fault is it that we have “Frankfurt masters”? We will have to return to the issue of burden sharing because the level of debt is not sustainable in the medium to longer term. This is my personal view from what I observe and read. The debt will not be sustainable without serious concessions, be it through restructuring of the interest rate or the payback time or otherwise.

Addressing this is the challenge the Government is confronting. But the Minister for Social Protection, Deputy Burton, is absolutely correct in saying that it was never believed this would be a “sprint” or that renegotiation could take place in 24 hours, and that everything would be delivered. It is a marathon not a sprint. Deputy Donnelly made the fair point that we should put together a team and work together - we should get going on this – but prolonged engagement in the rhetoric that the Government parties are “acquiescing” in the bailout, as suggested by some Opposition parties, is not beneficial. Living in the real world is what we are doing. In addition to keeping gardaí, nurses and others paid and the State functioning, we are turning our attention to bringing about serious change and surmounting the problems we face.

There are three broad areas we must address.

First, we must address how we reached the current position, and we can do this through committees of the House or the banking inquiry mentioned by Deputy Dara Calleary, on which the Government has started the ball rolling. Second, how do we get out of this situation? The Government is turning its attention to this question. I heard two colleagues describe the jobs initiative to be introduced next week as a damp squib. I could not describe anything I have not seen as a damp squib. Deputy Willie O’Dea said he thought it would be, but, to be fair to him, he said he hoped it would not, which is something. Let us wait and see next Tuesday.

The third issue is how to ensure we never return to this position. That is a challenge for the Government which is also being addressed, whether it is through a change in the way the Houses operate and scrutinise business, or wider reform including constitutional change. All of the areas the Government has indicated it intends to pursue will be addressed.

The notion has been put forth by some Sinn Féin Members that the Government has comfortably slipped into the chair of governing and decided that this deal is wonderful and that it will just sit back. That is not the position and I do not believe Deputy Pearse Doherty really believes it is. However, his position appears to be reduced to the following proposition, that if we remove Deputies Michael Noonan and Brendan Howlin, whom Deputy Dara Calleary has fairly indicated are very experienced people, from the negotiating table in Frankfurt and replace them with Deputies Pearse Doherty and Mary Lou McDonald or Caoimhghín Ó Caoláin, the great Sinn Fein negotiating skills will be of such strength and power that they will overwhelm the ECB and the European institutions and that when they return from Frankfurt 24 hours later, everything will be grand. The proposition with which the Deputy has sought to persuade the House on more than one occasion is that the Government lacks negotiating skills and that its members should take a crash course from Sinn Féin on negotiating. I thought he was joking, but his face was serious. The party would want to do better than that. I have no wish to offend anybody, but Sinn Féin had leverage in the negotiations that took place ten or more years ago which presumably is not available to it now.

Let us have a serious debate instead of this nonsense, whereby people think we can wish something away. Every time Deputy Mary Lou McDonald stands to speak, she seeks a vote on this issue. Will voting make the problems go away? She wants to see the Labour Party Members walk through the lobbies, the same lobbies her party’s Members walked through to support the bank guarantee in September 2008. They now say they had to do it to maintain money in the ATM machines. It is a new found interest in ATM machines. If we were to pursue the policies advocated by Sinn Féin in recent months, that we should turn our backs and tell the ECB to shove it, there would be nothing in ATM machines.