As Dublin stuttered to a halt on Wednesday under the weight of blockading taxis, Mary Harney went on RTE television to claim a great victory. Bobby Molloy's deregulation of taxis, she said, was as important for citizens as her own banning of bituminous coal from Dublin in 1990.

For the Progressive Democrats, the initiative might be even more significant. Making taxis readily available to the public is such a broad, consumer-friendly action that it connects with all age groups, and for a party desperately searching for relevance in the run-up to a general election, it was a godsend. Now they have to capitalise on it.

The trick is to secure the gain while transferring the pain to Fianna Fail, and they are well on the way to doing that. The Progressive Democrats are presenting themselves as white knights, taking on anti-competitive forces in a modern Ireland, with Fianna Fail being cast as the baddies.

Public antagonism towards the taxi-drivers, arising from longstanding abuse of their protected position, is likely to increase as protests and the withdrawal of services continue.

The exercise had Fianna Fail steaming. Willie O'Dea lost the run of himself and suggested the disastrous decision could be reversed through further pressure. Others felt the Progressive Democrats had not only dropped them in the manure but were asking Fianna Fail Ministers to clear up the resultant mess.

The Coalition Government might be tied into the deregulation process, but only the Progressive Democrats were smiling.

It had been a long, hard road for Mary Harney. When the Coalition Government was formed in 1997, the taxi issue didn't even rate a mention in the programme for government, but by the following year public dissatisfaction had grown to such an extent that the Tanaiste, urged on by the Competition Authority, advocated deregulation of the industry.

In January 1999 the Progressive Democrats Parliamentary Party decided to seek deregulation, but Fianna Fail wasn't in listening mode. And when negotiators reviewed the programme for government the following September, Bobby Molloy and Liz O'Donnell were blocked by Fianna Fail on the grounds that the issue was "too sensitive" within their Parliamentary Party.

It took some sharp words and a meeting between Bertie Ahern and Mary Harney to make progress. The upshot was a revised programme for government that spoke of "increasing the number of taxi licences in Dublin as quickly as possible in order to ensure a proper balance of supply and demand in the market".

Even then, however, Fianna Fail wasn't letting go, and the reform package Mr Molloy produced some months later providing an extra 3,000 taxi plates with a one-for-one arrangement for existing licence-holders was a Coalition compromise.

It took a High Court judgment to give the Progressive Democrats what they wanted. The ruling found the Government did not have the authority to limit licence numbers because this discriminated against citizens who might wish to engage in the business, while limiting service to the public.

With Michael McDowell providing the legal advice, Bobby Molloy went for broke, and the whole taxi business was immediately thrown open to competition. Those who had paid large amounts of money for old plates would be compensated and allowed to offset the loss against income-tax payments.

For two days angry taxi-drivers blockaded Dublin and the cities of Cork, Limerick, Galway and Waterford. As the Garda moved in on Thursday, the leaders of the protest sought to defuse the situation. They called for strike ballots, further street protests and meetings with Mr Molloy. Ivor Callely engaged in a bit of backstairs diplomacy at Leinster House, and there was wild talk of everything being open to renegotiation.

Not so. As far as the Progressive Democrats are concerned, the taxi issue is done and dusted. Bobby Molloy will not reopen the deregulation question.

The competition genie is out of the bottle.