PROFILE OLLI REHN:THE REHN MAN COMETH. Europe's economics commissioner faces into a political storm in Dublin when he arrives in the coming days for key talks on the national budget plan. Tension is inevitable. Nothing but painful cuts and tax increases are in store as the Government tries to find €15 billion in four years.
Olli Rehn, a Finn, was a virtual unknown in Ireland before the latest phase of the financial crisis thrust the State towards the edge of the abyss in late summer. Since then his repeated calls for unsparing austerity from Dublin – and his declaration that Ireland will no longer be a low-tax country – have marked him as a man viewed with no little trepidation.
“What he says he means: no more and no less,” says a commission official. It follows that there’s little ambiguity in Rehn’s demands for a deluge of cutbacks, reforms and increased taxation. In some quarters he is made out to be a Brussels bogeyman, ruthlessly pulling the strings of hapless officials in Merrion Street. In Brussels that image is rejected outright as a falsehood.
There’s little that’s showy about Rehn, a quietly spoken character who is seen in his homeland as a stereotypical Finnish male for whom “substance is everything”. In some ways his supervision of Ireland’s budget preparations seems more akin to the strictures of a stern schoolmaster who relentlessly seeks improvement from his charges and more and more detail in their homework.
People who know Rehn say he’s a down-to-earth guy, and many are apt to cite his offbeat sense of humour.
Fellow commissioners see him as a calm and consensual figure: “He is not somebody that is looking for the limelight.” Others see him as an archetypal safe pair of hands. “A very low-key, upright individual. Purposeful. Serious. Not at all a typical glad-handling politician,” says a former commission official.
Although the EU executive insists it is not imposing dire targets on Dublin, those who see Rehn up close view him as a facilitator and an enabling figure whose work with the Government aims to reinforce the credibility of its recovery plan.
A source close to Rehn describes the engagement as a “close dialogue for the benefit of Ireland”. He continues: “It is important that it is so close and so regular. Bear in mind that the commission has to act to safeguard the general interest of the EU – of Irish citizens and EU citizens – not specific governments and not specific political parties.”
Whatever about the Government’s lack of scope for manoeuvre, the cuts encouraged by Rehn and other figures, such Jean-Claude Trichet, head of the European Central Bank (ECB), are bound to be unpopular. Yet while Rehn will issue a crucial judgment on the Irish package, the true power lies with investors who lend to the Government and who will ultimately determine Dublin’s borrowing costs.
“It’s not Olli they need to convince; it’s the markets,” says a senior commission official. “This is not about some bloke from Brussels. This is about difficult decisions that have to be made.”
Still, Rehn is an increasingly significant figure in Ireland. With Dublin’s burnt-out banks already the beneficiaries of extraordinary support from the ECB, it’s not for nothing that Brian Lenihan, the Minister for Finance, last week described the endorsement of EU ministers, the commission and the ECB as being “of key importance” for the Government’s budget plans.
In a struggle for economic survival, which has been compared to war, Ireland needs all the help it can get. If Brussels has charge of the life-support machine, then it’s crucial to keep the commission on board.
In a year of upheaval in Brussels, Rehn has had a hectic time of it. No other holder of the economic and monetary affairs portfolio was ever confronted with what he has faced since he assumed the brief, in January. Greece was already spiralling towards the brink of insolvency. The long months of turmoil that followed played out like an economic horror story as the German chancellor, Angela Merkel, dithered over a rescue package and anxiety spread about the fate of the single currency generally.
Rehn met Lenihan within weeks of taking his new job. At that point Ireland was still in the good books, and Lenihan made the case that the State was at a “different stage” to Greece and other euro weaklings.
For a while there was some pressure from Brussels to increase future planned budget cuts, but in June the commissioner decided he would not formally ask the Government to intensify the plan. A few weeks earlier Rehn declared he agreed with Lenihan that the worst was over for the Irish economy. How wrong they were.
Rehn gets on well with Lenihan, as does the competition commissioner, Joaquin Almunia, who oversees Ireland’s ailing banks. They all get on so well, in fact, the two commissioners routinely refer to the Minister simply as Brian. In Brussels this has led to some confusion around the commission table. “Can somebody explain who Brian is?” another commissioner asked during the course of a sensitive discussion on Ireland’s woes.
So who is Rehn?
He grew up in Mikkeli, a rural Finnish town, where his father owned a car-parts business. He played professional soccer for the local team, studied economics and ultimately completed a doctorate at Oxford in international political economy. In 1988, at the age of 26, he entered public life as a member of Helsinki city council, in the liberal camp. He entered parliament in 1991 and became special adviser to Esko Aho, the prime minister, a year later.
It was a grim time. The collapse of the Soviet Union prompted economic chaos in Finland. Unemployment rocketed, three banks were nationalised, property prices fell more than 50 per cent in five years and the stock market fell by more than 60 per cent. The experience marked Rehn for life, say his allies.
“I recall very well the economic recession of the early 1990s,” he told the European Parliament in January. “We suffered huge human costs because of high unemployment.”
That Finland’s downfall in the 1990s bears similarity to Ireland’s current troubles suggests Rehn must be conscious of the difficulties unleashed by stringent budget corrections.
It is a given that Ireland’s latest austerity drive will impose further hardship on people who had no part in the follies that caused the crisis. For Rehn, however, the battle to correct wayward public finances is a moral crusade. In his view there’s nothing more antisocial than unbalanced public finances, because excessive borrowing shifts the burden of repayment to future generations and scarce public resources that might go to health and education are wasted on interest payments.
In the view of some who know him, Rehn’s nationality is potentially important in the Irish context, given the complexity of Finland’s relationship with its easterly neighbour, Russia. These people say his experience and liberal outlook mean national sovereignty is important to him.
“If there’s someone you want to have sitting by your side in this situation it’s Olli,” says a commission official. “Anyone who makes the case that this guy is some old-fashioned federalist couldn’t be more wrong.”
Curriculum vitae
Who is he?The EU's economic and monetary affairs commissioner.
Why is he in the news?He's coming to Dublin for briefings on the Budget with the Government, the Opposition and the social partners.
Most likely to say"Brian, we need more cuts here."
Least likely to say"Let's extend the deadline to 2016."
