Whatever shape the new administration takes, it will need skill and luck
BY ALL accounts for the first time in very many decades the debate between party canvassers and voters at the doors has been a serious one about national rather than local issues. Contrary to past experiences a recent poll has shown a two-to-one public preference for TDs acting in the national interest rather than concerning themselves primarily with local issues. This has been confirmed by reports from canvassers of all parties to the effect that they are having to spend a lot of time at doors debating our national crisis, and how best it may be tackled. But the public debate between the parties has been less impressive, involving more heat than light.
At the end of all this highly competitive campaigning, what we most desperately need to emerge is a new government endowed with a sufficiently clear and stable majority to be able to take and thereafter sustain the many unpopular measures now needed to enable us to emerge at the end of the next five years with our financial problems behind us.
Thereafter we could then concentrate on restoring a social cohesion that was weakened during the Celtic Tiger years, and is being further damaged by the cuts in services that have been forced upon us by the crisis.
There now seem to be only two alternative government arrangement that the electorate may look to as conceivably offering a stable majority. One of these could be a Fine Gael single-party government; the other, a Fine Gael-Labour coalition.
Even on optimistic assumptions, Fine Gael is very unlikely to secure an overall majority. So, to secure and thereafter to hold on to power for a five-year term, the party would need support from some others. Micheál Martin has offered conditional Fianna Fáil support – if Fine Gael adhered to Fianna Fáil policies – but that would not seem to provide a secure basis for a five-year government.
Alternatively, Enda Kenny could be elected taoiseach with the support of some Independents and perhaps the abstention of others. But that might also fail to provide the kind of solid support for a Fine Gael minority government that will need to take a whole range of extremely unpopular measures.
The only other government likely to be available would be a Fine Gael-Labour coalition, the post-election negotiation of which has not been eased by the nature of the campaign to date – although Labour has recently been stressing the continuing feasibility of the two parties agreeing a programme for government.
Some aspects of Labour and Fine Gael election campaigns also look like making more difficult the discussions with our European partners in which the new government will have to engage immediately after it takes office. And “immediately after” means just two days after the formation of that government on March 9th.
For, a key meeting of euro zone heads of government, without ministers of finance or foreign affairs, will take place on March 11th, to prepare the way for final decisions at a European Council two weeks later, on the 25th.
There has been some talk about the possible composition of an Irish delegation to discuss what has been described as a renegotiation of the Irish bailout. We should not have too many illusions about this proposal.
First of all, while we can of course send a delegation to the European Commission, which is at present struggling to influence decisions of the heads of government, a key element of the European Council is the dinner meeting of the heads of government alone, without either ministers or civil servants, where on March 25th decisions will be taken on current German-French proposals. (The most recent dinner meeting of this kind lasted for 6½ hours)
Second, the European side has made it clear that there will be no renegotiation of the Irish bailout. The Irish State itself – and not just Fianna Fáil – is committed to the deal negotiated two months ago. We can, of course, participate in the general European discussion that has been under way for some time about possible modifications to the interest rate charged to actual or potential beneficiaries of bailouts – but any such general rate cut will be subject to new conditions, some of which could pose problems for us.
Haircuts for senior bondholders in advance of 2013, currently the subject of election oratory, have also been firmly out at EU level because of the danger they might undermine the whole European financial system.
It would, of course, be open to the new government to propose some changes in the proposed spending cuts – but only if alternative cuts, or new tax increases were substituted for those to be dropped.
It is not clear whether the new government would succeed in negotiating a reversal of the reduction in the minimum wage, which Europe may see as a key factor in the restoration of our competitiveness, by bringing Irish costs into line with those elsewhere in Europe.
Given the mess that our last government and that of Greece have made of our two countries’ financial affairs, we and they, as well as other states now in severe difficulties, will not be well-placed to influence the outcome of such a European Council meeting. Our standing in Europe, once high, has been hugely reduced by the events of the past three years.
Moreover, while Fine Gael has played its few cards in relation to Europe more cautiously, Labour’s dismissal of a key figure like Jean-Claude Trichet as a mere civil servant who will do what he is told by European politicians was doubly unwise.
First of all, that is factually incorrect. Trichet is in fact completely independent and cannot be instructed what do, even by the European Council. And second, given the generosity of the aid he has given to our banks, which has clearly annoyed some of his more conservative fellow-governors of the ECB, as well as his key position in any future discussions, it was to say the least unwise to speak of him so dismissively.
The simple truth is that no new Irish government since the Civil War has ever been dealt such an impossibly difficult hand, or been accorded so short a time to decide how best to play it. Whatever form our new government may take – minority government dependent on Independent support, or, for the seventh time in just over half-a-century, a Fine Gael-Labour coalition – it will need great skill and great luck to win through.