OPINION: Bizarre week in politics has overshadowed need for public debate on EU-IMF bailout 28 January 2011, Irish Times
IT HAS been an odd week. The Taoiseach is no longer president of his party but remains leader of the country. The Greens have resigned from government but still vote with the Government. The resignation of eight ministers has created the constitutional imperative which means that the rest of the Cabinet can behave as they like from now on because they are constitutionally indispensable.
The comedian Dara O’Briain summed up the nonsense with his tweet: “So now one man is the Minister for Agriculture, Fisheries, Food, Justice and Law Reform?” The newly elected leader of Fianna Fáil said sorry for “the mistakes we made as a party”. Micheál Martin faces into an election with his party fighting not to be in government, as it has been for 61 of the last 79 years, but to be leader of the opposition instead of Sinn Féin.
A Financial Times editorial this week suggested that the “electoral annihilation” of Fianna Fáil “may be richly deserved” because it “gave a blanket guarantee to its banker friends that has ended in the humiliation of Ireland becoming a ward of the European Central Bank and the International Monetary Fund”.
Yet the Irish public in a recent Red C opinion poll regard Brian Lenihan, the man responsible for the blanket guarantee, as the best choice as Minister for Finance.
To top off a week worthy of a chapter in Alice in Wonderland , the president of Sinn Féin is now a baron. Whether Gerry Adams likes it or not, he now shares the same nobility rank as Baroness Margaret Thatcher.
Unless I’ve fallen down a rabbit hole and had tea with the March Hare and the sleeping dormouse, all of the above is not some bizarre, fantastic fantasy. Neither is this. The former leader of Fine Gael, John Bruton, agrees with Socialist Party MEP Joe Higgins on a principle of economics.
In the European Parliament recently, Higgins questioned the “morality of transferring tens of billions of euro of private bad debts of speculators and bankers who gambled widely on the property market” onto Irish people. This provoked an angry response by the president of the European Commission, José Manuel Barroso, who asserted that the “problems of Ireland were created by the irresponsible financial behaviour of some Irish institutions and by the lack of supervision in the Irish market”.
“But you should know that this is not the whole story,” Bruton then wrote in a letter to Barroso, his former European People’s Party bedfellow. “British, German, Belgian, American, French banks, and banks of other EU countries, lent irresponsibly to the Irish banks … [and] must take some share of responsibility for the mistakes that were made”.
Burden sharing must be the overriding issue of Irish public life for the next month of election campaigning. As in Iceland, foreign bank creditors must share the pain of the bailout with taxpayers.
The distraction of personality politics and the permanent cycle of political crises have overshadowed the rationale for the EU-IMF €85 billion bailout.
As Bruton pointed out on these pages in December, Irish banks owe €113 billion to German banks, €107 billion to British banks and a large amount to Belgian banks. “If mistakes were made in borrowing this money by the Irish banks, mistakes were made in lending it too.”
The left and right are economically in bed together. For instance, David McWilliams told the Ray D’Arcy Show that what Pearse Doherty has been saying on burden sharing “makes absolute sense”. So, an economist perhaps most comfortable on the centre right agrees with the finance spokesman of Sinn Féin.
“We’re all mad here,” said the Cat in Alice in Wonderland.
To people like Joe Higgins and Pearse Doherty, the EU-IMF bailout is ideologically abhorrent to their core ethos of wealth distribution. The established economic consensus and orthodoxy in the Civil Service, media and politics has traditionally found it relatively easy to dismiss the colourful language which dresses up the views of those on the distant left.
The underlying objection by McWilliams, Bruton and the growing club on the right, is driven by the very principle of capitalism. State intervention is contrary to the dogma that in a free market demand and supply should be allowed to reach their point of equilibrium.
Why has a banking crisis been allowed to turn into a sovereign debt crisis? Why did no one shout stop when this private debt was transferred into public ownership? Why should over 20 per cent of annual income tax be used to service such a debt?
As the political poet and connoisseur of thoughtful intervention said in his last Dáil contribution this week: “The model that is broken should not be repaired.” Michael D Higgins would probably agree with Alice when she said: “It would be so nice if something made sense for a change.” Can we have a proper election debate about stuff that matters like structured default, burden sharing and the EU-IMF interest rates?