BRIAN Lenihan put an end to the dithering and indecisiveness of this Government last week and opted instead for consequences. All the messing and prevaricating of the previous week was put to one side as he read his Budget speech to the Dail and announced that, at long last, this Government had found the strength to lead.

His performance was impossible to predict. In the weird world of Irish politics, we knew that he knew what had to be done, but we could not be sure that he would be allowed to be true to his own instincts. Confusion and fudge, if it came, would be courtesy of Brian Cowen, the Taoiseach and weak link in a Cabinet that lacks conviction.

The run-up to Wednesday's Budget was scarred by chaos and confusion as the Government and the unions tried to negotiate the unnegotiable. There could be no certainty that similar last-minute chaos would not be inflicted on Lenihan's Budget, and there is still no certainty that this Government can stay the course when confronted by concerted trade union opposition.

Those close to Cowen claim that he had no doubts about the Budget, that he is firmly in control of his Government and that Wednesday's toughness came from the top. They dismiss any suggestion of weakness and say that he wanted to give the trade unions every opportunity to come on board, simply because it would be easier to deliver a strong Budget without the background noise of trade union dissent. To believe that, however, requires a giant leap of faith, and Cowen has yet to earn that faith.

The next three months will be pivotal. Jack O'Connor and David Begg, the trade union leaders who have been so long inside the tent, will now try and break this Government's resolve by waging industrial war. It is a war that the Government cannot lose and it will be imperative that the resolve shown by Lenihan on Wednesday is not dissipated by Cowen when O'Connor mounts his barricades.

Trade union resistance cannot be allowed to prevail. The Budget has provided the opportunity to rebuild the economy and the country's confidence: no narrow sectional interests can be allowed to destroy that opportunity for the rest of the country. The trade unions are noisy, but they are just a lobby group. They have grown accustomed to a special place at the heart of government but they must now come to terms with a new reality. They refused to accept that the Government had no plausible option but to cut its spending permanently and the price of that refusal is that they have surrendered social partnership and the power that came with it.

A decisive shift has taken place over the past two weeks, a shift that strengthens Irish democracy by removing trade union officials from government policy-making. It is too early to say that the trade unions have been broken -- the next three months will be the test of that -- but they are no longer wagging the government dog. The trade union leadership, like the political leadership, has also been cruelly exposed by the new economic reality. Widely praised for their astuteness and cunning during the boom years, they have been revealed to be weak and uncertain when faced with genuine negotiations, rather than the choreographed nonsense so beloved of the Bertie Ahern years. They could have been part of Ireland's new beginning, but now they have chosen to remain in the past, and that is where Cowen and Lenihan should leave them.

It remains to be seen whether their members are prepared to follow poor leadership and launch themselves against the Government and their fellow citizens. Those that choose to strike will be striking against national recovery, choosing economic sabotage over painful but essential medicine. They will have to man the barricades knowing that almost half a million people are on the Live Register and that, if they succeed, many more will join them as the country lurches towards bankruptcy. They will have to explain to their neighbours why people with the luxury of a secure job and good pension have chosen to pull the country down around their heads.

If O'Connor and Begg choose to go down that path of confrontation then they must be met head-on by a resolute and implacably united Government. Fine Gael, too, must stand firm with the Government against trade union blackmail: it will gain nothing by siding with those who would damage the country's prospects of recovery. It will not be pleasant, and it will certainly not be easy, but it simply must be done, because the job of restoring this economy to growth has only just begun.

Lenihan has delivered a series of cuts and tax increases over the course of two Budgets this year that make a real and substantial difference to the Government's finances. By tackling the sacred cows of public sector pay, social welfare and child benefit he has sent the strongest possible message to the international markets that Ireland is serious about regaining its credibility.

He has started the process of decoupling Ireland from Greece, Spain and Portugal, showing the markets that this country can be trusted to sort out its finances by making and following through on seriously difficult decisions.

Decoupling is hugely important: Ireland has to be judged on its own merits as a country that can be trusted, and not lumped in amongst the eurozone's basket cases. But Lenihan has only made a start: it will be a long, hard campaign to convince international lenders that we are serious, and there will be more pain for everyone before it succeeds.

As the Financial Times noted in an editorial last week "Lenihan will need to tighten further to appease markets. Yields on Ireland's government bonds remain stubbornly high. Ireland's 10-year borrowing costs are, even after his plan, 1.9 per cent higher than Germany's. He should do so through further wage cuts, rather than tax hikes. This will make his countrymen wince -- but the alternatives are unthinkable."

The FT's call for further wage cuts will indeed make people wince, but it may not be necessary. The failed negotiations before the Budget did some good in that they identified vast areas of the public sector that can be transformed. Eliminating restrictive work practices, extending the working day to cut down overtime, redeploying people through the service, promoting and hiring on merit -- in short, managing the civil and public service -- can deliver savings that will add up in the hundreds of millions. Those reforms now have to be pursued with vigour, and the unions must be in no doubt that the alternative to reform is another pay cut. Reform cannot become bogged down in lengthy and tedious negotiations: it must be driven through, ideally by a minister with sole responsibility for creating a more effective, more efficient and -- for those who work in it -- more rewarding public sector.

The Budget was far from perfect, but it was a good start on a long, hard road. Its weakness stemmed from a lack of radicalism -- there were cuts in public spending, but no attempt to reform the business of government.

Departments that could be closed or merged were left unscathed and privatisation did not figure as a key strategy to reduce government debt. That radicalism will be required if Lenihan and Cowen are to press home Wednesday's gains.

There could yet be further crises that derail the recovery. Ireland's banks look more fragile by the day, with their losses from the sale of their property loans to the National Asset Management Agency threatening their solvency while another flood of losses is expected to arrive from residential mortgages. Further injections of taxpayers' money are inevitable, and outright nationalisation remains a real possibility. Lenihan's hopes of a return to growth next year may also prove overly optimistic, even if his hopes are shared by many economists. Ireland still has many hurdles to leap before it recovers its lost competitiveness, with costs across the economy still too high. There are dangers lurking in the international debt markets, with Greece particularly fragile, and Ireland's decoupling will take many months to establish itself in investors' minds.

Lenihan, though, has given us a chance by doing what he knew he had to do.

As Winston Churchill warned in 1936, "owing to past neglect, in the face of the plainest warnings, we have now entered upon a period of danger . . . the era of procrastination, of half-measures, of soothing and baffling expedients, of delays is coming to its close. In its place we are entering a period of consequences . . . We cannot avoid this period; we are in it now."

We have endured the warnings, the procrastination and the attempts at baffling expedients. Now it really is time for actions and consequences, for Government, Opposition, unions and everybody else in this country to make a simple choice. You can fight for recovery, or you can strike against it.

- Alan Ruddock

Originally published in