Sam Smyth: Anglo has put our very sovereignty at stake
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IT'S mission impossible today for Brian Lenihan, who has been playing his role as Finance Minister like Tom Cruise in a mega-budget action movie.
But even a cartoon action hero would be stretched to limit the damage to this country's political and economic independence in talks with key EU decision-makers today.
Although the discussions are ostensibly about Anglo Irish Bank, further fundamental issues will inevitably arise.
The Finance Minister could end up bartering his country's sovereignty for the EU to fund a banking system that has failed so spectacularly.
How, for instance, can Ireland insist on keeping its low rates of corporation tax when holding out its cap to countries that disapprove of our low tax on multinationals?
Just as interesting as the hidden outcome of his meeting today will be how Brian Lenihan publicly interprets it for consumption at home.
That signature look of steely determination will signify his status going into his meeting with Jean Claude Trichet, the president of the European Central Bank.
The Finance Minister will look just as bullish going into his one-to-one with the Spanish EU Commissioner Joaquin Almunia, who holds the competition portfolio.
Mr Lenihan is popular with his colleagues but this personal regard for him is unlikely to sway EU finance ministers' views of his country's debt crisis.
He is arguably the most liked and respected politician in Ireland too, but the public's anger has come close in recent weeks to boiling over into the bottomless pit that is Anglo.
The strain on the Irish public's patience has been reflected elsewhere, with the 'Financial Times', the 'New York Times' and the Bloomberg news agency questioning the wisdom of throwing good money after bad.
Credit rating agency Standard & Poor's answered the question last week by lowering its grading of Irish debt, leaving the country with its lowest rating since 1995.
Mr Lenihan, who was taking standing ovations for implementing swingeing cuts to public spending, is now having those policies questioned by the same audience.
The admirers who held up Ireland as an example for other EU countries facing economic meltdown are now second-guessing the policy.
Last week, Mr Lenihan drew again from his credibility bank when he declared that "stability" had been regained and cited a dubious statistic as proof.
The deficit between spending and income had been €12.1bn in the first eight months of the year, only a little more than the Department of Finance had predicted last December.
But before Mr Lenihan and his department seek a nomination for the Nostradamus awards for soothsaying, they might remember their record.
They failed impressively when charged with predicting the economic crisis and before that on forecasting tax incomes during the boom years.
Today Mr Lenihan is going to ask the chairman of the European Central Bank (ECB) and the EU Competition Commissioner to provide funding to wind down Anglo over 10 years.
The ECB and its president Jean Claude Trichet are understood to have earlier supported policies where no bondholders would lose money on their investments in Irish banks.
And today Mr Lenihan is expected to ask them to support this policy, but with EU money. Other sources are saying that the minister will also ask the EU decision-makers to allow Anglo to keep its name through this process.
Presumably this is a distraction included to attract jokes that will draw attention away from the essentially ugly nature of the Anglo question.
In recent weeks, the public mood darkened as Anglo became more needy -- and estimates for its insatiable appetite for taxpayers' money flitted between €25bn and €35bn.
As the exchequer's borrowing requirements grew, the Government's credibility fell, and Mr Lenihan must know that even his popularity cannot sell further public funding for Anglo.
The ECB said last week that Anglo is the responsibility of Irish taxpayers -- but the ECB has also been warning against allowing any bank to fail.
As Anglo is now a state-owned institution, in the eyes of bondholders its debts are indistinguishable from our sovereign debt.
Mr Lenihan might remind the EU Commissioner and the president of the ECB that Ireland is borrowing money to pay its share of the Greek bailout.
The biggest lenders to the poorest EU countries -- including Ireland -- are German, British, French and US banks, plus the ECB.
As president of the ECB, Mr Trichet will be aware of the enormous responsibilities facing the government leaders of the EU.
If the EU and the ECB still insist on Irish taxpayers' funding the bailout for Anglo, then they should be prepared to deal with the consequences
If Ireland goes under, then the single currency will almost certainly fail -- and the domino effect would involve political consequences that would set back the European project for a generation.
ssmyth@independent.ie
- Sam Smyth
Irish Independent
