News Analysis

Friday 19 September 2014

Tough rehab, yes -- but mind you don't end up killing the patient

We're in bits, but if the three Nurse Ratcheds actually pull this off, it will be worth it, writes Daniel McConnell

Published 23/10/2011 | 05:00

  • Share

L OOKING back, Ireland, like a Z-list celebrity who enjoys 15 minutes of success and fame, crashed and burned in a pitiful spectacle of self-loathing and bitterness.

  • Share
  • Go To

Things here were genuinely good for a short time, but then the dream turned into a nightmare. We lost our way; we foolishly let it all go to our heads. Fuelled by self-regard and self-absorbed guff, we believed we were the greatest in the world. We became addicted.

Champagne, cocaine, property, helicopters -- all bought on credit, which we now can't pay back -- we couldn't get enough. A nation gone mad.

Even as things turned in 2008 and the true horrors of our demise became evident, we went into a deadly state of denial for over two years.

Only last November, days before the end, came Ireland's Kerry Katona This Morning moment. Under the international glare of the media, Noel Dempsey and Dermot Ahern muttered their words implausibly, denying that we needed help.

It was a cringeworthy spectacle that was more suited to the Big Brother house than international politics and economics.

But when the end came, it was brutal and Ireland, like so many deluded X Factor wannabes or Hollyoaks creatures who eventually derail, had no choice but to seek help.

We were no longer capable of running our own affairs; we were strung out.

Ireland was placed into rehab (the €85bn bailout) and the Troika (the European Commission, the European Central Bank and the International Monetary Fund) was our Priory.

We are now under the care of not just one Nurse Ratched, but three.

Eleven months since we entered Troika rehab, last Thursday the Troika gave a newly sober and clean Ireland an excellent report card.

They praised Ireland for sticking to the bailout programme. Our recovery is on track but we are not "out of the woods yet", as Nurse Istvan Szekely of the European Commission told us. We could still fall off the wagon and slide back into our previously pathetic state.

On the positive side, all the targets were met.

Like all recovering addicts seeking to mend their ways, the new Irish Government has taken ownership of the programme, Nurse Istvan told us.

On the negative side, the three nurses warned that unemployment remained "unacceptably high" and further reforms of the "sheltered" legal, medical and pharmacy professions were still needed.

Nurse Ajai Chopra of the IMF said the domestic economy remained very weak. The continuing EU debt crisis and a weaker global economic outlook posed risks to Ireland's recovery, which has been driven by exports, he warned.

However, in a much-welcomed statement of intent about where Ireland is likely to be at the end of this rehabilitation process, the Troika said the reforms they are insisting on were all to make Ireland more affordable to the ordinary person and business.

They said the privatisation of State companies, as well as opening up the sheltered sectors, would lower costs, including electricity costs, for consumers.

"We want to make the consumer king and we are close to the coronation here," said Nurse Istvan. Using two examples of how bad things are here, he said that in Brussels, where he lives, a trip to the GP costs half of what it does in Ireland.

He also said Ireland had among the highest legal fees in the world, yet the profession was one of the least flexible in the world.

Nurse Istvan concluded by saying that Ireland would be best placed to benefit from any upturn or positive changes made at European level because of its commitment to the programme.

The Troika said the scale of cuts in the Budget was for the Government to decide, as long as it hit their target of 8.6 per cent of GDP.

Despite calls from the Government's own Fiscal Advisory Council for cuts in excess of €4bn, Finance Minister Michael Noonan said the council's suggestion of a more ambitious 1 per cent deficit target by 2015 -- instead of 3 per cent -- was "a bridge too far".

"To pull it back to 1 per cent would mean an additional correction of €4bn. It's a very big ask," he said.

Nurse Istvan said that ultimately the purpose of the programme was to put Ireland on a sustainable footing, allowing it to pay its way in the world like normal developed countries.

The inference was clear. You Irish were all very naughty and it's time you copped on and grew up.

In one way, it really is a terrible indictment of us as a people and on the governments we have tolerated and re-elected, that we needed foreign overlords to come in and tell us how to run our country.

But if we actually get a functioning, sound economy at the end of it, then it will be worth it.

There was some disappointment. Michael Noonan confirmed that he has all but given up on his wish to burn bondholders at Anglo Irish Bank because of continual ECB opposition.

This was portrayed as a U-turn, but Mr Noonan said he had no intention of not paying senior bondholders next week to the tune of €700m, despite them not being covered by the guarantee.

To be fair to the minister, he is attempting to end the use of highly expensive promissory notes to fund Anglo during its wind-down, but this is a long-term fight. He will need to secure that victory if he is not to look like he has caved in on a much-lauded promise to the Irish people.

Nurse Klaus Masuch of the ECB restated its position that burning bondholders was not a good idea and would undermine all the good work to date by the Government.

Another disappointment was the Troika's green-lighting of the continuation of the farcical Croke Park Agreement.

They seem happy enough for the moment to see how much Brendan Howlin can achieve by losing up to 21,000 jobs by next February, but they did leave the door open to come back to it, if it falls short of what is expected.

However, most importantly, for the first time in Ireland's rehab, the need for growth was singled out as a priority by both the Government and the Troika.

Nurse Ajai Chopra said outside investors did not just want fiscal adjustment in Ireland, but also economic growth. The Troika said it would have to work with the Government to consider opportunities to tackle youth unemployment.

Analysis, Aengus Fanning and Brendan O'Connor Page 28

"No one wants to have a lost generation," said Mr Szekely.

We can only hope that, between the €10bn-odd saved from the interest-rate reduction and the money left over from the banking recapitalisation, Noonan and Howlin will announce some measure in December to kick-start the stagnant domestic economy.

Otherwise, our intense rehabilitation will have been for nothing, as the patient will have been killed.

Sunday Independent

Read More

Don't Miss

Editor's Choice