independent

Tuesday 21 May 2013

Brendan Keenan: Merkel will help - but we have to do our bit

WE Irish have a great welcome for ourselves. For years, we regarded it as normal that presidents of the United States would spend a great deal of time and trouble over the miserable little war in our northern counties. So, of course, the chancellor of Germany should do the same for our southern financial woes.

The funny thing is that Angela Merkel is doing it. Of course, Germany has vital interests in the outcome of the debt crisis here and elsewhere.

But, quite apart from the "special case" business, the joint statement with Enda Kenny after the bank debt kerfuffle and yesterday's substantial comments go well beyond the normal diplomacy between Europe's largest country and one of its smallest.

The Irish ability to engage others seems to be working again and the Taoiseach appears to have considerable skill in this area (as, indeed, did Bertie Ahern). Sinn Fein once felt important enough to leave George W Bush twiddling his thumbs at Hillsborough Castle, but it doesn't do to push your luck too far.

That is the challenge for Mr Kenny. For the rest of us, we should at least pay attention to what Dr Merkel is actually saying. It is surprising how many heated discussions about German policy don't mention German statements.

An honest appraisal of the chancellor's comments yesterday might at least calm some of the "Irish right, German wrong" nonsense. The Germans have a case -- a good case. So do we -- but any deals will have to meet the requirements of all involved.

There is no reason not to believe Dr Merkel when she says: "Germany wishes to help you." Both Ireland and Portugal have a formal commitment of assistance with "debt sustainability". But there can be no sustainability until public finances are in balance, which is still a couple of years away.

The Government would like a downpayment, and soon; the Germans would prefer to pay cash on delivery. They may well be justified in their fear that early payment might reduce the commitment to deliver on the public finances.

Dr Merkel's comments on structural reform, as well as reducing deficits, may also be significant. Strangely, governments find it harder politically to change working rosters in the public sector, abolish quangos or apply competition to sheltered bits of the private sector than to raise taxes or even to cut social welfare.

DR MERKEL praised Ireland here too, and Irish systems are less hidebound than those of Portugal, Italy or Spain, never mind poor Greece.

Nevertheless, there are those in the troika and elsewhere who think Irish reform has been slower and more tentative than it should be. This is important in a grim, long recession like this.

The economy's capacity to grow when the moment comes will determine how fast the recovery will be and how far it will go.

The Irish consolidation so far has not yet reached the basic levels required for solvency. That is the measure of how disastrous the situation was in 2008. When that is done, we can ask Germany to keep its promises.

I suspect it will, but paradoxically, once our own fiscal house is in order, we can go it alone if need be.

Irish Independent

Also in this Section

Classifieds

CarsIreland

Yourlocal

Globrix

Buy. Rent. Know.

Findajob

Apps

Now available on

Top Stories

Most Read

Daily Deals

Independent Gallery

Celebrity News