Shane Coleman: Now that they're gone: what did the Troika ever do for us?
Published 08/11/2013 | 02:00
SO farewell to the troika. After completing its 12th review, the ECB, the European Commission and the IMF have flown off into the sunset.
The bailout agreement formally ends on December 15. However, if Enda Kenny thinks making history on that date will be enough to guarantee him re-election, he would do well to remember the fate of Albert Reynolds.
By coincidence, December 15 was also the date, 20 years ago, that Reynolds and John Major issued their Downing Street Declaration. It led directly eight months later to the IRA ceasefire.
Within a year of his extraordinary triumph, though, Reynolds was gone from frontline politics. All over an issue about which few people today could recall the details. It serves as a very definite warning to conquerors.
But, possible omens aside, the conclusion of the final review is as good a time as any to look back on the three-year reign of the troika – the good and the bad.
WHAT DID THE TROIKA EVER DO FOR US?
1) They saved our bacon. It's kind of implied in the term 'bailout' but it seems not everybody gets the point. Without the IMF/ECB/Commission's cash, this country may not have had the money to pay public sector wages and run public services. At the very least, the cutbacks would have been savage.
2) They saved us billions. Even if you argue that the Government could have borrowed the money to keep afloat from somewhere, there's no disputing that the interest rates the troika charged (even at the initial higher rate of 5.8pc) were far, far lower than we would have paid on the international markets.
3) They gave the Government political cover to take tough decisions. Let's face it, our political parties haven't a great track record of taking unpopular decisions and we, the voters, aren't good at rewarding those who do. The rules laid down by the troika meant there was no room for manoeuvre and the State – and both governments – needed that discipline to sort out the budgetary mess.
4) They (or at least the ECB) gave us a deal on the promissory note. It wasn't the widespread debt write-off that many – including the current government parties when in opposition – demanded. But the complex deal to reschedule some of the multi-billion bank bailout cut the annual cost of serving the debt. It reduces the Government's deficit by more than €1bn in 2014 alone. And payment is deferred until 2038.
5) They stayed politically neutral. Our sovereignty was unquestionably undermined by the bailout, but the troika can't be accused of straying into the domestic political arena. They dealt exactly the same with the FF/Green government as with the FG/Labour coalition.
AND FIVE THINGS THE TROIKA DIDN'T DO FOR US
1) Drive root and branch reform. A once-in-a-lifetime chance to radically reduce the influence of vested interests has been missed. Areas such as the health sector, the legal profession and social welfare have been left largely untouched, when reform and restructuring were badly needed. The blame primarily lies with the Government but as paymasters the troika should have demanded, not just requested, results. They were supposed to be the sheriff riding into clean up Dodge, but they were more Deputy Dawg than Wyatt Earp.
2) Tackle the mortgage arrears problem. Again, they're not the chief culprits but couldn't they have done more to address this massive issue? A revived banking sector is crucial to economic recovery, but progress has been painfully slow.
3) Allow us burn bondholders. Talk of 'doing an Iceland' is hugely simplistic, but there's no question that some of the bondholders should have been burned. The IMF might have been open to the idea but the ECB certainly wasn't, laying down the law to both the current and previous governments. The lack of action on some form of debt forgiveness, via the ESM, on Ireland's €64bn bank bailout is also a serious black mark.
4) End populism in Irish politics. For this, we've no-one to blame but ourselves. But depressingly, there's no sign of a shift in the style of politics, where the opposition bitterly opposes every difficult decision and the electorate responds to parties who tell us what we want to hear, not what we need to hear.
5) Allow us stand on our own two feet. It could (and arguably would) have turned out far, far worse, but it's worth considering what might have happened if the troika hadn't intervened. We would have been forced to do what the Baltic states did and slash public spending. The jury's out on the Baltic formula and it certainly would have been painful. But would it ultimately have resulted in a more sustainable, reformed economy?
Shane Coleman is Political Editor of Newstalk 106-108FM