Austerity junkies are playing out a big €2bn charade
Published 22/06/2014 | 02:30
THE heavies are hovering. Our bailout friends are showing signs of panic. The IMF, the European Commission and our own Fiscal Advisory Council (FAC) are queuing up to warn us: triumphalism is premature.
The economy is still fragile, they say, growth looks groggy. The austerity junkies, in charge for so long, haven't gone away, you know – they are competing for the megaphones, as they loudly warn that Ireland's politicians could fritter away what they see as our "hard-won" gains.
Ireland's politicians are trying to pretend that they were never austerity junkies. Labour Party rivals are cheeking their foreign bosses. The party's leadership contest has suddenly featured on the IMF radar. Last week, Craig Beaumont (their commission chief for Ireland) went so far as to give the IMF seal of approval to the runaway favourite, Joan Burton. Craig would be as happy as a pig in ... if Joan becomes Tanaiste. He told the media approvingly that Joan "has indicated her intention to remain in the Coalition and to maintain the fiscal targets for 2015, while also emphasising the need for social repair alongside economic repair".
Joan is the heavies' candidate. They see her as an austerity hawk in social democratic clothing.
Normally a blessing from such an unholy source would be the kiss of death to a contender for Labour's top job. Indeed her rival, Alex White, tried to exploit Joan's IMF imprimatur by telling Craig to keep out of internal Labour Party business. "It is highly inappropriate," according to White's spokesman, "that the IMF should comment, indirectly or otherwise, on the election for the Labour Party leadership. Frankly, Mr Beaumont should keep well out of it."
Alex sounds seriously shirty. Miffed at being ignored, he is frantically trying to break into the contest, which is looking like a coronation for Joan. The battle has suddenly centred around the contenders' attitude to the IMF/European Commission/FAC requirement for cuts of €2bn in the October Budget.
While cuts are taboo to those competing for the affections of Labour's loyalists, Ireland's heavies insist that we should stick to the €2bn figure. Predictably, pretenders to the Labour throne are claiming that such brutality will not be necessary; that we will still achieve the overall requirement to reduce the deficit target to 3 per cent by 2015 with much less drastic measures.
Well, we will, but only for the purposes of the Labour Party leadership. While Joan says that we will do it comfortably with few cuts, a more cavalier Alex maintains that it will not matter if we miss the 3pc figure by a small margin.
Unhappily for both contenders, they are hooked. They both bought into the austerity programme long ago. They may not be incurable junkies but they are on the drip. They cannot hope to be detoxed for a few short weeks of campaigning and then return to the drip on July 4.
Michael Noonan gave them both a helping hand on Thursday. In an extraordinary statement he responded to the IMF demand that he should stick to the €2bn figure when he explained: "There is a different set of skills needed if you are a politician running a government department to someone working for the IMF. It is not all cut and dried. I am a democrat and I have to bring the people with me."
Decoded, politicians who lose touch with the people also lose their jobs. The IMF and the Troika are ruthless, unelected plutocrats. Michael, Joan and Alex are wounded TDs in mortal danger because of years of bowing and scraping at the bidding of Craig and his chums.
Was it two fingers to Craig? Was Michael simply pandering to the electorate – just like Joan and Alex?
There are few politicians who have bought deeper into the IMF/European Commission/FAC agenda than the Minister for Finance. He has been their servant for more than three years. He remains their servant – as do Joan and Alex. Their current posturing is for home consumption. Michael's FG party has taken a battering at the polls. Joan's and Alex's Labour is in danger of oblivion, so they unite to point the finger at a common, external enemy. They assume that Craig knows the score: rattle the sabre but never show the blade to the phantom foe.
Even Enda Kenny waded into the fray in the Dail on Wednesday, insisting that talk of €2bn cuts in the Budget were premature as October was four months away. He was replying to Independent TD Catherine Murphy who mentioned the "elephant in the room" – the €203bn national debt.
The Kildare TD's honest intervention was particularly unwelcome. No one on the government benches wanted to be reminded of reality, least of all the size of the "elephant".
Enda and Michael are still rabbiting on about how we are going to make an application for funds from the European Stability Mechanism (ESM) to compensate us for our legacy bank debt. They know that there is little chance of securing a brass farthing.
Noonan admitted as much last week when he conceded that "things have changed dramatically" since June 2012, when Ireland appeared to have landed a special deal from Europe on the bank debt. But Europe no longer thinks it is needed, as we are constantly claiming that AIB and Bank of Ireland are out of the woods. We are even boasting about our intention to sell them!
Will Europe give us rescue money for banks that have recovered? The unwritten, deeply uncomfortable script is that austerity has been followed to the letter – leaving the banks in the recovery ward, but the people in penury.
That message was bolstered by the boss at AIB at Thursday's AGM. Chairman David Hodgkinson was upbeat: AIB would pay back every penny of the €20.8bn that the State had sunk into it. Taxpayers would not lose a cent; the bank is heading for profit this year; it would pass the stress tests; chief executive David Duffy has been such a roaring success that the board is renewing his contract.
It should have been music to Noonan's ears – if he believed it. But it totally undermines his case to bring the begging bowl from our bust banks to Brussels.
There is a charade being played out by politicians who have followed the path of austerity. Labour's pretenders are suggesting that hardship is all but over. They are hinting at lower taxes and higher expenditure. They are supported by a lukewarm Finance Minister and a hesitant Taoiseach .
Nothing could be further from the truth. Austerity is set to continue, but it will soon be given a more seductive name.
Unless Joan bolts for freedom after her coronation (which is more than possible), the next two budgets will include a few token sweeteners to pacify Labour rebels.
Shadow boxing with the heavies of the IMF is fine for home consumption, but back in 2011 these guys opted for a lock-in to austerity. An unequal contest between White, the likely loser in the Labour leadership stakes, and our external masters is laughable. The austerity junkies – in Dublin, in Brussels and in Washington – are still firmly in the saddle.
Sunday Indo Business