News Comment

Wednesday 1 October 2014

Johnny Fallon: After showing a bit of backbone, it’s time now for the Government to stand and deliver on debt deal

Published 10/12/2012 | 14:47

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AS CHRISTMAS approaches and we settle in to the aftermath of the Budget, it seems that for once we might have something to look forward to in the New Year. Pat Rabbitte made everyone sit up and take notice by suggesting that Ireland would not be repaying the promissory notes owed on Anglo Irish Bank, come next March.

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All over the country, people wondered: is this it? Are we finally playing hardball? Is Ireland going to take the first steps toward forcing the EU to begin the solution that not only Ireland and the EU needs, but also the world?



We can but hope. Alas, experience of this government and its predecessor would mean that we should be cautious. Rabbitte had hardly uttered the words when Central Bank governor Patrick Honohan was saying, that of course the promissory notes would be paid, just not yet, we will pay them over a longer time and sounding a lot more reasonable.

If the Irish Government was intending to play hardball then Honohan has already cut them off at the ankles. It seems this will not be a debt write-off but rather a new longer-term arrangement.



That in itself is OK and a definite improvement on where we are, but the question then is a matter of how much of an improvement and how long are we talking? Given the sheer volume of the debt, it is unlikely to make a sizeable enough impact.



The situation is not without hope and this country needs hope. Now is the time to ask the questions of the Government, before a deal and not after. Unfortunately there are quite a lot of questions to ask from a political perspective.

There is one simple test for any deal in the eyes of the electorate. ‘How much of an impact will it have on Budget 2014? What cuts can now be avoided and where can we start to focus on growth?’

If the answer from the Government is that it has no immediate impact then the deal is already lost. Most of us are not financial experts, and there are enough experts who will argue for and against what is proposed, for the rest it’s a case of stating the obvious, either a deal helps us find our feet, invest and grow and eases the pain of austerity or there is no point making the deal at all.



Politically, the Government has been far too cagey about what it wants. There is still a distinct lack of effort to formulate any kind of joint plan with Greece, Portugal and even our neighbours in the UK. Without building a support base for a proposal then we are relying on Germany just giving in.

None of us really know what it is the Government intends asking for. Why such secrecy? With all due respect to the efforts the Government is undoubtedly making, it’s fair to ask whether the strategy is to simply wait and see what’s on offer and then pretend that’s what we wanted all along so we can sell the deal back home.

Shifting things around won’t work on the Irish people this time. From 2010 onwards we have been led down too many blind alleys. Only last year we were told we were not paying a promissory note on Anglo Irish Bank, only for it not to be paid directly by the government but instead by another arm of the state.

Creative accounting won’t solve the issue nor relieve the hardship people are experiencing.



Getting a deal is no big achievement. There is absolutely no way the EU can continue without a deal. What we don’t know is if this particular deal will be another ‘seismic’ stepping stone, or if we are really attempting to sort things out rather than allow people to suffer more while awaiting a plethora of political games to play out in Europe.

The next question is the timing of the announcement. What changed in the last week? Think about this. The Government has been in talks for over a year now on this issue. All of a sudden we are finally treated to a vision of some apparent backbone. Why was this not possible to reveal a week ago or a month ago?

The answer one suspects is that because such talk might have caused people to expect an easier Budget and the bottom line is that whatever deal is done the Budgets won’t get easier. It is remarkable that just when some backbenchers were starting to feel jittery and have their conscience gnaw away at them, there is suddenly light at the end of the tunnel. ‘Hang in there, lads, we will be heroes by March.’

Did the ECB finally give clearance for Ireland to start talking about debt deals, now that they had put the budget through? If so, it does not lend itself to the image of Ireland playing hard.



We can but hope. Every single one of us needs this to be a proper deal and a new beginning. We need the Government to stand up for itself and to deliver. If it does we should all be thankful to them, but right now it’s a time to remind them of what is necessary. Ireland has borne austerity bravely and made dramatic changes. However, it cannot do the impossible and now, having proven our worth and our intentions we need the opportunity to grow and the trust of others.

We must face reality. The time for waiting is over. Whether or not the Government knows it, Ireland now expects and they must deliver, or come March, they may find those backbenchers even more unhappy.

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