Saturday 20 July 2019

John-Paul McCarthy: We need a realistic plan, not a few poetic flourishes

Germany is not yet convinced that the Coalition has a credible strategy for the future

German Finance Minister Wolfgang Schaeuble
German Finance Minister Wolfgang Schaeuble

John-Paul McCarthy

INFLUENTIAL voices have been taken aback by the Taoiseach's optimistic tone in recent days. Eddie Hobbs told an attentive Brendan O'Connor on The Saturday Night Show that the Taoiseach was "on the happy pills".

And Ivan Yates in the Irish Independent drove the point home about the follies of self-congratulation with a reminder that the national debt still remains about €200bn.

This kind of brisk scepticism was also on display in the quality German newspapers last week. Those who shape public opinion and public policy in Germany are beginning to ask hard questions about the Irish Government's capacity for long-term planning.

By and large, they are not convinced as of yet that the Coalition Government has a credible plan for economic survival once Ireland exits the bailout programme in the next few months.

The German broadsheets still refer to our banks as "Pleitebanken", or the busted banks.

A recent report on Michael Noonan's budgetary strategy on the economic digest site was careful to echo the German finance minister's sceptical response to the Irish Government's arguments about ex post facto compensation from what the Germans call the "Rettungsschirm", the rescue umbrella.

The influential Frankfurter Allgemeine Zeitung watches Ireland like a hawk as we know and even went to the trouble of translating Michael Noonan's Yeatsian flourish from his Budget presentation.

In Easter 1916, Yeats complained that 'too long a sacrifice/Can make a stone of the heart'.

The Germans rendered sacrifice here as "victim", and their version has the minister complaining that "too many victims turn the heart into a stone".

A jarring, but not altogether inaccurate insight.

The day after the Budget, the FAZ was also careful to carry a marginally different version of Wolfgang Schaeuble's earlier rejection of ex post facto recapitalisation.

Last Thursday, the German finance minister argued that the main problem with the Irish petition was its practical complexity.

It would, Schaeuble insisted, require legal changes at home in Germany, something every German party wanted to avoid he said.

He added a kicker then, explaining that legal changes like this were almost as dangerous ("ungefahr so schwierig") as a referendum on Europe in Ireland.

"Dangerous" is not the same thing though as "unacceptable" or "impossible" however, and finance here may not be totally delusional in seeing some small chink of light in Schauble's comments.

Other aspects of the FAZ's reportage should get the Coalition's full attention.

Many German experts simply do not know if the Irish Government can survive in the markets after the bailout exit.

One presumes that this is the key theme in the private negotiations that are ongoing as we speak.

The German policy elite are speculating, for example, about the possible future role of the ECB's Outright Monetary Transactions Programme in Irish economic affairs.

These large outstanding questions agitate the German policy elite, and when they hear the Taoiseach proclaim an imminent end to our "wirtschaftliche Notstandssituation", our economic emergency, they seem to be getting even more nervous.

Remember that we have dreadful form in the hype-stakes. Few who lived through that time can forget Brian Cowen's deathless mantra in his first few months as Taoiseach about the fact that "the fundamentals of this economy are strong".

We now know from the work of experts like Colm McCarthy and others that at the time these statements were going out on the news, our major banks were seriously bust and bust many times over.

The Germans haven't forgotten the late Brian Lenihan's bizarre Dail performance as well in 2009 when he proclaimed that Ireland had turned the economic corner and that his department was now predicting a return to economic growth in the next fiscal year.

The German elites also remember Charles Haughey's secret meeting with Helmut Schmidt in 1981 when Haughey asked for extra European funds on the back of substantial future oil and gas revenues that were supposed to be within arm's reach.

Schmidt was a Bundeskanzler in the mould of Haughey's father-in-law, Sean Lemass, and he could tell a conman when he saw one. He sent Haughey packing anyway, having formed a fairly dim view of the Irish economic policy operation.

The Government needs reminders of the Haughey-Cowen-Lenihan approach like a hole in the head.

That's why the Taoiseach's increasingly self-congratulatory rhetoric is so perilous for him and for us.

Judging by the German commentariat's scepticism last week, they want a serious plan from Ireland, in writing, that lays out the next steps after the bailout exit.

Garret FitzGerald refused to seriously engage with Margaret Thatcher after the hunger-strikes unless he had the rudiments of a plan in place before his approach.

This was the New Ireland Forum Report, a shallow, self-pitying document in many ways, but a document all the same.

In our case, it seems what the Germans want is what they always want: less rhetoric, more realism.

Sunday Independent

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