Thursday 18 October 2018

Revealed: total chaos in coalition as economy collapsed

Former Cabinet members Finance Minister, Brian Lenihan, Taioseach Brian Cowen and Tanaiste Mary Coughlan. Photo: Steve Humphreys
Former Cabinet members Finance Minister, Brian Lenihan, Taioseach Brian Cowen and Tanaiste Mary Coughlan. Photo: Steve Humphreys

Shane Doran and Brendan Keenan

THE scale of the economic collapse left Brian Cowen’s cabinet totally paralysed as the Government found it "almost impossible" to come up with a rescue plan, according to leaked US Embassy cables.

The diplomatic dispatches give an unprecedented behind-the-scenes insight into the previous government’s inability to respond to the unfolding crisis.

They paint a picture of an administration lurching from one crisis to the next with no clear idea how to steer the economy out of recession. And they also contain severe US criticism of the Fianna Fail/Green coalition’s failure “to be straight with the Irish public” about the major difficulties that lay ahead.

One cable sent to the US State Department in Washington recounts details of a meeting with senior government officials who privately admitted the Government had no clear plan to salvage the economy.

The stark admission was made during a briefing at the US Embassy in Dublin, less than three months after the controversial bank guarantee scheme. The revelations are contained in the ‘Ireland Cables’ – a tranche of more than 1,900 documents obtained by the Irish Independent from the whistleblowing organisation WikiLeaks.

Despite US criticisms of the government, it is clear from the cables that the Americans also did not foresee the spectacular collapse of the Celtic Tiger.

In one ‘confidential’ dispatch to the US State Department in Washington, former US Ambassador Thomas Foley wrote how the government was “bouncing from crisis to crisis”.

The cable, dated December 2008, reports on a meeting with John McCarthy – described as the “chief forecaster” in the Department of Finance – and two “economic officials” from the Department of the Taoiseach, John Shaw and George Shaw.

According to the cable, Mr McCarthy told US Embassy officials that “forecasting anything in the current uncertain environment is almost impossible”.

He added the government could “only react given the fast pace of the downturn”.

The leaked cable paints a picture of a government in crisis with no clear plans.

And it is certain to reinforce widespread criticisms of the Department of Finance’s performance throughout the economic crisis.

Two years after the cable was sent, Finance secretary general Kevin Cardiff admitted to an Oireachtas committee that the department did not have the necessary expertise to confront the economic challenges.

The recent Nyberg Report into the banking crisis also highlighted a serious skills deficit at the department.

Read more revelations in today’s printed Irish Independent newspaper:

- How us firms believed Coalition had favourties for State contracts

- Officials, ministers at odds over NAMA ‘haircuts’

- ‘Wink and nod deal gave 5,000 jobs to the North

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