Monday 18 November 2019

Angela's trick or treat spooks poor ol' Enda

Three months on and progress on the 'seismic' bank debt deal has been torturous, writes John Drennan

Enda Kenny must, when his feet occasionally touch the ground, curse the moment he famously claimed "Paddy likes to know the story".

Paddy may indeed like to be kept in the loop, but it often looks as though one of Enda's central objectives when it comes to the "seismic" bank deal has been to utterly confuse poor Paddy with as much spin as is decently possible.

Instead the most acute analysis has been provided by Joan Burton's warning that resolving Ireland's banking debts would be this administration's equivalent of the peace process.

And, outside of the ongoing taint of appeasement that surrounds this process too, the recent twists surrounding Enda's "seismic" game-changer rival any of the horrors we endured during that previous battle to define the future of our State.

So what exactly has been the pilgrim's progress of our "seismic" deal, and where does it stand now?

JULY 29

A SEISMIC DEAL AND PADDY IS DANCING

It WAS, claimed Enda, a "seismic" deal -- and on a first glance it was hard to deny it. If the government spin on July 29 was to be believed, Europe had, after a dramatic late-night showdown, cornered a recalcitrant Angela Merkel and forced her to finally break the link between sovereign and banking debt which had destroyed our State, via the creation of the ESM which would replace the State when it came to recapitalising bankrupt banks.

The reason Paddy, or in this case Enda, was dancing was because of the hastily added promise that the euro group would "examine the situation of the Irish financial sector with a view to further improving the sustainability of the well-performing adjustment programme" we are enjoying so much.

At last after all that embarrassing back-stepping from unwise pre-election pledges about burning bondholders, Enda had his own triumph and Paddy was in the money.

There was a slight absence of detail such as where, when and how much, but "seismic" Enda and "game-changer"' Eamon were not alone in their joy. Civil servant Patrick Honohan even claimed that the summit decision had pushed forward the process of breaking the vicious cycle of high interest rates on Gov-ernment bonds in Europe.

And, more critically still, the normally cautious Michael Noonan welcomed the agreement as "a very good news story for Ireland" and intimated that a deal could be in the pipeline by late October if Europe moved swiftly enough.

SEPTEMBER 26

REVOLTING FINANCE MINISTERS START TO MAKE PADDY NERVOUS

Having secured the great triumph, a strange silence descended over Government Buildings. In fairness the two-month long summer holidays had arrived, but to some, such as Micheal Martin, it also looked as though the Government was afraid to ask too many questions about the great triumph it had secured lest it not like the answer.

As the prospect of an October banking deal slipped ever so gently down the greasy EU fiscal pole, the silence was well and truly broken by the finance ministers of Germany, Finland and the Netherlands who stated very clearly that the ESM should not be allowed to use any of its €500bn funds to pay for previous bailouts.

A compelling government response to the German finance minister's warning that "legacy assets should be under the responsibility of national authorities" was markedly absent.

OCTOBER 19

ACT I: PADDY ACCEPTS 'GOOD SOLID PROGRESS'

IN SPITE of the somewhat spooky diplomatic atmosphere, the leaders' summit initially appeared to be a harmless desultory sort of thing. In its wake the Taoiseach claimed that his EU colleagues had agreed that their decision in June still stood.

But though there had been "good solid progress", we were a long way away from facts and figures let alone "seismic" country as a downbeat Kenny noted the Government was "continuing to work with our colleagues to improve the understanding of the sustainability of debt that we agreed in June".

However, since such things were far too "complex and sensitive" for us ordinary citizens to understand, he was "not going to go into the detail of them here". The good news, however, claimed Enda, was that "our destination is... very clear".

OCTOBER 19

ACT II: PADDY IS SAD AS THE OLD LADY SAYS 'NO'

OUR destination certainly appeared to be a lot clearer... and worse, by the end of the night.

On the surface it was the closest reprise of Mrs Thatcher and her iconic "out, out, out" declaration any Irish PM had experienced when in a separate post-summit interview Angela, the Old Lady from Germany, said 'No' to any use of the new EU bailout fund for legacy banking debt.

Ms Merkel was responding to questions about Spain, but a series of inspired leaks from German sources earlier last week attacking Irish illusions and an initial disjointed response by the Irish Government left Enda scrambling for credibility.

Micheal Martin warned that Enda's church mouse-style diplomacy had blown the invisible bank deal and Peter Mathews conjured up the spectre of Enda as a new Chamberlain. Paddy, and Enda for that matter, was most assuredly not smiling.

OCTOBER 21

RECOVERY, AND PADDY IS SMILING AGAIN

IT TOOK two days to restore the status quo, but, over a dark weekend, Enda Kenny used every diplomatic get-out-of-jail card possible to retrieve the Irish situation. Eventually, after a less than convincing statement from Germany on Saturday, the Taoiseach secured the ear of Angela for half an hour on Sunday.

In the aftermath of this treat, a statement, essentially drafted by the Irish side, stated that Ireland was to be considered a "special case'' in the forthcoming negotiations over the role of the new bailout fund.

The "unique" circumstances surrounding Ireland's banking crisis would also be taken into account by eurozone finance ministers, once they began detailed negotiations on how the ESM will work... sometime in 2013.

Though the special chat with Angela was dismissed by some as representing little more than Angela telling the Irish hysterics that "Mother still loves you", it was seen by many as representing a serious diplomatic triumph.

Intriguingly, Angela's "Mother still loves you" response secured a chilly welcome on the open market which apparently wanted more clarity on what Ms Merkel meant when she referred to Ireland as a "special case".

They should join the queue.

OCTOBER 22

GALLIC 'SPATS' REPLACED BY AN ALLIANCE HOLLANDAISE -- IRELAND'S SPECIAL RELATIONSHIP WITH FRANCE RESTORED

IT WAS perhaps serendipitous that Enda Kenny, whose low-profile diplomatic networking style has led to much unfavourable comment, had a high-profile meeting scheduled with Francois Hollande, who for his own reasons was more than happy to echo Angela's claim that Ireland was "a special case".

The Taoiseach unsurprisingly was quoted as being "very happy" with the result of the first formal meeting at the Elysee Palace between Irish and French heads of government since autumn 2008 when that other person, who used to ruffle Enda's perfectly placed hair, was in charge.

And in fairness it represents some measure of progress on any day of the week when "Gallic spats" are replaced by an Alliance Hollandaise.

OCTOBER 23

HUBRIS AND ARROGANCE IN THE AIR AS OUR SEISMIC DEAL HEADS OFF ON THE ROAD TO SOMEWHERE... OR NOWHERE?

ONE of the features of the peace process was that nothing was ever as bad as it appeared to be and nothing was quite as good as it was ever talked up to be either.

Such an uncertain landscape means that it behoves all sides to be cautious when it comes to a process which is as critical, if not more so, in terms of determining the Republic's future than the ending of the Northern sectarian knife-fight.

Instead, hubris and its first cousin arrogance were in the air as the Taoiseach laid into the Opposition who were, according to the 'Dear Leader', guilty of "shallow opportunism".

But what does Angela's guarantee mean?

One suspects, sadly, that Paddy will be waiting a while to find out when the EU finance ministers meet to work out those devilish details.

And intriguingly prior to this encounter the German Finance Minister, Wolfgang Schaeuble, visits us tomorrow. Last week Mr Kenny called this a courtesy call. Others wonder if it will be more of a softening-up affair.

Sunday Independent

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