Saturday 14 December 2019

James Downey: Time for Enda to convince us someone is in charge

James Downey

ENDA Kenny will address the nation tomorrow on the subject of the European fiscal pact.

He will very likely assure us that the Government has a plan to survive the next stages of the debt crisis -- a question which seems to have given rise to some uncertainty among his ministers.

"Uncertainty" is a polite word -- much used lately by politicians -- for confusion.

They don't deserve any criticism for either the condition or the euphemism. During the murkier stages of the Northern Ireland imbroglio it was often said that "if you're not confused you're badly informed".

Thankfully, we don't talk much about the North any longer. We have even more baffling things to talk about.

So let's talk about them and see if we can reduce the bafflement.

The simplest part of the problem is next week's referendum. We are asked to vote Yes to a series of proposals for permanent fiscal discipline in the eurozone.

Opponents of the treaty are right about one thing, if only one. These measures will not promote economic growth, they will hamper it.

But they are essentially the same measures that the Government is implementing at present and to which it is bound by previous agreements.

Moreover, they are the same measures that we would have to apply if we had freedom of action. A No vote will not change that.

Events abroad, however, may change the scene radically. In a sense, everything has already changed with the election of Francois Hollande as president of France.

Mr Hollande demands a protocol to the treaty, or a separate pact -- it makes no difference -- to promote economic growth and employment.

We don't know the details of his proposals. Still less do we know the likely outcome of his negotiations with Chancellor Angela Merkel. Unfortunately, I doubt that even the best agreement can produce a cure for Europe's ills.

President Barack Obama and the US Federal Reserve have resorted to the tried and tested policy of printing money. It has been a modest success. But how much money can you print without creating other evils, such as inflation?

European authorities, jointly and separately, have taken a much more conservative line. Too conservative.

The "firewall" to protect indebted countries (including Ireland) is manifestly inadequate. So is the European Stability Mechanism, due to come into operation soon. I fear that the same will prove true of the ultimate Hollande-Merkel pact.

Meanwhile, Greece remains in its usual place, on the edge, and Spain looks close to it. Europe, we hear, has a plan to contain the contagion that would follow a Greek default. What about Ireland's plan -- or rather, plans?

For our Government, or any European government, would be most unwise to confine itself to any single plan. I assume that it has considered every contingency and sketched out a possible response.

But I don't believe that ministers have allowed themselves to think the formerly unthinkable. That is simply not in the nature of most politicians. They react to events, including unprecedented events, by persuading themselves that the worst cannot happen.

Angela Merkel is to some extent a victim of the same syndrome. People who claim to be close to her thinking say that she wants to see the fiscal pact working before accepting a project for growth. All very well in normal times. But who can remember normal times? This is a time for drastic action.

We have been bewildered by figures, so many billions and trillions. Here is a figure that anyone can understand. Youth unemployment in Greece and Spain stands at 50pc. What would the figure be for Ireland in the absence of our notorious "safety valve" of mass emigration?

Since the crash, the "demographic profile" of our country has changed, greatly to our disadvantage.

At the same time, we have discovered that we cannot supply sufficient suitably qualified workers to fill the hi-tech jobs on which the very survival of our economy depends. Does the Government have any medium-term plans to restore the balance?

Our troubles are minor compared with those of Greece. There, the "social contract" between rulers and ruled has come close to collapsing.

This could happen in other countries too. Indeed, it is somewhat surprising that there has not been greater social unrest in several countries. Those who take an apocalyptic view believe that some could become almost ungovernable.

Dissent in Ireland takes different forms from almost anywhere else. Some will vote No next week because they object to property tax and water charges.

IN the chaotic 'Frontline' debate on Monday night, one man claimed that a Yes vote would imperil the Common Agricultural Policy. As an exercise in irrelevance, that takes some beating.

So what is truly relevant? What is the real background to Enda Kenny's address to the nation and what should he tell us tomorrow?

Come what may, austerity will be with us for a very long time to come. Merely to moderate it, we need Francois Hollande to succeed. Obviously we will support whatever deal he makes with Angela Merkel.

We must approve of greater powers for the European Central Bank and more contingency funding for the "firewall" and the ESM.

Debt writedowns are a trickier question, but we need them.

Two other tricky issues are our corporation tax rate and our attitude to a tax on financial transactions. Ultimately, we can't support this tax if Britain opposes it.

We must have banking reform -- not just European but world banking reform. To take just one Irish example, it is intolerable that we pour what is ultimately taxpayers' money into banks which buy government bonds with it, instead of using it productively.

Beyond that, we must put our minds to the question of federation. It was a mistake to create a currency union without a political union.

But how to persuade the populations of the EU member countries to agree? A formidable task at any time; gigantic at present, when so many European countries are ruled by incompetent and unimaginative governments.

Our own is no great shakes, but at least Enda Kenny has a mandate and a huge parliamentary majority. He doesn't have to worry about a phony issue, his refusal to take part in a television debate.

Tomorrow, he will claim the undivided attention of those who bother to tune in. He can use the time to do more than urge us to vote Yes. He can use it to convince us that there's someone in charge.

Irish Independent

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