An Taoiseach Brian Cowen is an embattled man. He leads a fiercely unpopular Government, which expects a kicking in tomorrow’s election, and is presiding over the worst financial crisis since the 1930s. Yet he is confident that on the economy he is “doing the right thing” that will lead to Ireland’s recovery.
The elections
The opinion polls are showing Fianna Fáil at 20/21 per cent, the party’s lowest ever rating. There is widespread public anger over the Government’s handling of the economy, and while Galway may not prove to be a complete disaster, does Taoiseach Cowen accept that, nationally, FF is set to get a hammering on polling day?
“This is the worst international recession in over 70 years and people are feeling the impact,” he tells me. “In the face of a crisis of this magnitude government has to act fast and decisively. What matters is doing the right thing for this country’s future and not short-term popularity.”
However if the Local, European, and by-elections go badly, and if they do turn out to be a public vote of ‘no confidence’ in the Government, will Mr Cowen consider resigning as Taoiseach and/or call a General Election?
“If everyone in politics thinks about nothing but positioning themselves for an election, then they are not acting in the public interest,” he says. “What we need now to get Ireland back on track is stability and a constructive debate, not endless politics.”
Nonetheless Fianna Fáil has been in power since 1997. It is not good for any party to hold power too long. How does the Taoiseach respond to charges that this Government is stale?
“We have a united Government prepared to make difficult decisions in the best interest of the people,” he argues. “We have an absolute conviction the public want action not electioneering. We’ve set out our plans and we are tackling the huge economic and financial crisis which has engulfed us and the world economy. These aren’t actions which are designed to win short-term popularity, but they are the right thing to do.”
Once tomorrow’s elections are over, the next polling day will certainly be the second Lisbon Treaty referendum in October. The Taoiseach acknowledges that last year’s ‘No’ vote was the public expressing “concerns” that “have to be addressed”.
He said the Government is working with the EU to “secure legal guarantees” on retaining an Irish commissioner and for Ireland to keep control over it’s tax rates, military neutrality, and laws on abortion.
“This will be looked at over the course of the European Council meeting on June 20” he said. “When this is completed we will decide when the referendum takes place. I think the Irish people will see a comprehensive package which addresses the concerns they expressed last year.”
Will the Government have learned the lessons from the first Lisbon vote and from Nice and put together a proper campaign which does not assume ‘It’s Europe, of course people will vote Yes’?
“I reject the implication that we took a ‘Yes’ vote for granted,” says the Taoiseach. “An honest assessment of the campaign would have to say it’s very, very hard to deal with attacks which have not even the slightest basis in truth. We’ll have to be more assertive but we will not run a negative, misleading campaign like the opponents of the Treaty.”
The economy
Former US president Bill Clinton famously remarked “It’s the economy, stupid!” and the economy is the dominant issue not only for the elections, but also in public and private discourse throughout the State, following the sudden death of the Celtic Tiger late last year. Since then, the Government has struggled to adapt to the changed circumstances and failed to convince the public it can handle the crisis.
Although there are international factors to the economic downturn, the Irish recession is largely a result of internal factors - eg, the property bubble. Taoiseach Cowen was the minister for finance during the ‘property bubble’ era. Could he not see how dangerous the bubble was, that it was not sustainable, and that the almost exclusive focus on property would, in the long run, damage our economy?
“Some of the people who were attacking me for not spending enough are now attacking me for having spent too much,” he says. “Others who were demanding more housing and lower prices are now saying there should have been less housing with even higher prices.
“Let’s be clear on this: the scale and pace of the downturn is unprecedented, as are its impacts. No-one could have predicted Lehman Brothers were about to collapse and the whole financial system was going to come tumbling down.
“Every single projection which we used for an election or a budget was based on the work of independent forecasters. I made decisions with the best advice available at the time.”
Difficult, and in some cases radical, decisions will have to be taken if the Irish economy is going to recover. As such gaining public support for such measures will be essential. Is the Taoiseach concerned that people will regard FF, and indeed himself as a former finance minister, as having played a large role in leading us into these difficulties, and accordingly will find it difficult to support FF in leading us out of the crisis?
“The only legitimate concern at the moment is to do the right things to get us through to recovery,” the Taoiseach replies. “If others want to talk about the past, that’s their choice. That luxury isn’t there for people who are required to take tough decisions now.
“Circumstances have changed rapidly and we have had to react rapidly over the last year. Independent bodies such as the ESRI and the European Commission say that they are decisions which can return Ireland to growth as early as next year. My concern is to do the right thing for the people.”
So far the Government response to the economic crisis has been to cut pay, impose tax and levy hikes, and reducing spending. However this will mean people have less money to spend, will hoard it, and will not inject it into the economy. As a result the economy receives no stimulus. It also means money is not being spent on various infrastructure projects like road building. Why have the Government taken this unimaginative approach to tackling the downturn?
“Firstly, there is a huge structural budget deficit that has to be tackled aggressively – and every serious commentator has confirmed that this is essential as a route back to growth,” says Taoiseach Cowen. “Secondly, many infrastructure projects are going ahead and specific funding has been ring-fenced for protecting jobs and helping new companies. In addition, we are increasing training programmes and we are working hard to get credit moving again for small businesses.
“We have to strike a balance. The independent assessments are that we are getting it right. Many positive elements of this are not headline-grabbers, but they are essential to beating this recession.”
Nonetheless, the policies so far have seen the Government slash the pay of Irish workers, while funding the banks - whose recklessness is another factor in getting us into the current mess - with taxpayers money. Why must the Irish public pay for the sins of greedy, unscrupulous, wealthy bankers?
“The public are absolutely right to demand that we be constructive and fair, and I can assure you that this is exactly what we’re trying to do,” says the Taoiseach. “But remember, many individual measures are being attacked as too harsh and too soft depending on the point of view of the individual.
“In relation to the banks, let’s be clear – the single most effective way of inflicting more pain on the public would be to let the banking system collapse. More businesses would close, fewer purchases would be made and we would compound the difficulties we are already facing as a result of the international recession.
“What has to happen is that the regulators and gardaí have to use the law to its full effect where there was illegal behaviour. Then we have to rebuild a solid financial system. That is what we are doing.”
The banks are refusing to give credit to businesses, thus harming and hindering Irish business in this most difficult time. Surely the Government has to step in and do tackle this, especially as the Government now has a stake in the banks?
“Yes, you’re right, and that’s why Nama is required,” says Taoiseach Cowen. “Only when the banks are in a stable position will they start lending again with confidence. Wherever I go I meet individuals and businesses that are struggling due to tight credit. This is costing jobs, growth and tax revenue. Tackling this requires unique actions, and we are pushing ahead with these.”
