Economic survival - Bailout denials lack credibility

IT is a sad indication of how low our politicians’ stock has fallen that, despite repeated denials by Taoiseach Brian Cowen and a good number of his senior colleagues, it is difficult to dismiss the possibility that Ireland might have to turn to the EU or the International Monetary Fund – or both – to sustain even the most basic functions of this society.

Despite how strongly we hope that we will not have to rely on a bailout – the kindness of strangers but on their terms – it is hard to ignore all of the indications, all of the international and domestic voices arguing for such an unprecedented and humiliating intervention.

Surrendering our economic independence would be yet another bitter pill to swallow but the fact that we do not have the funds to run the state for much beyond the middle of next year and that we will not be offered credit on manageable terms any time soon traps us in a deadly pincer movement.

We don’t have much time or flexibility and having committed to the Croke Park deal and to covering the banks’ debts we have a terribly limited and unattractive range of options. Despite yesterday’s modest improvement in the market for Irish bonds, it is hard to imagine European governments will be comfortable supporting Mr Cowen’s ambition to avoid a rescue package if our looming insolvency threatens other weak eurozone economies or maybe even the entire euro project.

It is possible too that the improving situation for Irish bonds is an unfortunate reaction to the growing speculation about an imminent rescue deal. As Fine Gael’s Michael Noonan put it yesterday, “the paymaster prevails” and as we are dependent on EU help, we cannot expect more or less open-ended support without at least some of the obligations such dependency brings.

Despite all of the speculation and denials, one thing is certain: it is an absolute tragedy that, after less than a century of independence, we have reached the sorry point where surrendering our economic independence is even being discussed. It seems to concentrate all of the systematic failings of how we conducted our private and public affairs in the humiliating prospect of being a colony again. It is a lesson we can never again ignore, no matter how seductive doing so might seem. Sadly, and immorally, it is a lesson we, especially the weaker and more vulnerable people in our society, will have considerable time to absorb.

Three weeks from today Brian Lenihan will introduce a budget which will represent the first steps in a four- year plan which must be robust enough to show that we can regain control of our affairs. How tragic it is that we are caught in such a terrible Catch-22 – inflict terrible social and economic pain on ourselves or wait for others to do it. How tragic it is that our ability to govern ourselves, our very right to independence, will be judged by the hardship we are prepared to inflict and accept. If those who brought us to this point cannot be regarded as enemies of the state, who can?

Another thing is certain. If it transpires that, despite all of today’s denials, we do have to turn to the bailout fund anytime soon, Mr Cowen and his colleagues’ race is run. At that point they will have only one option. They will have to inform President McAleese that they intend to dissolve the Dáil and go to the country. Anything less would threaten more than economic stability.