Ireland’s hopes for a deal on banking debt are an ‘illusion’

THE dysfunctional relationship the Irish State enjoys with Germany has latterly developed all of the hallmarks of a chronic case of battered wife syndrome — and in case there’s any doubt, the Irish are the ones wearing the skirts.

European summit after European summit, Angela Merkel viciously knocks our guys around in Brussels but later, when she deigns to pick up the phone and offer a hollow apology, the long-suffering Irish go running back into her arms, her sins instantly forgotten.

The Germans reacted with some surprise when Ms Merkel’s categorical declaration, that there would be “no retroactive direct recapitalisation” of banks, was greeted with dumbfounded horror in Ireland and, really, who can blame them? They’ve been saying the same thing for months, with one official latterly calling Irish hopes for a deal on the banking debt an “illusion”, it’s just that our politicians have refused to give credence to the contrarians — until the latest contrarian, Ms Merkel, could no longer be ignored.

Following the onslaught they suffered after the chancellor lobbed her latest hand grenade, giddy Government representatives have attached a great deal of importance to the description of Ireland as “special” and “unique” in a mollifying statement cobbled together by Enda Kenny and Ms Merkel on Sunday.

Regrettably, most of us didn’t need the Germans to tell us that our banking mess is “unique” or “special”. We’re all well aware of that already.

The figures, in case Ms Merkel needs reminding, are monstrous. Earlier this month, a “grim” report on the decrepit state of the EU’s 145 nuclear reactors estimated that upgrading the archaic facilities would cost up to €25bn. Cue much wailing and gnashing of teeth in Brussels.

Scarifying as that figure is, the impoverished Irish people have already pumped over twice that amount into our two nuclear reactors, Anglo and AIB, and yet they continue to belch their radioactivity into the economy.

Has everybody in Europe lost their minds? In what kind of alternate universe is it deemed credible for just 4m citizens to incinerate over €50bn in two toxic banks while the prospect of spending half that amount to prevent a nuclear winter sweeping through the continent is greeted with dismayed scepticism? Maybe Mr Kenny could put that question to our EU partners the next time he trots over to Brussels for a meeting.

If that doesn’t do the trick, perhaps he could point out that the cost of the Irish bailout has, thus far, exceeded the collective cost of the American bailout of its auto industry, leading banks and insurance giant AIG.

The banking bailout, despite all the woolly platitudes from Europe, or puff pieces about a “Celtic comeback”, is simply not sustainable.

This isn’t rocket science. You don’t need a Nobel Prize in economics to comprehend that 1.8m workers, those lucky enough to be in employment in recession-era Ireland, will never be able to bear the massive burden that was foisted onto their shoulders by the last government and the troika.

Yet, 20 months after this administration swept to power on a platform of renegotiating our crippling bailout deal the Irish people are expected to greet ambiguous statements, containing no specific commitments, with unbridled joy.

The Germans think we’re special, and a great bunch of lads for repaying all of those unsecured bondholders. So, say our crack team of negotiators, shouldn’t we be happy enough with that for now? Actually, no, we’re not happy and we’re not hopeful and we’re pretty fed up of being held up as an austerity idol and used as a punching bag by German politicians trying to score petty points at home.

A policy of patronisation and plámásing has gotten us nowhere and it’s about time the Government, instead of meekly acceding to every humiliation emanating from Berlin, started to act as if Ireland’s national interest, and not the Bundestag’s, was its primary concern.

For starters, Mr Kenny should read the speech given by the Central Bank’s Fiona Muldoon at the Irish Banking Federation’s annual conference last week, and acquaint himself with her central message: Namely, hope is not a strategy.

“What is needed now is authentic leadership, not humility; some courage to act,” she said, to a room full of chastened bankers, but her words could just as easily apply to this Government and its inability to get its act together and at least vocalise the kind of deal it is demanding.

What exactly is the Government looking for? A writedown of the €64bn, a deal on the promissory notes or the use of the ESM to buy equity stakes in our cursed banks? Because, despite some laudatory headlines claiming “victory” for Mr Kenny after he managed to convince Ms Merkel to release their joint statement, it’s very hard to claim a victory when no one knows what it is you’ve supposedly won.

In fact, Government TDs barely had a chance to do their victory laps in the media on Monday morning before another German government spokesman, Steffen Seibert, was again kicking them around and saying that, actually, Ireland does not enjoy “special status” in the support of its banks.

It’s pretty clear that the Irish State has some powerful allies in Europe, like the French, who have no hesitation about saying that we need a retrospective deal on our bank bailout, but the Germans steadfastly refuse to give any indication of the number of crumbs they are willing to throw at us from the top table.

NOW, according to some commentators, any prospect of a deal on the banking debt is being downplayed until at least Sep 2013, after federal elections take place in Germany, which would be a complete disaster for this country.

Sunday’s bewildering statement, which included lots of nice cuddly adjectives like “special” and “unique”, but a dearth of concrete proposals, commitments or deadlines, still maintained that our adjustment programme is “well performing”.

Considering that retail sales have fallen every single month for three and a half years; unemployment remains at record levels despite the tens of thousands of people being forced to emigrate; growth forecasts have again been downgraded by the Central Bank this month; and 1.8m people are left with less than €100 to live on every month after all of their bills are paid, one wonders what dubious metrics are being used to ascertain the programme’s alleged success? Angela Merkel has been dangling carrots under the Government’s nose for months but, invariably, the carrot turns into a big stick just before they manage to grasp it.

Instead of wasting their breaths trying to convince her of the merits of their case, it’s now time to join an alliance of like-minded eurozone states and forcefully counter German intransigence on this issue. Paranoid ministers may complain about an “orgy of negativity” when their negotiations go nowhere, but if they were sitting on the opposition benches they would be just as critical of the self-serving spin and unremitting stasis.

It’s easy to make promises during an election campaign. Now, in office, it’s time for this Government to deliver.