Debt deal - Moderate optimism is justified

When Enda Kenny told the Dáil yesterday afternoon that the Government had agreed a deal with the European Central Bank on the Anglo Irish Bank promissory notes, the Taoiseach ended what seemed like a particularly frenetic few days of political and diplomatic activity.

Initial assessments suggest that the deal is a good one and that it may help turn an almost impossible challenge into one that can eventually be surmounted.

Inevitably, after so many hours of yes-we-do, no-we-don’t confusion, the announcement was greeted with considerable relief. Another false dawn, especially after the overnight Oireachtas sitting to finally put Anglo Irish Bank out of its misery, would have been almost too much to bear.

It must be a considerable relief too for those who had staked their political reputation on securing a deal. Consequently, it would be more than churlish not to acknowledge the scale of the achievement or not to recognise that the Coalition has delivered on one of the most important promises it made when it came to office. It is necessary though to add the caveat that this welcome is based on the earliest, most positive readings of the deal.

On a grander scale, Mr Kenny, his cabinet, and, as he especially acknowledged, Finance Minister Michael Noonan and his staff, have concluded a deal that became essential almost as soon as the ink was dry on the unprecedented bank guarantee of Sept 2008.

Commitments made then, for whatever reason and possibly under duress, were utterly unsustainable and would have undone generations of social, material and individual progress in this country. Though that slate has not been wiped as clean as we might wish, yesterday’s announcement has, at first reading, thrown a lifeline to a society and an economy stifling under an impossible burden.

The deal also offers essential leeway if economic growth remains stubbornly low and threatens our ability to hit existing targets. It should also mean that Ireland reaches the 3% budget deficit target more quickly, easing the budgetary position in future years.

The deal, however, does not mean that we can defer essential changes in the way Government resources are used. It is just the first stepping stone in a very wide, very fast flowing river. All of the difficult domestic targets, some of them set out in talks around the possibility of a renewal of the Croke Park deal, remain mandatory and the opportunity offered yesterday will be squandered if they are not met one way or the other.

These have been, and still are for many, especially the 500 IRBC staff whose jobs may be lost, a grim few years but the deal and the growing confidence around the euro suggest that some moderate optimism might not be misplaced.

No matter how time changes the perception of yesterday’s deal, it is probably the best one we will get for quite some time. We must make best use of the opportunity it affords.