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Beards Out, Bundestag In

Posted on: March 6th, 2011

THE baton of power has passed. The changing of the guard has happened seamlessly.

No, not from Brian Cowen to Enda Kenny, although there will be a theatrical show of democracy when Enda swaps seats in the Dail chamber on Wednesday.

Real power has already passed from the beards to the Bundestag.

Two events last week exposed the awkward reality of Irish economic power.

One showed that the stranglehold of the bearded brethren was now over; the other that the supremacy of Angela Merkel is unchallenged. The Irish economy, having been partly wrecked by the brethren, is now being suffocated by Angela.

Angela, the European Union and the IMF have filled the vacuum vacated by David Begg, Jack O’Connor and Ictu. I am not sure whether it is better to be ruled by a bearded oligarchy or a cabal of bank-loving eurocrats; but have no doubt, Enda Kenny is not being handed control of the economy by Brian Cowen. The levers, as always, are being pulled elsewhere.

Year after year during the boom time, Brian doffed the cap to the social partners. His deference was a nauseating acknowledgment that not a cent moved in the economy without the bearded brethren’s approval. In exchange for industrial peace, they were feted at the top tables and their members were awarded insane benchmarking bonanzas.

Those of us who banged on about this at the time were ridiculed. Opponents of benchmarking had little support. Social partnership was a religion, a creed common to all parties.

Consensus was king.

Until last week. Happily, an independent report for the Department of Finance wandered a little outside its brief to give a judgement on social partnership, the sacred cow of the Celtic Tiger.

The verdict was damning.

According to the report, the deity of social partnership was a false god. It had “completely overwhelmed” the Budget process. It “obscured ministerial accountability to Parliament”. It was a “driver of spending” at a time when the economy was overheating. It led to “a major deterioration in competitiveness and very high public service wages, especially relative to international partners”.

In short, the social partners wrote the budgets. They undermined democracy. They allowed governments to bypass the Dail. They were toxic.

The real action on the economy happened outside Leinster House. External influences carried disproportionate weight. The trade unions first, with their poodles in Ibec, dictated economic priorities. The Dail was a rubber stamp.

Union leaders were rewarded with benchmarking deals which plundered the public finances, measures that — even today — cost the Exchequer €1.2bn a year.

The release of the report was a long overdue delivery of heavenly heresy.

When Ictu boss David Begg was asked for a reaction last week, he was a trifle prickly, dubbing the report “a facile exercise in scapegoating designed to obscure the true cause of the collapse”. He went on to do his own piece of superb scapegoating, fingering the “banks, builders, and toxic government policy”.

David and his pal, Siptu’s Jack O’Connor, are fond of using the wrongs of the banks as a distraction from their own role in the nation’s economic downfall.

Bankers, developers, regulators and governments caused the banking collapse and the crippling debt, but who shares responsibility for the gigantic hole in the public finances?

If you believe this report, it was not only the established villains of the property frenzy, it was also the social partners. The wrongs of the bankers must not be allowed to camouflage the role of others in bringing Ireland to its knees.

Luckily the social partners have been rumbled. The benchmarking deal of 2000, which gave public servants a 9 per cent hike, is now accepted as an abomination for the economy. Pay increased by 67 per cent between 1999 and 2006. The social partners flexed their muscles to ensure that one third of government spending went on public service pay and pensions.

The guys who secured the benchmarking deal have happily sunk into relative obscurity. Trade union leaders such as Begg, O’Connor, Billy Attley and Des Geraghty — the oligarchs of yesterday — still hold well-paid posts, but are now eunuchs on the political stage. Their day is over, as even their puppets in politics can no longer reward them with jackpots comparable to the glory days of 2000 and 2002. They can still wound, but can no longer kill.

If the beards are off the pitch, who has filled the void left by the departing power houses of the Irish economy?

I have good news for you. The supremacy of democracy is restored. The voice of parliament has been re-established. A democrat is back in charge of Ireland. Bravo.

Unfortunately, it is not an Irish democrat. It is the voice of a German democrat.

On Wednesday, Angela Merkel dropped a bombshell, leaving poor Enda in the manure. The woman who valiantly posed for painful pictures with Enda last month to boost his election campaign, torpedoed the Fine Gael leader’s rocky battleship.

She may have been a colleague of Enda as a fellow- member of the European People’s Party, but is no friend of Enda, Taoiseach-designate of Ireland. She was prepared to give Fine Gael an electoral leg-up but is found wanting when it comes to helping Ireland out of the economic swamp.

On Wednesday, Angela insisted that there would be no change in the EU bailout terms for Enda’s Ireland. She dismissed talk of a lower interest rate on the loans agreed in the November package.

Enda’s carefully nurtured image as a man with the inside track to Angela was destroyed. There were even humiliating stories in the Wall Street Journal that she would not find time for a one-to-one meeting with him at the European People’s get-together in Helsinki on Friday. Her help only stretched as far as photo-calls with colleagues in need at election time. To hell with the Irish economy.

Angela’s unhelpful intervention undermined the “renegotiation” pretence spun by both Fine Gael and Labour in the current coalition talks. Ten days ago they were playing the renegotiation card for all it was worth; they would lower the penal interest rate imposed on Ireland. Angela was Enda’s friend in Europe.

Angela , helpfully silent during the election, slammed the door on Wednesday.

Which leaves poor Enda looking pretty lame. His fair-weather political friend in Europe has little time for his craven pleas for a new deal. She has probably already forgotten the identity of the fresh-faced European People’s Party delegate who was pictured courting her in Berlin on St Valentine’s Day.

The Fine Gael element of the new government will not be beholden to the unions. That was the curse of Cowen and will be the Labour Party’s fate. Angela is the new social partner. In the last decade the fate of the Irish economy has been decided by forces located many miles from Leinster House. As the boys with the beards retreat, the Berlin Bundestag steps in.

We could start to reclaim our economic sovereignty by holding a referendum on the disastrous EU/IMF deal.

Armed with a rejection from the Irish people, we could challenge the mighty Angela, her bondholder and banker friends. Sadly, the Irish people have never been consulted about the fate of an economy, their economy, once controlled by the brethren, now treated without sympathy by Enda’s friend, Angela Merkel.