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Charlie is still our darling

Posted on: December 14th, 2008

THERE was a wicked rumour doing the rounds in Leinster House last week.

Charlie McCreevy was back in town making waves. He stirred it up a bit — as only he can — left people puzzled, and then headed for Brussels.

The chattering classes are missing the Commissioner- in-exile. Not a day passes without various politicians mourning Charlie’s absence in these troubled times. He is needed back home. He makes Taoiseach Brian Cowen and Tanaiste Mary Coughlan look like children at their first economics class.

The rumour was tantalising. Charlie’s Brussels term expires next year. A by-election will be called in Dublin South for the late Seamus Brennan’s seat. Charlie, a middle-class icon, will be nominated by Fianna Fail and swept to victory. The economy will be back in the hands of the most successful finance minister in the history of the State.

Sadly, it will never happen. Ireland may need McCreevy, but he is not for turning. He insists that although only 59, his career in politics is over.

Yet his talents may not be lost to Ireland.

Last week the commissioner was at his mischievous best. His speech to the Association of European Journalists in Dublin was bordering on a breach of protocol. But, thankfully, protocol was never Charlie’s strongest suit.

Charlie took the opportunity to fire a few shots across the boughs of the two Brians, the children in charge of the Irish economy.

Charlie gave a short sermon on debt, a mortal sin during his time in Finance. On Monday, in Dublin’s five-star Merrion Hotel, he specifically singled out Ireland as a key offender in the headlong rush of nations determined to sort out their economies by increasing their debt.

Across the road in Government Buildings, Brian Cowen and Brian Lenihan must have shuddered. Charlie was not being helpful.

“People,” he thundered (aiming his remarks at no one by name), “shouldn’t kid themselves . . . Diminishing tax inflows cannot be replaced with ever-rising levels of public sector borrowing in order to sustain spending levels that are simply not sustainable indefinitely.”

A lecture from the maestro for the floundering novices was bad enough. But worse was to come. Charlie dropped a slow release bombshell: “Investor appetite for Government debt is not limitless.”

Decoded: the two Brians had better cop onto themselves. Borrowing is the road to bankruptcy. Worse still, if we go on this way no one will lend us a brass farthing.

Sadly, this is not wild ‘McCreevy speak’. It is a responsible warning from a man who introduced seven budgets.

McCreevy’s words are supported by solid evidence. Take a look at the Financial Times any day to see how Ireland rates in the European borrowing league.

Grim reading beckons. The Financial Times publishes a nasty little daily table, ranking us against our European peers.

We are not bottom in Europe. That distinction belongs to Greece, a country in a state of political mayhem with a current deficit threatening to set another Olympic record. But Greeks aside, we are second in the relegation zone. It now costs Ireland even more to borrow money than Berlusconi’s shaky Italy.

McCreevy reads the FT, the bible of the bond markets. It tells him that investors have rumbled us. We are rated as a high-risk nation because of our spending orgy.

That result is bad enough, but problems facing much stronger European states seeking cash emerged on Wednesday. Mighty Germany, the country with Europe’s top credit rating, had encountered sudden difficulties on the bond markets. An auction of its ultra-safe two-year bonds had struggled. Worse still, Germany was only looking for €7bn. Next year Ireland could be out there in search of €20bn.

McCreevy alone seems to have spotted the danger.

And McCreevy alone has the credentials to issue such a warning. It was he who, as finance minister, set up the National Pension Fund. It was he who launched the Special Savings Incentive Accounts (SSIAs) to encourage Irish people to save. Charlie has a record of financial prudence in times of plenty.

That is not to suggest McCreevy is a patron saint of fiscal rectitude. Nor indeed a saint at all. He primed the public spending pump to secure the 2002 election for Fianna Fail. But he later purged his sins with public expenditure cutbacks. He paid a high price when Bertie Ahern blamed him for consequent Government unpopularity and despatched him to Brussels.

From there he must look back in sorrow at the declining health of an economy he had nurtured so well; but he rarely shares his thoughts on the current spending madness with anyone. Last Monday he nearly broke cover.

So what does McCreevy really think of the present crowd? Wild horses will not drag a direct criticism out of him.

Yet the recent plight of Brian Lenihan, whose stature as Finance Minister is growing by the day, must have galled him. When Lenihan gave an responsible interview to RTE’s Morning Ireland hinting at a postponement of the pay deal, Charlie must have cheered. Here was a finance minister in his own mode, showing sudden signs of courage.

Hope broke cover too soon. The bells had not chimed at midnight before the Taoiseach had undermined his Minister for Finance. A rushed statement from Brian Cowen’s office insisted that renegotiation of the pay deal did not arise. On the same day, Tanaiste Mary Coughlan told the Dail that the pay deal was not for changing. The unions had been on the blower.

Ireland had reverted to type, deep in debt for next year, bowing the knee to the social partners. Lenihan had been grounded.

Bertie Ahern would never have done that to Charlie.

Which all leaves the commissioner in a bit of a quandary. The exiled hero is about to return home. Neither he nor the Government want him back in Leinster House.

Former commissioners have traditionally decorated the boards of public companies. They have impeccable contacts, a bit of prestige and unique knowledge of Europe. Ray MacSharry and David Byrne took the comfortable road. But they were never proactive. MacSharry won directorships of Smurfit, Bank of Ireland and Ryanair. Byrne headed for Irish Life and Kingspan. Not too tough a way to earn a living.

McCreevy would never sit back passively and draw a non-executive salary. He is a player. Perhaps the Government might insist he takes over from Richard Burrows as Governor of a reformed Bank of Ireland?

As a shareholder I should love to see an energised McCreevy recapitalise the balance sheet, cut the costs, excise the bad debt and replace the board. Then he could swallow up Irish Life & Permanent, and EBS, and put manners on them.

The Government has bottled it with the banks. We need a steely czar to tear them apart and put them together again. McCreevy has the expertise gained in Europe, the political savvy earned in Dublin and the conviction to do the job. If he insists on spurning a return to the political arena, we could do worse than ask him to sort out the banks.