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Dempsey Ducks Cowen Trap

Posted on: April 7th, 2008

BRIAN Cowen is past the post for Taoiseach. Which opens an intriguing question: who will be his successor as Minister for Finance?

Which poses the more basic puzzle: does it matter a hoot?

Last week Paddy Power bookmakers quoted odds: Micheal Martin was 5/4 favourite to succeed Cowen; second favourite was Dermot Ahern at 2/1 ; then came Brian Lenihan at 7/2, Mary Hanafin and Noel Dempsey at 10/1, with Mary Coughlan at 12/1 and Seamus Brennan at 20/1 both rank outsiders.

A misguided school of thought today insists that it no longer matters who occupies the financial fortress in Dublin’s Merrion Street. The supporting argument is shallow: interest rates are now set in Europe where we have no real voice; our native currency has been surrendered, therefore our economy is controlled elsewhere; whoever is Minister is a bystander, implementing decisions made in Brussels — or even in Washington. Worse still, the argument goes, Ministers for Finance are prisoners of the department , fearful of crossing the diktats of the mandarins. It is a job for those wimps who have volunteered for a political vasectomy.

This is tripe. The next Minister for Finance will need testosterone in spades.

Why ?

Because being Minister for Finance is about to become a whole new ball game. Cowen’s term of office at Finance has lacked flair. He has played deadly safe. Critics say he was paralysed, refusing to court any controversy because he was waiting for the Fianna Fail leadership to fall into his lap; the prize was guaranteed to him — provided he made no political mistakes in Finance. He didn’t. The price, an economy in need of urgent surgery.

Cowen’s super-caution was often misunderstood as a craven deference to the mandarins. It was not. It was a political leadership strategy. And look how it worked. Next month, he will reap his reward. Onetime leadership rivals, like Micheal Martin, Dermot Ahern and Mary Hanafin, have slipped into the political twilight, reduced to jockeying for second place.

The pinnacle of their hopes is now the Finance portfolio, a platform offering them the experience considered necessary for politicians with ambitions to be Taoiseach. Cowen is blessed with luck. He deserts Finance just as all the economic fundamentals are faltering. No one needs reminding of the sudden decline in Ireland’s economic fortunes.

On the very day that Bertie announced his departure (and by implication Cowen’s escape from Finance) disturbing Exchequer figures revealed that the Government is not only €600m short on its tax take, but is overspending in key departments; on the same day Fed chairman Ben Bernanke and the IMF warned of a global recession; and it was also revealed that Irish pensioners had this year already lost €10bn.

Elsewhere, we know that unemployment is back on the rise; the construction industry is in crisis, inflation is soaring, the unions are threatening, competitiveness is fading. Brian Cowen must be thanking Bertie for his surprise early exit. Another six months perched in the Finance job and his prospects for the leadership could have been extinguished.

Political begrudgers argue that Cowen had a simple job in Finance; some even suggest that his predecessor Charlie McCreevy’s period was a doddle; that they both inherited an economy benefiting from favourable external winds. They were in the right place at the right time. All they had to do was sit tight and watch the economy boom.

The same critics argue that Cowen is bequeathing a quagmire of his own making to his successor; that he and the Finance Ministers of yesterday were faced with easier choices. For them, it was often merely a question of where the largesse landed.

Today, it is suddenly different.

Perhaps, but Charlie McCreevy’s performance in the hot seat gives the lie to the myth that Europe and the mandarins call all the shots. It depends on the Minister. Charlie was gloriously perverse. One official recently told me that they dared not make proposals to Charlie because he was as contrary as a frustrated mule. He would often do the opposite out of pig iron. And if our current EU commissioner spotted a hidden agenda from Europe, he would bristle.

Perverse or not , McCreevy steered the ship brilliantly. He was the great tax cutter and the courageous innovator. He halved capital gains tax and consequently brought in more revenue. He launched the national pension fund. He slashed income tax. He stood firm on our low corporation tax rate when others were trembling in the face of European guerrilla warfare. The national finances were McCreevy-led .

Cowen did little. He failed to anticipate the current slide. On Wednesday, as the bad Exchequer returns broke, he was rattling off all the usual excuses: oil, the US credit crunch, currency movements. It was the old story: external factors. He was implying local impotence. A convenient excuse in bad times; but not very convincing if you constantly claim credit for the boom.

The truth is less palatable. The US primed the boom. We ourselves are largely responsible for the bust. In the meantime McCreevy in particular was a genius at managing a booming economy. Cowen, less so, for political reasons.

There is a clear lesson. The two greatest Finance Ministers of modern times have shared a key common characteristic: neither has nurtured ambitions to lead Fianna Fail. Ray MacSharry, who rescued the economy from oblivion, refused to curry favour with his backbenchers. Ditto McCreevy, whose fearless pursuit of his convictions marks him out as the greatest of all to have held the post.

The next Minister will need similar bottle. Mary Harney would be a gutsy choice in difficult times. She would relish slaying the dragons, but she will stay in Health.

Micheal Martin — favourite for Finance with Paddy Power — has done a fine job at Enterprise and Employment, but much of it has been broadcasting good news. He has little experience of making hard choices. Nor has second favourite Dermot Ahern from his time in Foreign Affairs. And more ominously, both nurse future leadership ambitions. They could fall into the Cowen trap.

Cowen should plump for Noel Dempsey. The current Communications Minister is as refreshingly obstinate as McCreevy. In other departments he has been happy to tackle political taboos. He has risked great unpopularity with Fianna Fail backbenchers over his proposals to change the voting system.

It was Noel who abolished the dual mandate for members of the Oireachtas, stopping them from holding council seats. Dempsey eyeballed the TDs. They surrendered.

When he took over at Education he caused a furore with radical proposals on third-level fees. He was forced to back down, but Dempsey refuses to look over his shoulder at his backbenchers before every move.

Nor is he intimidated by hostile short-term movements in public opinion. In today’s fragile economy that will prove a precious quality for a Minister for Finance.

And you can back him at 10/1.