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Ireland braces itself for another year of fiscal pain and sacrifice | Henry McDonald

By cruel coincidence, the opening of the Irish parliament coincides with the arrival in Dublin of a trio of technocrats from the ECB and IMF

A leisurely stroll along the river Liffey in the unseasonably warm January air between two of Dublin’s most famous landmarks will provide you with all the evidence you need of an economy still in the doldrums of recession.

From the Four Courts, which the anti-treaty republican forces occupied during the civil war of the early 1920s to the curved elegant Ha’penny Bridge connecting either side of the river there are boarded up empty pubs, closed hotels lying dormant for years, abandoned shops and businesses along this historic route.

The Republic may still even amid the eurozone crisis be a successful exporter of food, hi-tech goods, pharmaceuticals and computer components but its domestic economy, in particular consumer demand, remains stagnant.

Most of the economic indices of late such as the lowering of growth rates to jut 0.7% confirm the widely held view across Dublin and the entire Republic that 2012 is going to be another year of fiscal pain and sacrifice.

This was the atmosphere into which the 166 members of the Dail returned to work on Wednesday. The economy remains the dominant issue that will loom over this session of the Irish parliament.

The Fine Gael-Labour government faced the opposing ranks of Fianna Fáil, Sinn Féin, the United Left Alliance and heterogeneous band of independent TDs knowing that in many ways the coalition’s fate is as much in the hands of a trio staying at a hotel directly behind the parliament as inside the chamber.

By a cruel coincidence the Dail resumed business just 24 hours after the so-called “troika” from the European Central Bank and the International Monetary Fund rode into town.

The trio are staying at the Merrion Hotel behind Irish Government Buildings and many wags in Dublin are noting that this is where the power in the country really lies. The “troika” are in Dublin to inspect the nation’s books, to ensure that all relevant economic data is available to the IMF/ECB following the multibillion-euro bailout of the Irish economy. Their presence has also sparked fears that they may recommend further cost-cutting austerity measures on top of Enda Kenny’s in order to keep driving down Ireland’s national deficit.

Opinion remains divided about whether there should be a traditional Irish welcome for the foreign fiscal experts. Richard Boyd Barrett, a United Left Alliance TD, last night dismissed the “troika” as nothing more than the “boot boys of international capitalism”, while a Dublin newspaper columnist appearing on the same television programme suggested the Irish should be as welcoming and friendly as possible given the largesse of the EU/IMF in bailing out the country and its debt-ridden banking system.

There are other challenges ahead not only for the coalition but also the main opposition party Fianna Fáil, which has still barely woken up from the knock-out blow it received from the Irish electorate last February when it endured historic losses at the ballot box.

For the government there are a couple of problematic referendums pending, the most important of which is a potential vote to endorse the latest EU treaty hammered out (minus David Cameron) at the end of last year.

Fine Gael and Labour strategists will be hoping that the fear factor will force the electorate to vote yes in that referendum; that fear of being left isolated outside Europe will discourage many from registering a protest vote by plumping for no to the EU.

Fianna Fáil’s high command is also trembling at the prospect of the publication of the Mahon Tribunal report into political corruption. All the Irish political classes expect the report to be highly critical of Fianna Fáil’s election hat-trick winner and taoiseach during the boom years, Bertie Ahern. The party will have to deal not only with the sullying of Bertie’s legacy but also the nexus between Fianna Fáil, major property speculators/builders and the financial institutions – the so-called “golden circle.”

Micheal Martin, the current Fianna Fáil leader, will have to try and distance himself from the Ahern-Brian Cowen era while at the same time not alienating the party’s grassroots, many of whom once worshipped Bertie as their champion.

But it is the economy that eclipses all other political issues in the Republic of Ireland between now and when the country takes time out to party when its national soccer team arrive in Poland for the European Championships.

Prior to entering the Dail on Wednesday the minister of finance, Michael Noonan, described as “ludicrous” talk that Ireland may need another international bailout this year, even though a top European banker from Citibank warned that this may come to pass.

On his arrival Enda Kenny also denied there was any possibility the Republic would go with the begging bowl for a second time to the IMF and ECB. Those confident assertions from the two most powerful men in the Irish government could become hostages to fiscal fortune over the next 12 months.

Maybe the two of them should nip over to the Merrion Hotel and ask to speak to three foreign gentlemen staying there to check if they agree with that analysis. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds