Belfast Telegraph

Cowen comes out fighting, too late to save the day

By Brendan Keenan

So, the real Brian Cowen has appeared. You could hear the audience gasp at this piece of legerdemain. Even RTE's formidable Sean O'Rourke was gasping a bit at the Taoiseach's sterling performance on RTE’s News at One.

Regular readers will remember that I saw signs of this some weeks ago. I claim no particular credit, since everyone who knows, knows that Mr Cowen is better than his dismal performance of most of the last 18 months.

Does it matter that he has finally showed up? When that earlier column was written, I thought it did. There was still a chance for Mr Cowen to stamp his authority — to begin to persuade people that those in charge knew what they were doing, and to put some fear into those who were getting in the way.

That was before the disastrous impact of the bailout that wasn't going to happen, when everybody knew it was. This bizarre episode not only damaged Mr Cowen's standing, but that of Brian Lenihan as well — in the country and in the party. They certainly made a mess of things, but it is too easily forgotten that the enforced rescue was a bolt from the blue.

Before and even during that crisis, the mantra of every minister had been that the country was “fully funded” to the middle of next year. By that they meant there was enough cash put by to keep the country running until then, without having to borrow on the financial markets.

Why did they set such store by this? They probably never intended going as far as the summer, when all the cash would have run out. They would have known that it would probably still be too difficult to borrow on the markets and that it would be time to send for the IMF.

Even so, there was a glimmer of hope. Borrowing on the markets in the spring would be expensive, but perhaps not impossible.

But a spring election always looked more likely. The cash hoard in the National Treasury Management Agency meant such an election would be over before the question of replenishing that cash arose. If the markets were still unwilling, it would be the Finance Minister of the new government who would have to write humiliating letters to the IMF. All that was before the new bank crisis swept such considerations away. With Irish banks also unable to borrow on the markets, the European Central Bank realised that it could not begin to withdraw its cheap emergency loans from the eurozone banking system.

The ECB insisted on a rescue, which clearly threw Mr Cowen into a panic. He fought to the last ditch but, with hindsight, an orderly retreat would have been better. It was all very messy — and not just for him.

It got the Greens in a mess and damaged Mr Lenihan, Mr Ahern and Mr Dempsey. Thursday's stability report from the European Central Bank was the latest bit of evidence that the ECB lost out too.

The report shows that, like every sane observer, the ECB realises that landing a government in a fiscal crisis with another load of debt to save the banks is no answer to anything.

“Swift and drastic” action to de-risk and downsize the banks is needed. The ECB is not saying what that means, and neither is anyone else. For Mr Cowen, while his earlier plans may have been scuppered, the course of action is now clear. He has an election to fight.

Perhaps this is what has reinvigorated Mr Cowen. There is an election to fight, and fighting elections is what he was reared to do. With nothing to lose, it's probably more fun.

Belfast Telegraph