Sunday 19 October 2008

Lisbon: The Brussels View

I travelled to Brussels this week with a group of Irish journalists on a media trip to the EU which co-incided with the Summit. In the two days leading up to the Summit we met a number of Irish and non-Irish MEPs, several senior officials in the Commission and Parliament (including the highest ranking civil servant in the Commission, Catherine Day), (embattled?) Commissioner McCreevy, and President of the European Parliament.

That much of the subject matter centred around Lisbon (I would say two thirds) at a time when the financial system is falling apart tells us how high up the agenda Lisbon has remained - and will remain. If there was an overall message it was this: that completing the reforms set out in Lisbon is more important now than ever, that this is mostly a problem Ireland needs to resolve, and that regardless of Ireland’s ability to sign off, this reform process is going to be brought to a close.

Irish MEPs and officials frankly admitted that the No to Lisbon has made their job harder - not just in dealing with colleagues, but dealing with third parties as well. One MEP said that in dicussions with American companies thinking about investing in Ireland that the No has thrown up a cloud of confusion about whether Ireland will remain at the heart of Europe.

Some of the Irish officials were at pains to explain that the vast bulk of political measures signed off in the Union come about after compromise, trading negotiating points, and building alliances with other states. This, they now claim, has become more difficult.

But, we asked, Lisbon doesn’t bring in clear measures which would tackle the financial crisis? True, we heard, but the fact that the Union has waged a decade long internal battle to streamline its institutions and to equip itself for the twenty first century has undermined its ability to act as a unit. They also added that in the end it is getting more important, not less, to be able to reach a common position on key international issues. In that sense they stressed the difficulty the French presidency faced in getting a unified statement on issues from Russia’s invasion of Georgia to the Financial crisis. In the end the French succeeded in twisting enough arms to get a unified face, even if there were hiccups in between.

The argument went that if say Malta chaired the Union now that it is simply not credible that the EU could have brokered a fairly quick ceasefire in Georgia - even if the aftermath has been imperfect. The rotating presidency, we were told, is a very real problem. Foreign leaders need to meet a dozen different presidents in the space of a few years, all of whom are also doing their day job of running a country. Continuity is required.

It’s Ireland’s problem. Ireland, they said, signed off on this as a government and failed to deliver. True the Irish people were asked but nearly all of the EU people we spoke to lamented the Yes campaign for being incompetent and half hearted. The views ranged from disappointment that the Irish government ran such a pathetic campaign, to near contempt for the Irish government’s incompetence, to one outright claim that Brian Cowen should have resigned after failing to convince the Irish people on the deal which he was instrumental in brokering. And yes, when questioned about the French No, the speaker said Chirac should have gone too.

Overall the message was that in December Brian Cowen doesn’t just need a set of proposals and ideas - he needs a solid plan that he is ready to roll on. But what if? Well, some refused to be drawn on it, saying they trust the Irish government will speak very forthrightly to the Irish people and that in consequence of such frank outlining of Ireland’s position that the Irish people would make the right choice. But still what if? What then of Lisbon? we begged. “What then of Ireland” was the response.

It seemed pretty clear - there will be no substantial opening up of Lisbon. Though not one speaker ruled out the possibility of retaining a commissioner. But no reopening of the substantive institutional agreements. The reforms have taken too long and people are simply exhausted. It’s got to be signed off ASAP. That was the message. Europe needs this out of the way.

And the message was clear too - that if Ireland fails to come along, some formula would have to be found to let the others proceed. Personally I feel that those who say this actually want it to be true more than knowing it to be true. Because of course the risk is that if Ireland is sidelined that other states may well object. But is that where Ireland really wants to be?

Among both officials and some MEPS the idea of partial oireachtas ratification was entertained. This has been referred to here at Irish Election in a previous post. While legally possible for a partial parliamentary ratification, I find it hard to believe that the government will have the political capital in reserve to sustain the backlash. Judging by the current budgetary crisis the government may not have any political capital at all - it mightn’t even be in office!

Friday 3 October 2008

Minister, show backbone in dealing with Banks

The EU Commission has said that it will look into whether the Irish bank plan breaches competition rules and if it does, the commission will force Ireland to recoup the money from banks. This may sound like more of Brussels poking its nose into our affairs. You know what it really is: a God send for the tax payer.

While I know the government had to do something to help the banks I am inclined to believe the went too far. Why had no other governments used this approach? Why was Ireland so roundly criticised? Doesn't a blanket prop really invite moral hazard since there isn't even a fear of failing now. At least on a case by case basis bank execs would wonder if they were going to get the help the need.

But I don't know. Perhaps as more facts emerge we will be provided with justification for the nuclear option. Fair enough. But one thing really worries me. It is that the government will not be robust enough with the banks in the even of their drawing down tax money. In our little clientelist, boys network elite, can we have confidence that the government will go in hard and rough if they have to bail out a bank?

In France, before Dexia was bailed out the government set strict conditions. They insisted not only that the CEO would go, but he would go without his golden parachute. Can you imagine that happening here? I can't.

The minister has talked about possibly taking equity and maybe putting members on the board or management team in the event of a major bailout. I haven't heard what is provided for in the legislation but I gather it is up to the minister in each case. Will he make use of the full rigour of these provisions or will he pussy foot and give funding with no guarantee other than the financial regulator will monitor the bank's activity.

Well you know what. The Financial Regulator is worse than useless. Yes, worse. If there were no regulator at least there would be no pretence of oversight. But the current regulator has been gutless, even reckless, in his dereliction of duty.

On prime time, CEO of the Regulator, a very uninspiring John Neary, insisted that the only problem in the Irish banks was the international credit freeze. He denied they had lent recklessly or taken too much risk with a construction bubble. You know what John - you are either stupid or lying. Perhaps a bit of both. And it is shocking John if the likes of you are left guarding 400 billion of tax payers money. What kind of crony are you? Where did you crawl from you spineless, disgraceful twit?

So please please, Mr Lenihan, I hope you show that under your sweaty shirt there is that which our regulator so singularly lacks: a backbone. Please, it's our money, so you have our full permission to be tough with the banks. Use it.