Monday, June 8, 2009

Local and European

Like many elections, the outcome of these elections will change everything and nothing.

In terms of party politics, it is a revolution: Fianna Fail are deeply wounded but not slain. Fine Gael are calling a historic transformation of Irish politics even though FG under Garret held a larger share of the vote. The historic difference, of course, is that FG is more popular than FF but that only serves to underline the nature of Irish politics. Contrary to Pat Rabbitte, it was never a two and a half party system. We have had a single party system with a possible alternative if the voters tired of FF and FG could assemble all the other parties. Too often FG showed a lack of finesse in dealing with their coalition partners and with independent TDs.

In the real world, nothing has changed, The only reality that elections can change is the holders of office which may also mean a change in real power. These elections do not not change much because neither local nor EP representatives wield real power. Local government has been emasculated and discredited, the European Parliament is powerful but our MEPs answer to the domestic political leadership on the votes that matter.

The great danger now is paralysis. The Government have been punished severely, not just for past failures but for current policies (indeed, the Greens were penalised more than FF even though they could claim to have opposed more strongly than any other party the failed economic policies of the past

Ireland's economic straits are so dire that there is little room for manoever. In good times, Governments have a vast menu of expenditure choices to prioritise and the past decade has been marked by a rnge of vanity projects. Only the presence of the Pds spared us the ultimate white elephant when the 2002 elections prompted Michael McDowell to block Berties Ceauscesu project in Abbotstown.

In difficult times, Governments face tough choices and Ireland cannot postpone these choices because we are currently borrowing €20Bn. a year to support Government expenditure. The cutbacks that have made the Government parties so unpopular are only the beginning of a four year process which envisages even greater levels of expenditure reductions merely to bring Government finances into an acceptable level of deficit.

A great difficulty for FF is that their response to the crisis is coloured by the need to justify their prior failure to avoid or mitigate the crisis. Blaming international factors irritates voters because FF were all too ready to claim credit during the boom times.

Paul Krugman made an interesting comment during his lecture in Dublin last Friday. He said it was unrealistic to imagine that the Government would not cheer on the bubble I.e. that politicians by their nature are incapable of restraining growth, even if it is unsustainable and even dangerous. Who then could control a bubble? Above all, the Central Bank but we are now being told that the Central Bank did not have power to act, and the Financial Regulator is blamed for inaction.

The Government is about to be presented with a new scheme for the Central Bank and financial regulation. It sounds suspiciously like the existing system. The main difference highlighted by the Sunday Tribune today is that the Head of Supervision will be on the Board.

FF and the Greens will hang together to avoid an early general election. Not merely would they be out of office - I suspect many in FF are resigned to that – it would would fix their current unpopularity through the term of the next Dail.

By the end of the year there will be a General Election, Fianna Fail councilors and Green councilors who lost their seats will cause this. Many grassroots Fianna Failers aren't happy. I personally don't want a General Election now, why should Fine Gael and Labour sort out Fianna Fail's mess?

For most of its history, FF espoused single-party government as a core principle. We know now why CJH was so committed to this principle and Albert was so uncomfortable with coalition he rubbed Dick Spring's nose in the Beef Tribunal Report. Bertie learned from their mistakes and when an overall majority was in sight in 2002, he went into denial.

At moments of crisis, existential questions need to be asked. Why does FF exist? The Good Friday Agreement has settled the national question for the foreseeable future. Will there be a space between FG on the right and Labour and others on the right?

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