this source of revenue disappeared almost overnight. People were spending less too, so VAT receipts were down, and every additional unemployed person cost the State €20,000 a year between lost taxes and increased social welfare payments.
The exchequer returns for January 2009 showed tax revenues down by €857 million (19 per cent) on the same month in the previous year. There had been a surplus of €630 million in January 2008. Now, a year later, there was a deficit of €744 million: a yearon-year reversal of €1.4 billion in the monthly figures. By December 2010, the State was taking in only €7 for every €10 it was spending. This could not continue for ever. The State would have to reduce its spending, try to increase income from new sources over time and, in the meantime, it would have to borrow the difference.
But therein lay a massive new problem. The State had guaranteed the banks and it turned out they were in a much worse state than Brian Cowen and Brian Lenihan had imagined. And it seemed no one knew to what extent. Estimates of the billions involved grew every month. International lenders began to doubt Ireland’s ability to keep control and to repay its debts. The interest on our borrowings began to rise exponentially. The ten-year bonds’ yield went from 4 per cent in 2006 to 14.55 per cent in July 2011. Eventually the ratings agencies – on whose somewhat arbitrary opinions international lenders partly base their decisions – consigned Irish bonds to ‘junk’ status. By the end of 2010, with a perfect storm of mounting debt and a deteriorating economy, Ireland was unable to pay its way and unable to borrow. The country was hurtling to bankruptcy or to bailout.
The Fianna Fáil-led Government was slow to see all this coming. Summer 2007 was a time for celebrating their three-in-a-row election win and for bonding with their new coalition partners, the Green Party. From September 2007 until April 2008, they seemed mostly preoccupied with their Leader’s difficulties at the Mahon Tribunal.
The Mahon Tribunal (originally the Flood Tribunal) was set up in 1997 to examine allegations of corruption in the planning process in Dublin, including the activities of Minister Ray Burke, who resigned from politics when the Tribunal was established. The Tribunal continued for over ten years, despite court challenges and considerable political hostility, eventually producing a set of reports which detailed and documented extensive corruption and malpractice in the rezoning of lands in County Dublin.
As I had served as a member of Dublin County Council during the period under investigation, I was very familiar with the subject matter. I was called to give evidence and I was ‘commended’ by the Tribunal in their final report. It was not so for others. In September 2007, the Tribunal began to publicly examine payments which had been made to Bertie Ahern at various times. These payments included a ‘whip-round’ among some of his friends during a difficult time in his personal life. The collection had taken place after a dinner in a Manchester hotel, and a suitcase full of cash was brought to him in Dublin, by a UK-based Irish businessman. All the money amounted to tens of thousands of euros. But there was difficulty in tracing it because the former Minister for Finance did not have a personal bank account for about five years. There was enormous uncertainty and confusion about who lodged what monies and when to a particular account.
Ahern’s answers were less than clear. In a Dáil exchange on the issue, I suggested to him that his explanations amounted to a cock and bull story. Eventually those close to him were called to give evidence, including his staff, and when public sympathy mobilised around one of his personal assistants, Gráinne Carruth, Bertie’s days were numbered.
In my office in Leinster House a few days after Ms. Carruth’s appearance at the Tribunal, I watched with my staff, the live coverage of Ahern emerging onto the steps of his department, surrounded by ministers, and announcing his resignation. I thought of all his successes, all the elections he had won, his insatiable appetite for constituency work, his reputation as a mediator, and above all, his indispensable role in negotiating the Good Friday Agreement in Northern Ireland with Tony Blair. His popularity, too, was epitomised for me by a night in St Joseph’s Boys Football Club in Sallynoggin when he officially opened the new club-house. When the formalities were over, I made my way towards the stage to welcome him to my constituency, only to find myself being pushed aside by a group of female constituents eager to get up close and personal with him. ‘Get out of our way, Eamon,’ they said with a smile, ‘we want to give Bertie a kiss.’
And now, it was all coming to a sad end for him.
Leadership of Fianna Fáil and the office of An Taoiseach was handed over to the only candidate offering to succeed, Brian Cowen. It was a long transition, with Cowen taking time away from the capital to celebrate in his Offaly constituency. The Government had yet to wake up to the recession, it seemed.
Brian Cowen’s first test was the referendum on the Lisbon Treaty now only a few weeks away. Very quickly it became painfully clear that the Government had not prepared for this. The Irish EU Commissioner, Charlie McCreevy, proudly proclaimed he had not even read it. In a radio interview, the new Tánaiste Mary Coughlan, seemed to have only the most rudimentary knowledge of it. It was a fiasco. Among citizens, there appeared to be resistance to this Treaty, even from among those who usually supported the EU. A new and credible opposition to Lisbon appeared in the form of Declan Ganley and his mysterious Libertas organisation.
My own first public meeting on the referendum was in Liberty Hall. To my surprise, the place was full when I got there, and when I started to speak, I sensed the mood was quite hostile. All of a sudden, I heard a voice asking gruffly from the audience: ‘What about the Passerelle?’ – a reference to an obscure detail in the Treaty. I knew I was in for a rough ride. When the meeting was over, one of my co-speakers, Proinsias de Rossa, who was an MEP at the time, was knocked to the ground and assaulted by a menacing group waving a video camera. What about the Passerelle, indeed.
Ruairí Quinn reported to the parliamentary party that on current trends the Treaty would be lost. It was decided that I should liaise with Brian Cowen and Enda Kenny, offer them our grim assessment and try to work out a joined-up campaign with them. This led to the plan that the Taoiseach and I would canvass together on a particular day in Dundrum Shopping Centre. When Tony Heffernan went out to reconnoitre the location for the photo shoot he discovered that the backdrop to the intended photo shoot was a Next shop front. I was repeatedly rejecting the notion of a Fianna Fáil-Labour coalition after the next election, and a picture of Cowen and me under a Next headline could not be allowed. But he couldn’t control everything: Cowen and I ended up –to the delight of the photographers and to the horror of my team – scoffing tea and scones together in a nearby café. We were joined on the canvass by local Fine Gael TD, Olivia Mitchell and by Seamus Brennan TD, then in the final stages of his illness. It was the last time I saw Seamus alive.
The Lisbon Treaty was defeated. In a poor TV interview afterwards, I came out with the words ‘Lisbon is Dead’. My intention was to say that the Treaty in its current form could not be put to the people again, but it was interpreted that I would oppose the holding of any second referendum. WikiLeaks later released a report by the American Ambassador of a conversation which he claimed that I had with him and which suggested that while I was publicly opposing a second referendum, I was privately indicating Labour support for one if held. I never met that particular US Ambassador at all!
We were halfway through 2008 and the Government had still not woken up to the fact that the country was in a critical condition, haemorrhaging businesses, jobs and reputation. It seemed that Fianna Fáil ministers who had become accustomed to government by auto-pilot could not mentally adjust to the new realities that economic circumstances had changed.
At first, nationalisation of the banks, as called for by Labour, was rejected by the Fianna Fáil-led Government. Eventually they were forced into it, first nationalising Anglo and later AIB. On the public finances, they were equally undecided. They began in July 2008 with a mini-budget which reduced expenditure by €1 billion. Reacting to the worsening circumstances, they brought forward the date of the 2009 Budget to October 2008.
