More on the departure of the Troika

Quite a strange piece in the SBP by Pat Leahy at the weekend about the ‘exit’ of the Troika in the coming months – assuming all goes to plan. Now, this site has dealt with the concept of the exit, and its reality or otherwise, over the last week or two. But it’s hard to believe it’s much more than a cosmetic exercise where although nominally ‘responsibility’ for decision making will be returned to the Irish government, while in practice the parameters within which those decisions are taken will be tightly constrained, and far beyond the usual constraints of economic decision making in the contemporary era.

Strange, one may ask? Yes, and for a number of reasons. Firstly one hopes against hope that his reports from Government advisors are inaccurate because if not there’s a level of self-deception that is – frankly – astounding.

“My plan is to get the jeep that Michael Collins arrived in to Dublin Castle to accept the handover from the British in 1922. We’ll put Enda and Eamon in the back,” mused a senior government figure last week.

Uh-huh?

Ideally, he would have representatives from the troika lined up with a detachment of their economists and policy wonks from their barracks at the Merrion Hotel. As Taoiseach Enda Kenny and Tánaiste Eamon Gilmore dismount from the jeep and approach across the cobblestones in the Upper Yard, Klaus Masuch from the ECB and Ajai Chopra from the IMF will salute stiffly. They’ll all come to attention and the army band will play Amhrán na bhFiann as the tricolour is raised.

Sure, as Leahy notes, that’s ‘banter’, but it suggests a detachment from the reality of the situation that is dispiriting.

The banter illustrates something quite serious: that the exit from the bailout later this year is now firmly on the horizon. Of course, as the head of the National Treasury Management Agency John Costello said last week, exiting the bailout isn’t something that is achieved overnight. “They don’t ring a bell to say the bailout is over and austerity at an end,” he said.
But regaining the means and the power to manage our own fiscal affairs was the primary task the Fine Gael-Labour administration set itself when it took office in 2011. Its achievement – while it would not, by any means, spell the end of austerity – would be a signal moment for the country and for its government.

But as noted above, it’s not, it really isn’t. Then there are other oddities.

I read this and I recall a similar statement made some years back…

“By the autumn of this year, we’d expect to be fully funded for next year,” said a source in Government Buildings.

And what of this,

Achieving a new deal with the public sector unions is also regarded as an important step on the road to exit by both the political and financial worlds.

And…

The preference of the market is for agreement. “The sight of strikes [in Ireland] on screens all over Europe would certainly spook investors,” said O’Leary. “It’s the question they always ask – why no strikes?”
“The public sector has got to get more competitive,” said one market player. When it was pointed out to him that public servants have taken pay cuts, he barked: “Everyone else has to pay for their own pensions.”

‘Barked’. Okay. I will let others parse that last comment out.

And this last…

Market sources in Dublin and abroad say the continued budgetary discipline is the most important final step that Ireland can take to exit the bailout. “The markets are buying into the Irish success story,” said one source. “But they’ll be looking at whether things go off track, and whether the government is sticking to its plans.”
Holding the line on the reduction of the budget deficit will be crucial, sources say. This will create political pressures – already evident – as government TDs and ministers, spooked by poor poll ratings, seek to demonstrate some tangible benefit for people from the promissory note deal and the impending bailout exit.

What budgetary discipline means, and there’s another piece in the same edition, as well as more in the Irish Times on Monday, is effectively adhering to the agreements as regards budgetary cuts across the next number of years. And as already noted elsewhere the problem for the government is that trying to sell the ‘deal’ and the departure of the troika as an achievement in and of itself is insufficient if there is no amelioration of the situation at ground level. Indeed Leahy notes that the troika provided a ‘flak jacket’ of sorts to the government in terms of allowing it to push unpopular decisions – but that now, as evidenced by the polls that jacked is shot to pieces.

In a way what strikes me most is that the government in a way is running on empty in relation to Europe. Far too much was made of the promissory notes deal – once the details emerged it was clear it was nowhere near what it had been talked up to be. But, once achieved, to whatever extent it was achieved, it was over – no longer a goal to be striven towards and not much a prize to achieve. And now the departure is the next supposed ‘prize’.

But if the promissory notes deal evinced something of a ‘meh’ on the part of the electorate it’s hard to believe that the troika leaving town is going to see a better result. And after them, then what? What supposed great event will the government strive towards then?