Notebook

October 22, 2012 6:50 pm

Kenny needs helping hand from Merkel

Ireland is a special case, whatever that means, writes Jamie Smyth

Irish-German relations have seen better weeks. Barely had the Irish recovered from a 6-1 drubbing by Germany in a football World Cup qualifier than Angela Merkel delivered a blow to Dublin’s efforts to persuade Berlin to shoulder some of its €64bn in bank debts. “There will not be any retroactive direct recapitalisations,” was the response from the German chancellor when asked at last week’s EU summit whether there was a possibility of providing aid to Spanish banks – and by extension Irish lenders.

For Dublin this was embarrassing. Minutes earlier Enda Kenny, Ireland’s prime minister, had assured media that solid progress had been made on gaining EU approval to allow Dublin to restructure the debts it took on to support its banks.

Mr Kenny’s opponents were quick to dub photographs of the taoiseach embracing Ms Merkel at the start of the summit as evidence of a “Judas kiss”. Back home the airwaves heated up as the radio phone-in shows fielded calls from angry voters. “Our days of doffing the cap to people as far as I’m concerned are gone,” one contributor, called Barbara, told Liveline, the most popular show. For good measure she added: “I’d like some of our ministers to develop a set of liathróidí (Gaelic for balls).”

Two days of frantic diplomacy, a 30-minute phone call between Mr Kenny and Ms Merkel and a joint statement suggesting Ireland is a “special case” has calmed the storm. But with no sign of clarity yet, Mr Kenny remains vulnerable just as Dublin prepares to unveil its toughest austerity budget so far.

Dublin’s ability to implement austerity measures without social unrest has earned the taoiseach plaudits abroad. Mr Kenny – who will take over Ireland’s presidency of the EU which starts in January – has travelled extensively in the US, China and beyond to sell the Irish comeback story. Investors have rewarded the country with its benchmark bond yields plummeting below those of Spain. “The Celtic Comeback” ran the headline over a photo of Mr Kenny on the cover of Time magazine earlier this month.

Banx illustration

Back home it’s a different picture. Mr Kenny, who was elected prime minister in March last year, has seen his personal satisfaction ratings slip to 33 per cent.

The future does not look any brighter. Mr Kenny faces a conundrum ahead of Ireland’s scheduled exit from its bailout at the end of 2013. With gross debt creeping up to 120 per cent of gross domestic product and economic growth stalled, does he tell the EU the country’s debt is unsustainable and demand early help? Or should he continue to promote the Celtic comeback story and hope Ireland’s EU partners decide to lessen its debt burden? Either way Mr Kenny’s relationship with Ms Merkel will be critical.

Anglo the musical

Mr Kenny must take heart from the fact that he can’t possibly run the country as badly as his predecessors Brian Cowen and Bertie Ahern. The two former leaders of the Fianna Fáil party have disappeared from public view since retiring following the country’s economic collapse, albeit with handsome state pensions.

But the men are due to return centre stage next month with the opening of Anglo The Musical , a satire on Ireland’s boom and bust that began with the collapse of Anglo Irish Bank. Rehearsals, which began last week, provided a preview of the irreverent Spitting Image-style puppets, which will tell the story of how “it only takes a few muppets to screw an entire country”.

It is unlikely that Sean Fitzpatrick, the former Anglo Irish chairman, will see the show. The bankrupt businessman faces charges related to financial irregularities at the bank and his case is expected in court during the musical’s two-week run.

Quinnasty the saga

Speaking of courts, next week Sean Quinn, another Celtic Tiger titan who has fallen on hard times, is due to be sentenced following his conviction for contempt of court. The former billionaire and his family have appointed new legal advisers to fight Anglo Irish’s attempt to secure control of a €500m property portfolio, which he admits trying to put beyond the reach of the bank. The saga, which has so far featured secret videotapes, a €100,000 wedding cake and protest marches in Quinn’s home town, has become an Irish soap opera, known as “Quinnasty” by the media, with each court case eliciting more scandalous detail.

jamie.smyth@ft.com

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