A close relative was working for an Irish civil engineering company in Thailand when the Pacific Tiger economies went belly up. I remember him commenting at the time the levels of remorse at the misdirection of the fast profits of those growth years, and the lost opportunities for developing infrastructure. Ireland, I suspect will have benefited from the direction given it by the EU’s structural funds. But, as John Murray Brown notes, there is nothing left in the tank. The so-called ‘optimal solution’ to the Broadmeadow Viaduct collapse alone is proof of that…Murray Brown:
…the reality is that whichever party is in power, stabilising the economy will involve awkward choices. Financial support for the banks will add to the fiscal burden. Reducing the fiscal deficit, while necessary to maintain credibility with the debt markets, risks worsening the economic contraction. Cutting expenditure, while it may dampen demand less than raising taxes, will hit the most vulnerable in society.
Such are the straitened circumstances of Irelands public finances, however, that the government is having to countenance cutting social welfare entitlements just to contain the deficit at current levels. Where several European Union countries have announced stimulus packages, Ireland has no resources to soften the impact of the recession, with the budget swinging from a small surplus in 2007 to a projected deficit equivalent to 12.2 per cent of GDP this year.
Interestingly he concludes with the suggestion that the kind of shadow boxing that has long characterised Irish politics, simply will not do (for government or opposition):
The government is starting to recognise that unless voters see the bankers and developers taking some of the pain, it will be difficult to secure a wider mandate for the rest of the reforms now under consideration. Responding to reports that Derek Quinlan, one of Irelands leading developers and owner of the Connaught and Berkeley hotels in London, had moved to Switzerland, Mr Lenihan last week seemed keen to reassure voters that Nama would have powers to recover its loans if the borrower had left the country.
I dont know if this man is paying his debts, he told FM Radio. But I do know that some arent paying their debts to Nama and it will have to take enforcement proceedings, seize the land involved, and hold it as an investment. And if the land is insufficient to pay the sum owing, the personal assets will have to be pursued.
It is tough talk from the minister but unless Dublin is seen to take tough action too, its ability to plough on with its recovery plan will be in doubt.
As Noel Whelan noted in the irish Times on Sunday, selling Nama will take a political will (along with a vision) that has thus far been lacking. And that political will, still substantially lies with Fianna Fail:
While academics have the luxury of always questioning, debating and redebating, ultimately the decisions about Nama must be made in the political realm.
The Cabinet has often been criticised for delaying or failing to show leadership and yet when it reiterates its intent to proceed with Nama, while open to suggestions for improvement, it is accused of rushing or bullying.
Cabinet, unlike a symposium or a blog, is a decision-making body. Governments have to decide and then seek parliamentary approval for their policies.
Having made its decision to initiate Nama, the Government should now steer the matter through both Houses of the Oireachtas and get on with the job.