Dublin: Government Scrambles To Avert Total Collapse

26 Jan

Ireland‘s teetering government scrambled on Wednesday to get enough parliamentary votes for a bill central to an EU/IMF bailout or risk immediate collapse.

Ireland’s Finance Minster, Brian Lenihan, speaks to the media as he leaves the …More Enlarge photo

Three independent lawmakers have threatened to vote against the fiscal law and could sink its passage, casting doubts over Dublin’s commitment to its fiscal goals under an 85-billion-euro (72.9 billion pounds) rescue package.

If the finance bill fails to pass the vote at 1200 GMT, dubbed “High Noon” by local media, it would finally bring the curtain down on Prime Minister Brian Cowen‘s government, which has been stumbling towards collapse for months.

Cowen is trying to win the independent lawmakers around through changing some measures in the bill and opposition lawmakers could abstain to ensure the law is passed.

If all three independents vote against the bill it will be lost by a margin of two, at 82 against and 80 in favour. The speaker of the house, a Fianna Fail member, will vote if there is a tie.

Former minister for communications Eamon Ryan, whose Green party pulled out of government last week but still plans to vote in favour of the bill, struck a hopeful note.

“I think sense will prevail in the end,” he told state broadcaster RTE.

With an election looming in February after Cowen’s coalition imploded last week, the independents are using the bill to extract concessions, such as exemptions on social contributions for the low paid, which will be popular with voters.

“I am just looking for common sense,” said one of the trio, Mattie McGrath, who left Cowen’s Fianna Fail party this week. He said the Finance Minister Brian Lenihan would be replying to his concerns about the bill shortly.

“We will see what the morning brings.”

Irish people are fed up with the political turmoil which has seen eight ministers resign, a thwarted cabinet reshuffle, Cowen’s resignation as party leader and the withdrawal of the Greens from government — all in the space of a week.

In an editorial the Irish Independent newspaper despaired: “The country’s growing reputation for insanity can only be enhanced by these developments.”


The finance bill legislates for tax measures already being implemented as part of the 2011 austerity budget. If it fails to pass it will not necessarily jeopardise Dublin’s targets for tax returns.

But shelving the bill until a new government is formed might mean Dublin misses an end-of-March deadline from the EU and IMF to have the budget passed. A new administration could either decide to introduce an entirely new budget, thought unlikely, or alter the finance bill to introduce their own measures.

Such delays would spook investors already worried about Ireland’s ability to meet its fiscal and debt goals in the face of spluttering growth.

“Everyone is agreed on the size of the overall programme so in the broad sense of things it’s not a major problem. But it provides another of those, ‘What are they up to in Ireland’ stories and to that extent it could be unnerving,” said Austin Hughes, chief economist with KBC.

The finance bill is the swansong of Cowen’s government, which polls show heading for its worst election result as voters blame it for the crash and humiliating bailout of Ireland’s former ‘Celtic Tiger’ economy.

The polls indicate the next government is likely to be a coalition of the Fine Gael and Labour parties which want to renegotiate some of the terms of the rescue package.

Irish Central Bank Governor Patrick Honohan said he did not expect a change of administration to affect Ireland’s commitment to its targets given that all of the major parties have agreed to the overall fiscal commitments.

In an interview with Reuters he projected a weak 2011, saying recovery would be “very gradual.”

After the finance bill vote, Fianna Fail will hold an election for a new leader. Former foreign minister Micheal Martin is tipped to win.

(Editing by Sonya Hepinstall)


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