Kenny's big gaffe was in the Dáil, not in Davos

Fine Gael made a commitment before the election to at least attempt to renegotiate the debt, but last week Enda Kenny told us "We have never looked for a debt writedown". By Vincent Browne.

A comment that Taoiseach Enda Kenny made in the Dáil last Tuesday was even more stunning than the airhead "people went mad borrowing" remark, which he made in front of the masters of the universe at Davos.

He told the Dáil: "We will not have 'defaulter' written on our foreheads. We will pay our way. We have never looked for a debt writedown, although we want an extension of flexibility from these facilities to help our taxpayers and in dealing with our deficit, and to help repay our debts in a more realistic fashion."

Never looked for a debt writedown? Having made promise after promise during the election campaign a year ago that he would do precisely that? On the basis of that promise, his party got its largest number of seats ever in our parliament.

That election manifesto stated: "A Fine Gael government will seek a mandate from the Irish people to renegotiate a more credible, fairer package that is better for Ireland and Europe.

"Fine Gael in government will force certain classes of bondholders to share in the cost of recapitalising troubled financial institutions. This will be done unilaterally for the most junior bondholders (owners of preference shares, subordinated debt and similar instruments), but could be extended - as part of a European-wide framework - for senior debt, focusing on insolvent institutions like Anglo Irish and Irish Nationwide that have no systemic importance."

That was a categorical commitment at least to attempt to renegotiate the debt, but now Kenny is saying: "We have never looked for a debt writedown."

Michael Noonan, Leo Varadkar, Simon Coveney and many other members of this government have said repeatedly that this government did ask for a writedown on the debt, but was refused. So what is going on? Does Kenny know what he is saying, or are the others deceiving us?

That Dáil performance last Tuesday was beyond pathetic, but that wouldn't matter much if it weren't an indication of how Kenny performs at international functions. We got a glimpse of how he performs at such functions from his conduct at Davos. How can we expect him to behave differently at the closed EU summit tomorrow - where the final draft of the fiscal treaty will be approved, and the imploding crisis in Greece will be discussed - given his performance at the open session in Davos?

It doesn't matter what the rest of the world thinks about us, but the coherence and persuasiveness of our representatives matters greatly - all the more so now, when our country is in such distress, partly because of the huge burden of other people's debt we are carrying to protect the stability of European banks.

That election stunt - sending Kenny to Berlin in the midst of the election campaign to meet German chancellor Angela Merkel on his own - was probably a major miscalculation. If what he is now saying is to be believed, it is as sure as can be that he never broached a debt writedown at that meeting.

Having failed to do so at that initial meeting, the Irish case was compromised from then on - and all for a photo opportunity. Actually, as far as Ireland is concerned, these EU summits seem to be no more than a photo opportunity for Kenny to be seen with important people, and maybe get a few autographs.

Maybe Klaus Masuch of the ECB was telling it like it was ten days ago, when he said at the Troika press conference that he could understand how the Irish government came to the view that it would be better to pay the unsecured Anglo bondholders €1.25 billion last Wednesday, implying that it was entirely a decision of the Irish government - and not a diktat from Frankfurt.

In other words, the Government is telling us porkies by protesting that it acted under threat from the ECB - for didn't Kenny say last week: "We have never looked for a debt writedown"?

Wouldn't it have been refreshing if, at the Davos assembly of very important people, Kenny had said something like the following: "The Irish crisis was caused by internal and external factors. We certainly mismanaged our own internal affairs and that caused the fiscal crisis, and we will pay whatever we have to pay to rectify that. But there were external factors also for which we do not - and did not - have responsibility. The low interest rates in the Eurozone were appropriate for Germany, but not for Ireland.

"It was partly under pressure from the ECB that we gave the bank guarantee in September 2008, and that has caused a massive burden of private bank debt to be inflicted on the Irish people. We have been told that, were we to default, even marginally, on this debt, the consequences to us would be calamitous, for it would destabilise European banks generally.

"So, to protect that stability, Ireland has to bear an enormous burden alone. This is wrong. It has to be Europe-wide burden sharing, and I am going to insist on that at the EU Council meeting on Monday."

One thing is now clear: Irish people were indeed mad to expect this Taoiseach to have the gumption to stand up for us.

Richard Bruton was right.


Image top: World Economic Forum.