‘Germans’ running 26-County finances

On the day it emerged European bureaucrats have taken up offices in the 26-County Department of Finance, EU economic commissioner Ollie Rehn flew into Ireland to inspect the Dublin government’s economic plans.

The commissioner met Mr Lenihan in Government Buildings. Later, at a joint press conference, Rehn called for political consensus ahead of this year’s budget.

Amid concerns that the sovereignty of the 26 Counties is being whittled away by Europe on the back of the economic crisis, Rehn said there were certain economic “rules of thumb” which the Dublin government needed to follow.

These usually tended to speak in favour of relatively more expenditure cuts than revenue increases, he said

Ireland has been a low-tax country, but now it is time to become a “normal tax country”, he declared.

Tomorrow, Mr Rehn will hold separate meetings with representatives of the opposition parties -- Fine Gael, Labour as well as Sinn Fein -- at the European Commission office in Dublin.

The meetings were held on the understanding that the current coalition government -- even if it somehow survives the passage of the 2011 Budget-- will call a general election in the Spring.

Meanwhile, there are strong doubts that the 26-County State will be unable to continue borrowing, as planned, in January, and will be forced to turn to external sources, including the EU and the IMF, to prevent a damaging default on its loans.

Writing in today’s Irish Times, prominent academic Morgan Kelly revealed that Since September, a permanent team of ECB “observers” had taken up residence in the Department of Finance.

“Although of many nationalities, they are known there, dismayingly but inevitably, as “the Germans”.

“So, thanks to the discreet intervention of the ECB [European Central Bank], the first stage of the crisis has closed with a whimper rather than a bang. Developer loans sank the banks which, thanks to the bank guarantee, sank the Irish State, leaving it as a ward of the ECB.”

Brussels is anxious to ensure that a 26-County financial crisis will not destabilise the euro or threaten the larger European economies, particularly the dominant German economy.

But in Dublin, political posturing continues. A number of Fianna Fail party and Green Party TDx were keen to take credit for the news that there will be no cut in the statuary 26-County old age pension, thanks to the massive political clout of Ireland’s old-age pensioners.

Pension levels have been considered sacrosanct in the face of cuts since October 2008, when old-age organisations held the largest protest in recent years outside Leinster House over a threatened reduction.

“We want to remain in control of our economic sovereignty, that’s for certain, but we do have several weeks left when we can shape a fair budget,” Minister of State for Equality Mary White told Irish television.

“This would send a good positive signal that we care about our pensioners, that we care about old and vulnerable people.”

ean Healy director of Social justice Ireland said Mr Rehn has “insulted Ireland’s poor and vulnerable people” by refusing to meet them.

Mr Healy said “It is totally unacceptable that the European Commission supports an approach which will see Ireland’s weakest groups take the major part of the ‘hit’ for the reckless actions of greedy bankers, incompetent regulators and an inept government.”

Meanwhile, Taoiseach Brian Cowen said he accepted “his share” of responsibility for the financial crisis when he addressed a Fianna Fail meeting in Glenties, County Donegal, last night.

But Mr Cowen placed most of the blame on Ireland’s banking system, which he said was undermined by “wrong” lending policies that were pursued and the “incapacity” of the regulatory system to predict the outcome of those policies.

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