Ireland Calling by John Spain
Brian Lenihan: the lost leader
Posted on Wednesday, June 15, 2011 at 01:12 PM
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|Brian Lenihan pictured with a copy of the Irish budget in 2008.|
THE profound sadness across the country at the death last week of the former Minister for Finance Brian Lenihan crossed party lines, social levels and age groups.
It was a universal grief, a feeling shared by everyone here that we had lost one of our best, taken from us in tragic circumstances at too early an age (just 52) and at a time when politics in Ireland really needs people of his caliber and integrity.
In Hemingway's memorable phrase, courage is the ability to show grace under pressure, and Lenihan was the perfect example of that. For the past year and a half he was battling both deadly pancreatic cancer and the biggest financial crisis ever faced by the state, an exhausting double burden.
Because the news about his illness had leaked out, he had to do it in public. Yet he managed to do so always with composure, eloquence and good humor.
He never complained or looked for sympathy, or even a little time off. He maintained his dignity at all times, as well as a sunny optimism that was infectious.
It was an extraordinary exhibition of grace under extreme pressure, of true courage. The people of Ireland recognized that and they admired him greatly for it.
So when he lost the battle with cancer last week a wave of genuine sadness swept over the country. It just didn't seem fair that someone so gifted and so good had been dealt such a rotten hand. He deserved better.
In some ways Lenihan seemed to be a throwback to an earlier golden age in politics, when a certain formality and a degree of reserve were combined with honesty and charisma in leaders like Jack Lynch, or even JFK.
Lenihan had the same patrician aura, the same commitment to public service, the same style and ease, the same gift for oratory and the same capacity for hard work.
He should have been leader of Fianna Fail and taoiseach (prime minister), but Bertie Ahern, probably recognizing the threat from his ability, did not promote him early enough and so we got Brian Cowen instead.
When Cowen took over as taoiseach halfway through 2008 he had the good sense to make Lenihan his minister for finance. But already the storm clouds had gathered, and it became Lenihan's unenviable role to be the public face of Ireland's financial crisis as the economy faltered and we teetered on the brink of collapse before the eyes of the world.
From then until the defeat of the Fianna Fail led government in February this year Lenihan was in the center of the storm, facing a crisis of such magnitude that it threatened our very sovereignty.
It was a crisis on a scale that no other minister for finance here had ever faced since the foundation of the state. And for part of 2009 and all of 2010 -- right through the time we were forced into taking the bailout from the EU/IMF -- Lenihan had been undergoing treatment for pancreatic cancer, one of the most deadly forms of the disease.
The pressure must have been horrendous, with endless draining meetings at home and in Europe, yet he never faltered and he did what he thought was best for the country in very difficult circumstances.
Patrician is a good word to apply to Lenihan, in its best sense. He came from a privileged background, something that can often spoil a person, but in his case had the opposite effect. He appreciated deeply the advantages he had been given by birth and he used them as best he could, not to line his pockets, but to make the country a better place. In that he was a Fianna Fail patriot in the old tradition.
He was part of a political dynasty, with a grandfather and father who had both been in the Dail (Parliament).
His father, also Brian, had been tanaiste (deputy prime minister) and a presidential candidate, and was probably the most popular Fianna Fail figure of his generation.
Brian junior was sent to the famous Jesuit school in Central Dublin, Belvedere College, alma mater to a long list of high achievers from James Joyce to Tony O'Reilly, and then went on to study law (like his father) at Trinity College and in Cambridge. He excelled at everything, getting a first in Cambridge. He was fluent in Latin and French as well as Irish, a cultured man who read voraciously and carried his learning lightly.
He worked as a lawyer and a university law lecturer, but after the death of his father politics claimed him. Ahern left him on the back benches for years before eventually making him a junior minister and then minister for justice.
Brian Lenihan dies, Former Irish Finance Minister was an heroic figure who battled deadly cancer
Even for politically adverse youth, Lenihan was a hero
Brian Lenihan, former Irish finance minister dies of pancreatic cancer
He had to wait for Cowen's arrival before being given the top job in the Cabinet. He became minister for finance in May 2008 just as the economy began to fall apart. It was the unluckiest timing imaginable.
With only a brief ministerial career behind him and knowing no more economics than any young lawyer, however brilliant, it was instant immersion in the complexities of high finance, fiscal policy, budgets, banking, bondholders and bullying international bodies like the European Central Bank and the IMF.
He learned fast because he had to, and in pressure situations in press conferences with financial journalists firing complicated questions he not only coped but was impressive.
He appeared to have a firm grasp on the issues and on what he was doing. And he was courageous and proactive.
He was so alarmed by the mess we were in, by the shrinking tax revenues as the construction boom collapsed and the yawning deficit in state finances that he introduced an emergency budget within a few months of getting the job.
Including that one, he brought in four tough budgets in his three years as minister for finance, imposing the cutbacks and corrections that we needed to do to get our borrowing back onto a sustainable level.
That job is not finished yet. There is still a long way to go, a lot more pain to come, with more tax and more cutbacks in state spending. But the heavy lifting on the overall budget problem was started by Lenihan.
It cost him and Fianna Fail dearly, although most people realized that the mess was not of his making. Indeed, it seems certain that if he had been in finance earlier he would have cut through the soft landing baloney of the Ahern/Cowen clique and started the correction long before it did happen.
In spite of this he is likely to be judged harshly by history because he was the one, with Cowen, who introduced the blanket guarantee for the banks. He had only been minister for a few months when Anglo Irish started to go belly-up, and the markets were getting very nervous about our main banks as well and their massive property loans.
On that infamous night in September 2008, with the top bankers in the country warning him that the whole system was on the point of collapse and with it the Irish economy unless the government stepped in with a rescue, Lenihan signed up to the blanket guarantee.
From Europe he was being urged to do it by the head of the European Central Bank, Jean Claude Trichet, who told him the Irish banks had to be saved for the good of the country.
Of course we now know that what Trichet was really concerned about was contagion from a banking collapse in Ireland to banks in Europe. If it meant the Irish taxpayer had to be buried under a mountain of debt to prevent a crisis in Europe, so be it.
What the guarantee meant was that the enormous bank debts were transformed into state debt, with the taxpayer liable for everything. In retrospect it looks like a disastrous decision.
But we have to remember that at the time no one realized the scale of the problem. Lenihan was being told by the experts around him that the problem was manageable, that it was a temporary problem of liquidity in the main banks, not a solvency issue of banks that were going bust.
Lenihan was surrounded by Department of Finance officials who were incompetent and did not understand what was going on. In fact it is likely that even the top bankers who were minimizing the problem on the night did not themselves realize just how big the problem actually was.
It wasn't long before the truth began to emerge. The markets were not fooled and no one would lend to Irish banks.
Having nationalized Anglo, Lenihan eventually had to pump so much borrowed money into the two main banks that one is already owned by the state and the other is about to follow. Along the way the two biggest building societies (savings and loans) ended up in state ownership as well.
Lenihan set up NAMA, the state agency designed to take the bad property loans off the books of the banks so that they could start lending to business again and get the economy going. That is now costing us a fortune and the banks are still not lending.
And finally, at the end of last year, Lenihan was forced to swallow his pride and accept the bailout from the EU and the IMF for Ireland, with all the humiliating conditions that are attached.
So overall, as I said, history may well judge Lenihan harshly. However, it can truthfully be said that on the evidence available to him at the time, the solutions he implemented must have seemed the most radical, the bravest and the best.
It is a measure of how much he was trusted and liked that even now, when we know better, there are few who blame him for the sorry state we are now in. The new government, in spite of all the bluster before the election, is continuing along the same path.
They are now getting ready to raid the last €5 billion from the National Pension Reserve for their jobs program. That would be justifiable if we could be sure that the investment would produce enough to pay the pensions when they are needed, as well as jobs now that may or may not last into the future.
We were all told, Lenihan included, that to let the banks here go bust and to burn the bondholders and the French and German banks which had poured money into the Irish banks would be an absolute disaster.
We were told that it would make Ireland into a financial leper colony and that the money markets would never touch us again. So the state had to step in with the guarantee.
In spite of us doing this, however, the Irish banks and the Irish state still can't borrow money on the markets.
The government's aim is to start borrowing from the markets again next year, but some experts are saying it will be 2013 at the earliest before we will be able to do so, and that is dependent on meeting our deficit targets.
Iceland, you my remember, did the opposite and let its banks default when it got into trouble at around the same time as Ireland. Yet it is now back in the markets successfully raising money at around 5%, which is not only a lot cheaper than the 11% yields last week on five year Irish bonds but even cheaper than the bailout we have been given by the EU/IMF!
Lenihan would have got a laugh out of that. He had no problem laughing at himself. He will be missed.