As the crisis went on, he formed the view that the Taoiseach and senior members of government should brief newspaper and broadcast editors on the Government’s strategy. When he took it upon himself to do so, it became a source of contention with some in Government Buildings. In certain instances, they had a point: Lenihan was never good at circumspection and there were times when he should certainly not have returned journalists’ telephone calls. But there is no talking to a politician with a headline in his sights.
He generally liked journalists and counted a number of senior members of the press among his friends. He would telephone them, on occasion to take issue with something they had written, but more often to exchange views. Sometimes, he was on a fishing exercise. He understood how the media worked and was acutely conscious of its influence even at times of enormous personal difficulty.
Within two days of his cancer diagnosis in December 2009, his thoughts had turned to a strategy for dealing with the inevitable media reaction. From the outset, he accepted the public’s right to know, but he wanted to avoid intrusive regular updates. He prepared himself for those who would argue that he should resign and the accusation that he was hanging on to office. ‘Don’t worry,’ he said, as I tiptoed around these delicate issues: ‘I saw all this with my father. I know what to expect.’
We agreed that a frank interview with Sean O’Rourke on RTÉ’s News at One in the first week of the New Year was the best way to put the matter into the public domain. Those plans were scuttled by TV3’s decision to broadcast the details of his illness on St. Stephen’s Day. He greeted this development with extraordinarily calm: by comparison with his precarious medical condition, TV3’s editorial decisions must have seemed a trifling matter. With characteristic magnanimity, he quickly put the whole business to one side. It was left to the rest of us to bear a grudge on his behalf.
Budget 2010, delivered just a week before he became ill, had been well received as a tough, decisive budget that had grasped difficult issues, such as public service pay and reductions in social welfare, while also introducing much needed reform of public sector pensions. The deficit was reduced very slightly for the first time since the crisis began. His declaration at the end of his speech that we had ‘turned the corner’ was thrown in his face in many a subsequent debate. It did not bother him unduly. It was right at the time, he argued, in his indefatigable way. And it is true that the Greek crisis in the late spring of 2010 changed everything.
The seriousness of our economic position was, at this stage, by and large, well understood. The measures introduced were certainly very difficult and it is easy to forget the magnitude of the adjustment that had been visited on the country: between July 2008 and December 2009, savings and taxation measures amounting to €14.6 billion on a full year basis had been achieved. But amid all the bitterness and the anguish of the public discourse, there began to emerge that remarkable stoicism which characterised the response of the majority of Irish citizens to the crisis.
The perilous state of our banks remained a constant worry and absorbed an increasing amount of Lenihan’s time. But, at least until the late spring of 2010, it looked as if the plan to bring stability to the public finances was finally working. Then the backwash of the constantly mutating international crisis, this time with Greece at its epicentre, rolled in on our shores. In May 2010, interest rates on Irish government debt jumped in response to the Greek crisis and from then on, it was all about the spreads on our bond yields which ebbed and flowed all summer. Following a downgrade by Standard and Poors in August our bond yields rose sharply and events began to take on a momentum of their own.
Returning to the Department after a summer holiday, the anxiety was palpable. ‘I’m afraid that after all our efforts we are going to end up in the place we have been striving so hard to avoid,’ an official confided. As the economic indicators rolled in, it became clear that the hope in the spring of a nascent recovery had melted away. Lenihan became worried about the politics of the crisis. He was deeply concerned that the Government had no mandate for the action that he feared would now need to be taken. Very early in September, he went to the Taoiseach to argue the case for calling an immediate general election, but Cowen was firmly of the view that it was the job of government to bring forward a budget and deal with the fallout.
For the next two months, Lenihan and senior officials engaged in almost constant discussions with the Commission and the ECB on our budgetary preparations. This oversight by Brussels was partly due to changes introduced earlier in the year increasing surveillance of individual member states’ budgetary planning. But it was also a clear indication of the growing concern in Europe about our budgetary position and the state of our banks. Lenihan hoped that by embracing their involvement in our budgetary process we might avoid the need for a formal Programme. The Government’s lack of a democratic mandate continued to worry him as he tried to make his way through uncharted waters.
He forged ahead with the decision to publish a four-year plan, which would set out in detail the measures to be taken to restore order to our public finances. He wanted a plan that could be read and understood by every citizen. He believed our own people, as much as the international markets and our masters in Europe, needed to be given certainty about the immediate future and confidence that we had a coherent strategy to get the country back on track. In effect, Lenihan’s plan was to become the blueprint for our bailout programme. Adherence to it over the last four years has played no small part in the improvement of our economic outlook.
A small group was given responsibility for writing the plan and, in between his constant engagement with Europe and the ever-worsening position of our banks, he would meet with us to review progress. Meanwhile, events were gathering pace: as our borrowing costs continued to rise, we withdrew from the international markets; the adjustment required to return us to a deficit of 3 per cent of GDP by 2014 went from €7.5 billion to €15 billion; the cost of bank recapitalisation increased; the ECB became ever more uncomfortable about its level of exposure to Irish banks; and Angela Merkel and Sarkozy made unhelpful comments at Deauville. There was beginning to be an inexorability about where these events were leading us and a feeling that we were losing control.
In early November, Commissioner Olli Rehn paid a brief visit to Dublin during which he endorsed ‘convincing measures’ by the Government and the parliament to deal with the crisis. Within days, Commissioner Rehn, who had travelled from Dublin to the G7 meeting in Seoul, rang Lenihan to say a lot had changed since his visit to Dublin. The precarious position of our banks had been discussed by the finance ministers of the largest economies in the world and they were worried. There followed ten days of rumour, international manoeuvring and some heavy media manipulation. It was difficult not to conclude that we were being railroaded into a programme. On 18 November, three days before the Government announced its intention to request financial support from the EU and the IMF, the Governor of the Central Bank, Patrick Honohan, rang RTÉ’s Morning Ireland from Frankfurt to tell the nation that arrangements were being made with external agencies for a Programme of Assistance for Ireland.
However irritated Brian Lenihan might have been by the Governor’s interview at the time, he bore him no ill will. In a conversation soon afterwards, he said Patrick Honohan had his own dilemmas and he understood that he did what he felt he had to do.
The whole business was badly handled: more information should have been made available to the public at an earlier stage. But in the Government’s defence, the circumstances could not have been more appalling. We were being swept in the direction of a bailout, even though we had access to funding; some EU member states were taking the opportunity to throw our corporation tax rate into the mix; and there was no agreement with the ECB about how our banking crisis should be addressed. The fact that media outlets were being briefed by sources in various European capitals made it particularly difficult to devise a communications strategy. The Government was in a very difficult position. But whatever about accusations of ineptitude, suggestions that it was playing for time to save its own political skin were unfair. Those at the most senior Government levels had no illusions about their political prospects: they already knew their goose was well and truly cooked.
Just over a week after the formal application for external assistance, Lenihan delivered his fourth and final budget speech. He presented the arguments in favour of the bailout he had fought