Former Taoiseach Brian Cowen has just been made a doctor of law by the National University of Ireland (NUI). Not surprisingly, this has generated a cacophony of criticism – both of Cowen’s record in office and of the NUI for the granting of the award.
I agree with much of the criticism, but let me start with a comment of Cowen’s in his conferral address that contains more than a grain of truth: “Europe forced certain countries such as Ireland to implement inappropriate decisions such as protecting international bondholders.”
Cowen’s comment may be self-serving, but it is clearly true that key European decision makers sought to protect the interests of their own banks and other bondholders during the crisis.
Academic research by, among others, Helen Thompson of the University of Cambridge, bears this out. “Bailouts” to the periphery countries (including Ireland) were, in reality, Thompson writes, “an opportunity to Europeanise the problems of the German banking sector”. The German banks, which had lent recklessly to Ireland and elsewhere, were let off the hook by injections of public money (to be repaid by the Irish exchequer).
Irish Times columnist Fintan O’Toole is right to say that the extraordinary burden Ireland bore (and continues to bear) as a result of the debt crisis was, in part, “to shore up the euro zone and the European banking system”. And despite subsequent (claimed) promises to the contrary, Ireland did not get reimbursed for bailing out those German and other European banks. Nor will it.
Criticism of the EU tends to be rare and muted in Ireland – the only pity here is that neither Cowen nor O’Toole go further in their attacks.
For the most part, however, Cowen is on shakier ground when he tries to justify his record. This is most evident when he speaks of “deficiencies in regulation” of the banking sector.
His record as Minister for Finance (2004-8) was not principally a record of deficiency or of failure to regulate the financial sector – it was a record of encouraging that sector in its ever-more-reckless behavior.
Examples include his rejection of a 2006 Revenue proposal to tax “contracts for difference” transactions (which might have helped at least slow down speculative share purchases, such as those of Sean Quinn in Anglo Irish Bank), and his role in 2007 legislation that allowed Irish banks to use commercial property loans as collateral for further borrowing. Cowen was not asleep at the wheel (which he seems to think might cast him in a marginally better light) for the financial crash – he was pumping fuel into the tank.
Cowen also claims that his government could not, once the crisis broke and he became taoiseach in 2008, allow “financial institutions to fall”. It is, remarkably, his only (indirect at that) reference in his NUI speech to his government’s disastrous 2008 blanket bank guarantee that saw the debts of institutions that had no core role in the Irish economy (Anglo chief among them) underwritten by the state.
Did Anglo have to be included in the bank guarantee? And could it subsequently have been excluded in order to lessen the overall cost of the bank rescue scheme, including the bill for the notorious Anglo promissory notes? These are interesting questions but not ones that a self-absolving Doctor Cowen seems particularly interested in addressing.
Finally, Cowen credits his government with “laying the foundations for a return to growth and job creation in the future”. As I have noted here before, building on the work of my UCD colleagues Sam Brazys and Aidan Regan, the Irish economic recovery (job creation especially) was largely attributable to an influx of IT firms that were barely impacted, one way or the other, by the crisis or by Cowen’s austerity programme.
Cowen joins a long list of prominent Irish people who eschew real accountability. The key here, as often, is lack of specificity. Cowen ostensibly accepts responsibility for “mistakes” but does not actually identify what – personally, individually (and the list would be long for him) – those were.
The “failure” becomes generalised and vague, which means that at the end of the day no individual can be held to account. Not even the most powerful politician in the state, who as much as anyone helped drive the economy off a cliff, is really to blame.
Instead he is to be rewarded with an honorary doctorate and, earlier, membership of the board of Denis O’Brien’s Topaz company – corporate Ireland, as well as academic Ireland, is more than happy to give the doctor a clean bill of health.