IRISH PRIME MINISTER INCREASINGLY BELEAGUERED

C O N F I D E N T I A L SECTION 01 OF 02 DUBLIN 000577

SIPDIS

E.O. 12958: DECL: 10/21/2018
TAGS: PGOV PREL EI
SUBJECT: IRISH PRIME MINISTER INCREASINGLY BELEAGUERED

REF: A. DUBLIN 573

B. DUBLIN 571

C. DUBLIN 569

D. DUBLIN 556

E. DUBLIN 545

DUBLIN 00000577 001.2 OF 002


Classified By: Pol/Econ Chief Ted Pierce;
Reasons 1.4 (B) and (D)

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Summary
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1. (C) October has not been kind to Irish Prime Minister
(Taoiseach) Brian Cowen. It opened with the Government
struggling to contain the damage from the global financial
crisis and a faltering Irish economy (Refs A and D). On
October 16, Cowen had to explain to the European Council that
Ireland was not yet ready to propose ways to resolve the EU
dilemma created by Ireland's rejection of the Lisbon Treaty
(Ref C). Then, in the face of the economic crisis, came
Cowen's release of an austerity budget (Ref B),which has
been savagely attacked by friends and foes alike. The flap
over the budget has reinforced a perception that Cowen's
authority and credibility are slipping away and that he is
out of touch with the people of Ireland ) perceptions that
were sparked by Cowen's remarkable failure to persuade the
Irish public to pass the Lisbon Treaty referendum in June

2008. End summary.

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European Council Gives Cowen a Break ...
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2. (U) On October 16, Cowen told EU leaders at the European
Council meeting in Brussels that the Irish government was not
ready to propose a way forward in responding to Ireland's
June 2008 Lisbon Treaty rejection. He noted that a
parliamentary committee on Ireland's future in the EU had
been established, which would further examine the issue and
report out by the end of November. He also said that the
Irish government would consult the legal service of the EU's
Council of Ministers to explore options that could make the
Lisbon Treaty palatable to the Irish public. (Note: The
legal service is responsible for drafting EU treaties in
consultation with member states. In the past it has devised
legal formulas to enable states to opt out of parts of
treaties. End note.) Cowen indicated that options would be
presented to the European Council at its December meeting,
noting that the Irish public would need to be reassured about
the role of the EU in matters of tax, abortion, the country's
neutrality, and the status of its commissioner. He declared
that Ireland should be at the heart of Europe, saying that he
saw a need for stronger institutions and more effective
decision-making as provided for in the Lisbon Treaty.


3. (C) French (and current EU) President Nicolas Sarkozy,
assured Cowen of the support of the European Council.
However, he also suggested that if Ireland could not come up
with its own proposals for moving the Lisbon Treaty forward
in December, he might table his own. (Comment: In December,
the European Council will likely expect that proposals put
forth by Cowen will enable the European Parliament election
in June 2009 and the appointment of new commissioners in
November 2009 to be conducted under the new Lisbon Treaty
rules rather than the existing Nice Treaty rules. December,
however, may be too soon for Ireland to commit to the Lisbon
Treaty rules (Ref C). End comment.)

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... But His Own Party Does Not
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4. (SBU) Forced into austerity by the global financial
crisis and the downturn of the Irish economy, Cowen's new
budget, unveiled on October 14, raises taxes and reduces
benefits (Ref B). A fierce public and political outcry has
ensued. Espcially sharp criticism has been leveled at Cowen
or his plan to eliminate the automatic entitlementof all
people 70 and older to free medical care nd use a means test
instead to determine who witin this group should pay. Not
only did the oppoition and the public express outrage at the
elimiation of this entitlement, but non-Cabinet Membersof
Parliament from his own party Fianna Fail, Members of
Parliament from his coalition partner Green Party, and
independent Members of Parliament who have generally
supported the coalition also vigorously objected. One Member
of Parliament, Joe Behan, a 20-year Fianna Fail veteran,
resigned from the party in protest. An independent Member of
Parliament called the measure "socially unfair, morally wrong
and political madness." Another publicly withdrew his
support for the government. Some political commentators

DUBLIN 00000577 002.2 OF 002


started talking about a vote of no confidence in Cowen's
government.


5. (SBU) Stung, Cowen appealed on October 19 for "time and
space" to find a solution to the uproar. Delaying a
long-planned trip to China, he stated that his proposed plan
to eliminate free medical care for all those 70 and older
would need to be changed in order to gain wider public
acceptance. He indicated that his government would consult
with the Irish Medical Organization on solutions. However,
he reiterated that an acceptable solution had to be sought
that would sustain needed reductions in government
expenditures. Union leaders warned that increased taxes and
reduced benefits could derail the social partnership
agreement negotiated in September but not yet finalized (Ref
E). (Note: The government, the business community and labor
meet triennially to reach voluntary agreements on wages and
benefits. End note.) Opposition Fine Gael leaders tabled a
parliamentary motion, to be debated the evening of October
22, calling for a reversal of the elimination of free medical
care for all those 70 and older.


6. (SBU) In a hastily announced press conference on the
morning of October 21, Cowen announced to the nation that he
had "listened carefully" to the "depth of feeling" expressed
and had found a solution. Expressing regret for the anxiety
caused and blaming a failure to "adequately communicate" for
the uproar, he pointed out that 70 percent of those 70 and
older would have remained eligible for free medical care in
spite of the policy change. Nonetheless, he went on to say,
the government had decided to raise the threshold for
eligibility for free medical care such that 95 percent of
those 70 and older would continue to be eligible. Cowen
insisted that the "budgetary parameters" he had originally
set ) a savings of euro 100 million ) would be maintained
by renegotiating payment rates for the treatment of those 70
and older as well as realizing savings by not paying for
medical treatment for the wealthiest five percent of this
group. Following Cowen's press conference, political
commentators referred to "a revolt in the ranks," "a
breakdown in party discipline," and "the collapse of Cowen's
authority."

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Comment
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7. (C) Once the political dust had settled over the weekend,
it became clear that those objecting to the elimination of
free medical care for all those 70 and older did not intend
to bring down Cowen's government (and perhaps their own
political fortunes). Rather, they were warily eyeing the
voters in their constituencies and were trying to position
themselves as champions of the vulnerable. Most appear happy
with the compromise crafted by Cowen. Nonetheless, the
incident has reinforced a perception that Cowen's authority
and credibility are slipping away and that he is out of touch
with the people of Ireland ) perceptions that were sparked
by Cowen's remarkable failure to persuade the Irish public to
pass the Lisbon Treaty referendum in June 2008.
FOLEY