A GREEN THREAT TO THE GOVERNMENT?

C O N F I D E N T I A L SECTION 01 OF 02 DUBLIN 000422 SIPDIS E.O. 12958: DECL: 10/06/2019 TAGS: PREL PGOV EFIN ECON EI SUBJECT: A GREEN THREAT TO THE GOVERNMENT? REF: A. DUBLIN 417 ¶B. DUBLIN 416 ¶C. DUBLIN 361 ¶D. DUBLIN 360 ¶E. DUBLIN 217 DUBLIN 00000422 001.2 OF 002 Classified By: Amb. Daniel M. Rooney. Reasons 1.4(b/d). ¶1. (C) Summary: The Green Party, the Irish government's junior coalition partner, will hold a special convention on October 10 to vote on a revised Program for Government and draft legislation setting up the National Asset Management Agency (NAMA). John Gormley, Minister for Environment, Heritage, and Local Government and leader of the Green Party said that if either of these is rejected the Greens, "could not continue in government." A DFA contact told us that if the government falls, it is possible the Lisbon Treaty ratification could be delayed. This would delay the legislation implementing NAMA as well. Recently, Gormley admitted to the Ambassador that this is a "tough time to be in government," with three major political hurdles to overcome over the next several months. In addition to the Program and NAMA, the government must introduce a harsh budget that will be politically unpopular. It is unlikely that the Greens will leave government even if they do not approve the government Program; rather, they will likely continue negotiations until they get a deal that party members can live with. However, this would delay the beginning of discussions on the budget -- something the government would like to avoid. End Summary. Will Greens Approve New Government Program? -------------- ¶2. (C) The Green Party is stuck between some of its more strident members, who complain that the leadership has strayed from the Party's ideals, and the exigencies of governing. In a September 28 meeting with the Ambassador, Gormley said that it was "increasingly difficult to govern with the opposition constantly criticizing" the government. He understood that this is politics but that the opposition is "taking it a bit far." That said, he admitted that the Greens (the junior partner to the much larger Fianna Fail (FF) party) have a lot to lose by leaving. ¶3. (C) Gormley continued that the government faced three serious challenges before the end of the year. First up are negotiations this week over a revised Program for Government. The Greens have laid out an opening position that will be difficult for FF to swallow, including a rollback of cuts to secondary education, maintaining high social welfare benefits and introducing universal health care (Ref A). If the two parties reach agreement, then the Program will be voted on by the Green Party membership at a special convention on October ¶10. According to party rules, the agreement must receive a two-thirds majority in favor in order to pass. If the program is not approved, negotiations will either continue or the Greens will leave the coalition, effectively toppling the government. Could Greens Imperil Lisbon Treaty? -------------- ¶4. (C) On October 5, a Department of Foreign Affairs (DFA) contact told us that officials in his department are worried about the Green Party's decision and how it might affect Lisbon Treaty ratification (Ref B). He explained that, if the Greens leave government, the Dail (Irish parliament) would be dissolved (because Fianna Fail does not have a majority of the Dail's members) and ratification of the Lisbon Treaty would have to wait for a new government. Our DFA contact said that there are ways of avoiding such a chain of events but, "it is a real possibility." The DFA has sent a memo to Minister Gormley "reminding him and his party of their responsibilities in this matter." ¶5. (C) On October 5, Poloff spoke to Peadar O Broin of the Institute of International and European Affairs (IIEA) who explained that because of technicalities in the vote certification process, the Parliament will not be able to ratify the Lisbon Treaty until some weeks after the October 2 vote. If the Greens leave government this weekend and Parliament is dissolved pending early elections (which must be held within 17 to 25 days of dissolution of Parliament), the Lisbon Treaty is unlikely to be ratified until a newly constituted parliament can act. The Greens and NAMA -------------- ¶6. (C) According to Gormley, the second hurdle is the legislation setting up the National Asset Management Agency DUBLIN 00000422 002.2 OF 002 (NAMA),meant to take bad property loans off of the books of Irish banks in the hope that the banks will begin lending more again (Ref C). The Green Party's rank-and-file, many of whom blame bankers and property developers for Ireland's financial mess, objected to some of the provisions of the legislation and urged the party leadership to seek amendments, not all of which Fianna Fail agreed to. The Green Party will vote on whether the party should support the NAMA legislation at the October 10 special convention. In a September 18 interview, Gormley said that if either the Program or the NAMA bill were rejected at the convention, then the Greens "could not continue our participation in government." ¶7. (C) On October 6, Econoff spoke with Alan Barrett, senior economist at the Economic and Social Research Institute, who confirmed what O Broin said regarding the Lisbon Treaty and added that the pending NAMA legislation would also be delayed if Parliament is dissolved. Unlike in the case of the Lisbon Treaty which is supported by all major political parties, however, Barrett said it was not clear that NAMA would survive in its current form -- if at all -- under a different government. This would be a severe blow to the moribund Irish economy just after receiving welcome news with the Lisbon passage. Most Greens Want to Stay in Power -------------- ¶8. (C) Econoff spoke to Joe Curtin, a Green Party member and senior researcher at the IIEA, who predicted that both the Program and NAMA would pass at the convention. He said that most Party members realized that it is better to be inside than outside government and that, "the Green Party has a real opportunity to affect change." Curtin admitted that there is a bit of brinksmanship going on between Green and FF officials, but this is constrained by the fact that both parties recognize they need the other to remain in power. Upcoming Austerity Budget -------------- ¶9. (C) Gormley told the Ambassador that the final challenge will be the government's 2010 budget which will be introduced in December. The government must come up with about USD 6 billion from increased taxes and decreased spending in 2010 (Refs D and E). This will be the first in a series of harsh budgets aimed at getting the deficit under three percent of GDP by 2013. The Greens oppose many of the cuts -- in particular in education and social welfare payments -- an they will be discussed within the Program for Gvernment negotiations. Comment -------------- 10 (C) We agree with Curtin that it is very unlikelythat the Greens will pull out of government thiswekend. The party would face political oblivio if a general election were held today. However there is a greater chance that a revised Programdoes not get the necessary two-thirds of the vots at the convention. This would ikely lead to an extension of the negotiations between the Greens and FF, which would delay the start of the government's internal discussions on the December budget. This would be problematic because government officials need as much time as possible to minimize the political fallout from what is widely expected to be a draconian budget. End Comment. ROONEY