One hundred and thirty days after the general election, Ireland is one step closer to the formation of a new historic government.
Fianna Fail, Fine Gael and the Green Party have concluded a coalition deal, and if accepted by party members, this will be the first time in history that two center-right parties enter the government together.
The February elections left a watershed after the nationalist party, Sinn Fein, won the most seats in the Irish Parliament in its history and reaffirmed the duopoly that Fianna Fail and Fine Gael had enjoyed since the Republic was formed. Sinn Fein’s rise came when voters expressed their dissatisfaction with the lack of housing and the poor healthcare system under Fine Gael.
The new coalition is facing a number of challenges, given the economic disruption caused by the coronavirus pandemic, as well as the continuing uncertainty about Brexit. These three parties will also need to decide whether they will be able to make the changes required by the majority of voters who turned to the left Shin Fein.
Although Ireland, as in many other countries of the world, is witnessing the destruction of its economy, the real question will be how it will emerge from the crisis. Before the virus appeared, Ireland’s economy was one of the most efficient in Europe: it bounced back after demanding salvation after the 2008 financial crisis. Now unemployment has skyrocketed to a record high and has raised concerns about a return to large-scale emigration, periodically observed throughout its history.
The new government plans to launch a package of tax incentives in July, which will be aimed at decarbonizing the economy, and says it wants to achieve a “recovery led by jobs.” It is assumed that this will be financed by issuing debt obligations, and the outgoing government has already entered the market three times this year and has seen record demand.
Before the virus appeared, the Irish economy was already faced with great uncertainty due to Brexit.
Negotiations between the EU and the UK have not yet led to a trade deal, and confirmation that the extension of the transition period will not be extended has increased the prospects for a tough Brexit.
Avoiding a tight border between the Republic and Northern Ireland will continue to be a key challenge, given the integration of the respective economies.
Failure to conclude a trade deal between the EU and the UK will be another problem for the country’s economic recovery. Meanwhile, the new government is seeking to create a unit in the Prime Minister’s office, “to work towards consensus on a common island.”
Keep everyone happy
Although the new administration may provide some short-term stability in a country under strong pressure from the dual threats of Covid-19 and Brexit, the nature of the coalition will raise questions in the long run.
The agreement concluded by the three parties means that Fianna Fail leader Michael Martin will become Taoiseach (Prime Minister) until 2022, after which current Prime Minister Leo Varadkar will resume his role.
The appointments in the cabinet have not yet been made, and although Fianna Fail and Fine Gael are politically similar, the historical differences shared by the two parties related to the carbon-friendly policies pursued by the Green Party mean that the arithmetic of ministerial appointments can be difficult. down the line.