ALAN DUKES, THE former minister for finance, warned government colleagues of the need to cut spending or face the arrival of international lenders to bail out Ireland 30 years ago, new papers reveal.
Files form the National Archives, released today under the 30-year-rule, contain a memo from Dukes warning of Ireland being close to needing European Community (later the EU) or IMF assistance which would result in cuts “far harsher than those now contemplated”.
The former Fine Gael minister’s warning came over 25 years before the Troika of the EU, IMF and ECB did arrive in Ireland in November 2010 as the Fianna Fáil-led government sought a bailout package that eventually totalled €85 billion.
The purpose of Dukes’s memo was to warn colleagues of the need to cut spending. Speaking to Claire Byrne on RTÉ Radio 1 this morning, Dukes said the financial situation at the time was “extremely difficult”.
“I was firing what I hoped would be the second last warning shot and we wouldn’t need the last one because it was actually very difficult to get colleagues in cabinet to understand the need for controlling spending,” he said.
He said that with unemployment at 16 per cent, the national debt standing at 54 per cent of GDP and borrowing costs much higher than they are now it was “a bigger problem than it would look today”.
“The total revenue from income tax was going on paying interest and principal on the national debt which meant there was nothing I could do of a constructive nature for anybody in the country,” Dukes explained.
Asked if there was a “clear and present danger” of a bailout being needed, Dukes said there was.
He added that this had not been the first time he had contemplated firing such a warning. In 1983 a “serious discussion and disagreement about the borrowing requirement we could sustain” saw only Dukes’s “stubbornness” preventing him from referring to the bailout threat, the former TD explained.
On the same programme, Dukes also revealed why he rebuked then-taoiseach Garret FitzGerald over spending hundreds of pounds on presents for then-US president Ronald Reagan and his wife Nancy.
State papers reveal that FitzGerald’s officials spent nearly £350 on a sterling silver rosebud vase, cigars and a book about Irish plants on a US trip in 1984.
“One wonders – I still do – at this kind of practice of heads of state giving gifts to each other. They are almost the last people who need gifts of any kind to make them happy. But it was the custom of the time,” he said.
Dukes added that his former Fine Gael colleague, FitzGerald, took his strong words “with very good grace” acknowledging it was “something that needed to be looked at”.
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