Will Haughey last a year? Economic woes mean he may not. New Irish leader hamstrung by weak mandate

Ireland's voters, who have only just chosen a new government, may be trudging back to the polls in a year's time. The inconclusive election, which left Charles Haughey's Fianna Fail party three seats short of an absolute majority, is almost universally regarded here as the worst possible electoral outcome.

The change of political command comes without a clear mandate from the voters, which means that Mr. Haughey cannot effectively take command of the country's tattered economy.

So far, Haughey seems determined to soldier on. Earlier this week, the new prime minister said he planned to serve his full five years in office. He has also ruled out any deals with independent members of Parliament. But the political arithmetic, as well as Haughey's own track record as a leader of previous minority governments, seem to suggest otherwise.

To survive, Haughey - who has never secured an overall majority as a prime minister since becoming Fianna Fail's leader in 1979 - is dependent on the support of political independents. But during his second term of office in 1982, he held on for less than a year before independents who had initially supported him turned against him.

The future of the Anglo-Irish agreement is now fraught with uncertainty. This is as much a result of Haughey's ambivalent attitude toward it as of his own precarious election victory.

Two of the independents on whom Haughey must depend to stay in office, Tony Gregory and Neil Blaney, are republicans who are strongly opposed to the accord. The November 1985 treaty gave Ireland a voice in Northern Ireland affairs, but at the same time it cemented Northern Ireland's constitutional claim to be part of the United Kingdom so long as that is the wish of the North's Protestant majority. To Irish republicans, whose goal is a united Ireland, any British claim to any part of the island is totally unacceptable.

Yet for the moment, Haughey's principal preoccupation will be to address the country's economic plight.

In an interview at the United States Embassy, where young Irish people are lining up to emigrate to the US, Ambassador Margaret Heckler says she sees no ``quick fixes'' for Ireland's problems.

According to the US's former secretary of health and human services, it will ``take strong medicine to deal with the unacceptably high debt level, rising unemployment, and very high taxes which are strangling all growth in the country.''

The small country is caught in an economic vise. Although Ireland still enjoys a good credit rating, which gives it unrestricted borrowing potential, it is weighed down by debt.

In the last four years, its international debt has doubled from $17.5 to $35 billion. No other country in the developed world has, on a per capita basis, borrowed as much. The national debt now represents 133 percent of the gross national product.

The chaotic state of Ireland's economy is partly blamed on the first Haughey government in 1979, which overborrowed and overspent, although the process in fact had started before him.

Outgoing Prime Minister Garret FitzGerald, just defeated in his reelection bid, succeeded in drastically reducing high inflation. But he failed to achieve any of his other principal economic targets by the time he was voted out of office.

The reason why alarm bells failed to ring earlier was Ireland had seemed to be in no immediate danger.

``The strategy was that if you could hold the line and keep spending reasonably tight, there would be enough economic growth to gradually put the figures right without having to do anything utterly Draconian,'' says Terry Baker, who edits a quarterly commentary for the Economic and Social Research Institute.

The problem was that Irish exports did not hold up as well as had been expected. With the punt (the Irish currency) being dragged down against the earlier high rising dollar, the economy last year did worse than stagnate. It declined at a time when more and more young people are coming into the job market.

Yet Irish governments have little room to maneuver. The two favored courses of action are to reduce income taxes and to bring down public expenditures. But when Dr. FitzGerald's Fine Gael coalition government tried to introduce budget cuts into social spending programs, the junior coalition partner, the Labor Party, bolted and brought down the government.

To many observers here, the real economic problem facing Ireland is its incredibly narrow tax base.

In a country of only 3 million people, fully one-third are on welfare. The remainder are squeezed by such high taxes that three major parties - Fianna Fail, Fine Gael, and the Progressive Democratic Party - all favor bringing down taxes to spur the economy.

One critic of the 58 percent tax rate complains: ``I have no savings. All my friends are broke.''

While there is general conviction that Haughey is right when he says the economy has to be taken by the ``scruff of the neck,'' it is a prospect that daunts most Irish people.

As one Irish official put it just before the recent election: ``It's very hard, when there has been belt-tightening and no recovery to show for it, to be expected to pull in your belt even tighter.''

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