Fianna Fáil and Fine Gael may be coming together in what would be a profound change

Words such as “stalemate” and “shambles” dominate media coverage this morning of the state of negotiations towards the formation of a government. A day of political theatre in the Dáil yesterday saw four candidates – Mary Lou McDonald, Leo Varadkar, Micheál Martin, and Eamon Ryan – defeated in votes for the position of Taoiseach.

However, after all the strong language and mutual denunciation in the Dáil chamber, it emerged quietly last night that Fine Gael and Fianna Fáil are now to begin “exploratory talks” next week.

Fine Gael’s public position is that they don’t want to go into government: With Fianna Fáil, with Sinn Féin, or with anyone. Their Ministers and spokespersons line is that they lost ground in the election and should therefore go into opposition. However, they are also saying now that as “a last resort” they will consider the option of coalescing with Fianna Fáil.

And we seem to be running out of all other options quickly. The Fianna Fáil leader Micheál Martin told the Dáil yesterday that he could not go into government with Sinn Féin, a party that wants to “legitimise a murderous sectarian campaign” of the IRA. While not all in Fianna Fáil share his absolute rejection of the Sinn Féin option, enough of them do to ensure his position will not be over-ruled by his party.

So, the first step towards formation of a Fianna Fáil/Fine Gael coalition will be taken early next week when Mr Varadkar and Mr Martin meet.  This encounter will be billed as “exploratory talks” rather than negotiations, because last week’s Fine Gael parliamentary party meeting decided that there would be no government formation talks until a future meeting approved of this. Such a Fine Gael meeting may well take place later next week.

A “grand coalition” of the two traditional centrist parties can not yet be taken for granted.  These are of course the two parties that emerged from the split between the pro and anti-treaty sides when the 26-county state was founded, and when a border was introduced onto the island.  That split happened 98 years ago but it began with a bitter and bloody civil war, and led to Irish politics being defined substantially by that conflict for close to a century.

The Irish people have moved on, and the two traditional parties may now be at the point where they, finally, have to move on too. In the 1932 General Election – the first where Fianna Fáil took their seats in the Dáil – these two parties received 80% of the votes between them.  Earlier this month they won just 43%.

What implications will this havein policy terms? Well firstly, it will mean that for now at any rate, business is not likely to have to consider the implications of the implementation of Sinn Féin policies.  Property investors and developers in particular have been concerned about the possibility of a rent freeze and a change in the tax treatment of build-to-rent projects. The major spending on health and housing proposed by the Sinn Féin party would, if implemented, have had significant tax implications.

But a Fianna Fáil/Fine Gael government, possibly with the participation of the Green Party and even Social Democrats, will also want to be seen finally to tackle the housing and health crises that played such a role in the election campaign.  Yesterday the Fianna Fáil leader Micheál Martin said that the next government must prioritise State intervention to improve key services. So, there will be ambitious targeted spending programmes.  If the Green Party are to be in government (and together Fianna Fáil and Fine Gael are nine seats short of a Dáil majority, a problem which would be solved with the help of the Green Party’s 12 seats) then we can expect serious climate change measures affecting the energy sector, the motor industry and more.

Sinn Féin and the left will tell us that such a Coalition will not represent “change” and that the people voted for change.  However, a grand coalition after the 98 year old Civil War split involves plenty of change, while a government with a renewed commitment to spending on health and housing and to taking serious new climate change measures involves plenty of change too. There would also very likely be a novel “rotating Taoiseach” arrangement whereby the leaders of Fianna Fáil and Fine Gael would each serve periods of time as Taoiseach.

Looking slightly longer-term, the big change could be the realignment of Irish politics along traditional left/right lines. If the two civil war parties come together for four years, the question is can they fight the next election as convincingly different entities offering a real choice between competing visions of society.

The Opposition to that Government would be dominated by Sinn Féin, and that party and Labour, the Social Democrats and the smaller left-wing entities will be the ones claiming the “change” brand at the next election.

The deal isn’t done yet. Political insiders say the talks will move slowly.  Expect the occasional threat by one side or other to walk away.  But the alternative to this grand realignment seems to be a general election, and neither of the two civil war parties currently think the result of that would deal them a stronger hand than they have now.