Irish Leaders to Quicken Coalition Talks as Virus Spreads

(Bloomberg) -- Ireland's leaders face mounting pressure to accelerate coalition talks, as parliament returns against the backdrop of the unfolding coronavirus outbreak and a continuing surge in support for Sinn Fein.

Lawmakers, set to meet in Dublin on Thursday, ditched a vote to choose a new prime minister given the lack of progress in forming a new government since last month's election. Leo Varadkar will continue to lead a caretaker administration while talks go on.

Varadkar's Fine Gael and opposition party Fianna Fail, which have dominated government for most of the state's history, are inching toward the nation's first grand coalition. That would lock left-wing nationalist Sinn Fein, which took the biggest share of the vote in the election, out of power. The efforts to form a government take place as the corona virus spreads, with six cases uncovered in Ireland over the past week.

“The public is unlikely to appreciate a long period of fraught negotiation between politicians with only minor policy differences while a potentially serious health scare rumbles on,” said Dermot O'Leary, chief economist at Goodbody Stockbrokers in Dublin. “The stakes are high, but we are still at the very early stages; a new government is unlikely until after Easter.”

In an interview with broadcaster RTE in Dublin, Fianna Fail leader Micheal Martin said he wants a coalition with Fine Gael, with the “overwhelming” majority of his lawmakers against a deal with Sinn Fein.

In the Feb. 8 election, no party came anywhere close to winning the 80 seats needed for a majority. Main opposition party Fianna Fail won the most seats, with 38, while Sinn Fein came second with 37. Varadkar's Fine Gael won 35.

Sinn Fein leader Mary Lou McDonald is short on allies -- both Fine Gael and Fianna Fail refuse to govern with her party because of its historic links to the IRA and left-wing policies. A coalition of Fianna Fail, Fine Gael and the Green Party is the favorite to form the next government, betting odds suggest. Fine Gael and Fianna Fail held “good” discussions on Wednesday, Fine Gael said.

One factor that could make that coalition more likely is Sinn Fein's growing strength.

Sinn Fein's support jumped to 35% in a Sunday Times poll published March 1, up from 25% in the election. Fianna Fail and Fine Gael showed combined support of 38%.

“The poll results give an even greater incentive for a government to be negotiated,” O'Leary said, as the alternative of another election being called would result in Sinn Fein becoming the biggest party and “in a much stronger position to form a government itself with like-minded politicians of the left.”

To contact the reporter on this story: Peter Flanagan in Dublin at pflanagan23@bloomberg.net

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Dara Doyle, Morwenna Coniam

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