Minority government (1987–1989) Garret FitzGerald told Haughey that Fine Gael would not oppose policies necessary to improve the public finances. His successor as party leader,
Alan Dukes, continued this approach in the
Tallaght Strategy. Haughey supported efforts by Ray MacSharry, back as Minister for Finance, to reduce public spending. MacSharry's first budget was severe, going beyond the measures proposed by Fine Gael. Social partnership was launched by Haughey, MacSharry, and the new Minister for Labour, Bertie Ahern; after negotiations with the trade unions, an agreement, the
Programme for National Recovery, was reached in October 1987. Through Father
Alec Reid, Haughey had opened up a secret channel of communication with the president of
Sinn Féin,
Gerry Adams. In May 1987, on Reid's instructions, the journalist
Tim Pat Coogan brought a dossier to Haughey's home at Kinsealy, detailing proposals for an IRA ceasefire. The document demonstrated Adams's desire to end republican violence and suggested willingness to accept a negotiated settlement which fell short of Irish unity. Haughey repeatedly refused to meet Adams in person. John Hume became an intermediary between Adams and Haughey, while
Martin Mansergh, a Haughey advisor, acted as the Taoiseach's representative with Reid. The
Enniskillen bombing in November 1987 led to a breakdown in talks, as Haughey concluded that Sinn Féin was more interested in ending its political isolation than stopping violence.
Gerry Collins, Haughey, French president
François Mitterrand and French foreign minister
Roland Dumas at a European Council meeting in Strasbourg in 1989 In late 1987, Des Traynor asked Dermot Desmond and other businessmen to form a consortium to pay Haughey's debts, but Desmond refused due to the difficult financial situation following the recent
stock market crash. Some weeks later, Desmond met Ben Dunne at a golf club, and Dunne told him that he had made a confidential donation to Haughey. The following year, Haughey bought a yacht, the
Celtic Mist, for £120,000 (about €350,000 in 2025). Repairs to the yacht, which cost more than £70,000, were paid for by Desmond. During this period, Haughey used the Fianna Fáil leader's publicly funded allowance account to pay his personal expenses, including
Charvet shirts and meals at Le Coq Hardi, an upmarket Dublin restaurant. Bertie Ahern, who oversaw the account but was often away on ministerial work, signed blank cheques which were later used at the restaurant. In October 1988, Haughey was hospitalised for almost three weeks after suffering bronchial spasms which impaired his breathing. He had been experiencing respiratory issues and recurrent kidney stones since returning to office in 1987. In late 1988, with the public finances recovering, Ray MacSharry was appointed to the
European Commission and replaced as Minister for Finance by
Albert Reynolds. Haughey pushed through plans for the
International Financial Services Centre – later one of the success stories of the
Celtic Tiger – and with the economy improving, the Taoiseach was as popular as he had ever been. In April 1989, Haughey caused a sensation when he suggested he might call a snap election if the government lost a vote on a Labour private member's bill. Most of the government was against an early election, but Haughey was encouraged by
Ray Burke and
Pádraig Flynn. Haughey called
an election for 15 June. The election campaign focused on health cuts, and the result was a fiasco, as Fianna Fáil lost four seats, leaving it seven short of a majority. Alan Dukes rejected a continuation of the Tallaght Strategy, viewing the snap election as a betrayal. Haughey's sole realistic option was to work with his former nemesis, Des O'Malley, and the Progressive Democrats. Fianna Fáil began negotiations in early July. Six cabinet ministers spoke against abandoning the core value of not entering coalition; Pádraig Flynn was the most vehement. On 12 July, Haughey and O'Malley agreed a coalition personally, bypassing official negotiators. "Nobody but myself could have done it," Haughey remarked, while shaking hands with the PD leader.
Coalition (1989–1992) The Fianna Fáil–Progressive Democrats coalition was remarkably stable. Relations between Haughey and O'Malley were businesslike but never warm. The economy continued to grow, and taxes were reduced as part of the next social partnership deal. Although an opinion poll in 1990 showed 85 per cent of Fianna Fáil voters supported the coalition, compromises with the PDs rankled with the parliamentary party. Ireland was to hold the
European Council presidency in 1990. The government's intention was to focus on sustainability, but the
fall of the Berlin Wall in November 1989 changed its plans. Haughey was an enthusiastic supporter of
German reunification, and put it on the EC agenda over the objections of Margaret Thatcher and
François Mitterrand. A
summit at Dublin Castle in June 1990 was widely regarded as a success; a few weeks after reunification in October, German chancellor
Helmut Kohl wrote a letter to Haughey thanking him for his "personal support". During 1990, Haughey presided over the redevelopment of
Government Buildings, insisting on the use of Irish timber, artists, and craftsmen. The refurbishment, which cost £17.6million, later won a number of awards. Haughey also steered the regeneration of the
Temple Bar district of Dublin after lobbying from the musician
Bono, among others. Haughey's public image during this period was influenced by
Dermot Morgan's depiction of him on the satirical radio programme
Scrap Saturday. Dialogues with
P. J. Mara, played by
Owen Roe, portrayed Haughey as venal and vain; they were described by the Haughey biographer Patrick Maume as "an absurd and toothless ogre berating an obsequious P. J. Mara". In the late 1980s, Brian Lenihan, a senior Fianna Fáil minister, became sick with liver disease. By 1989, he was gravely ill. Lenihan needed a transplant at the
Mayo Clinic in the United States, likely to cost up to £200,000, or he would die within weeks. At Haughey's behest, the money for Lenihan's operation was soon collected from businessmen sympathetic to Fianna Fáil; it later emerged that more than half of Lenihan's fund ended up in Haughey's own accounts. After his transplant, Lenihan made a good recovery, and in September 1990, he was nominated as Fianna Fáil's candidate for the
presidential election. Initially the heavy favourite to win, Lenihan's campaign ran aground over whether or not he had contacted outgoing president Patrick Hillery by telephone to prevent a Dáil dissolution in 1982. With his memory likely affected by anti-rejection drugs, Lenihan told contradictory stories. The Progressive Democrats expected him to clarify that he did call Hillery, a story well known in political circles, but he persisted in disputing the claim. With the coalition at risk, Haughey sacked Lenihan from the government. Lenihan remained a presidential candidate; though he lost the election to
Mary Robinson, a sympathy factor following his dismissal was credited with giving him a respectable 44 per cent of the vote. Fianna Fáil had never previously lost a presidential contest, and afterwards, party members started to consider life after Haughey. at the
Moncloa Palace in 1990The government was beset by scandals in 1991. In May,
a tribunal was established into alleged malpractice in the beef industry. It focused on the actions of
Larry Goodman, a friend of Haughey's whose firm had been supported by government policy. Goodman's business, which had been exporting beef to Iraq, went into examinership following the Iraqi invasion of Kuwait in August 1990. Subsequent investigations, including one by
Granada Television's
World in Action programme, uncovered significant irregularities. Reports of insider dealing and overinflated property transactions in the
semi-state sector raised the spectre of a golden circle of crony capitalists linked to Haughey. Though he was not directly implicated in these controversies, they put Haughey on the defensive. In September 1991, he went on the radio to call on
Michael Smurfit and Séamus Paircéir, two semi-state chairs, to resign. Though both men stood down, they were outraged by the public demand, and there was fierce opposition in the Fianna Fáil parliamentary party.
Resignation Coalition had created serious disquiet in Fianna Fáil, including among ministers. Albert Reynolds described it as the moment he lost faith in Haughey. Pádraig Flynn called it a "dirty little deal" intended to keep Haughey in power at all costs. Because the PDs had two seats at cabinet, Fianna Fáil backbenchers viewed their chances of advancement under Haughey as slim. Critics of Haughey, a predominantly rural bloc led by Reynolds, became known colloquially as the "country and western wing". In a September 1991 interview, Haughey joked about staying on as Taoiseach, saying: "Some of these Chinese leaders go on until they are eighty or ninety, but I think that's probably a bit long." Within weeks, four Fianna Fáil backbenchers publicly called on Haughey to retire before the next election. After an acrimonious parliamentary party meeting on 6 November, a no-confidence motion was tabled by
Seán Power. Albert Reynolds and Pádraig Flynn said they would support it and were sacked from the government.
Gerry Collins, a Haughey supporter, went on television to plead with Reynolds not to "wreck our party right down the centre". The motion was defeated by 55 votes to 22 in a roll-call vote, but it was generally accepted that Haughey could not go on much longer. It was in this context that Ben Dunne visited Haughey at Abbeville in November 1991 and found him depressed. On impulse, Dunne gave him three bank drafts, worth £70,000 each, which had been intended for Dunne himself and two others. In response, Haughey said "Thank you, big fella" and conveyed the money to Des Traynor. , County Roscommon, commemorating Seán Doherty's
Nighthawks interview Haughey's former Minister for Justice,
Seán Doherty, had felt betrayed after Haughey failed to support his nomination as
Cathaoirleach of Seanad Éireann in 1989. He was affronted by the government's introduction of a Phone Tapping Bill in late 1991. In January 1992, he went on an RTÉ television programme,
Nighthawks, and told interviewer
Shay Healy that the cabinet had discussed the tapping of journalists' phones in 1982. Des O'Malley, who had also been a minister in 1982, said he had not been part of any discussions. On 21 January, after days of silence, Doherty made a further press statement, saying that he had brought transcripts of recorded conversations to Haughey personally, and that he had taken the blame for phone tapping to protect his leader. Now Haughey was fighting for his political life. On 30 January, to prevent the collapse of the government, Haughey resigned. He was succeeded by Albert Reynolds, after failing to persuade Bertie Ahern to stand against him for the leadership. In his farewell speech to the Dáil on 11 February, he said: "I might quote, perhaps,
Othello: 'I have done the state some service; they know't. No more of that.'" He concluded: "Let the record speak for itself. If I were to seek any accolade as I leave office it would simply be: he served the people, all the people, to the best of his ability." Haughey retired from the Dáil at the general election later in 1992 and was replaced in his Dublin North-Central constituency by his son,
Seán Haughey. ==Retirement and tribunals==