Leading Article: A new spirit in Ireland

ALMOST two months after the Irish electorate gave Albert Reynolds and his Fianna Fail party a well-deserved hiding, Mr Reynolds has re-emerged as Taoiseach. The decision of the Irish Labour Party to enter a coalition with Fianna Fail shocked some of the former's supporters. Their distress is understandable, but it may well prove misplaced.

Under Dick Spring's leadership, Labour has come to represent the socially liberal, rather idealistic mood that was reflected in the election of his former colleague Mary Robinson to the country's presidency two years ago. In contrast, Fianna Fail had degenerated into little more than an often corrupt populist machine for collecting votes and distributing the spoils that come with office. Compared with Mr Reynold's party, Fine Gael and the Progressive Democrats - the two other parties with which Mr Spring could have done a deal - are models of intellectual rigour and moral rectitude.

Even so, the case for this coalition is strong. Fianna Fail, deeply rooted in the nation's history, represents continuity and remains substantially the largest party. Labour - still the third force - represents the widespread feeling that change must come. Together they could provide a formidable motor for reform. Because Fianna Fail is not policy driven, it is proving more adaptable than the other parties. And because Labour did well in the election, doubling its representation in the Dail, the smaller party was able to punch above its weight in the lengthy negotiations that led up to the agreement.

Labour will be the junior partner in the coalition, but a junior partner commanding almost half the cabinet seats and providing most of the intellectual gravitas is not to be taken for granted. For example, the social commitments in the 60-page joint document issued by the two parties - including a referendum on the legalisation of divorce and moves towards decriminalising homosexuality and allowing abortion under strict conditions - are not part of traditional Fianna Fail thinking. Yet the fact that Fianna Fail has been prepared to embrace these reforms indicates that it, too, believes that the popular mood has changed, and Fianna Fail's ability to sense such shifts is legendary.

As far as Northern Ireland is concerned, Mr Spring's influence is likely to be benign because his party is not burdened by the past. He can be expected to insist that the new government is more active in talks with Belfast and London and more understanding of the anxieties felt by Protestants. He is not prepared to abandon unilaterally the two controversial clauses in the Irish constitution under which Dublin lays claims to the entire island. But he will have less inhibition about bargaining them away, and doing so at a relatively early stage in any negotiations held under the Anglo-Irish Agreement.

It is on the economic front that the most obvious anxieties about the new administration emerge. Fianna Fail is, by instinct and history, a big spending, interventionist, patronage party. Labour has made a number of expensive commitments, particularly in the fields of education and welfare. Yet the economy is not in good shape and this is no time for the country to turn its back on the tentative economic reforms of recent years. If the new government is to succeed, economic and social liberalism should go hand in hand.