Bank debt deal - Deal would have strings attached

As next month’s day of reckoning over the wretched Anglo Irish and Irish Nationwide €3.1bn promissory note looms ever closer, it is inevitable that the conversation or, more realistically, the debate around the issue will become ever more fraught.

Those who support the Government will counsel patience and rightly point out that negotiations on any matter of such great importance, especially when such mismatched players are involved, always go right down to the wire. They will rightly point out that, though it may be unnerving, no news is good news. Their optimism, however, must be tempered by apprehension, because the consequences of not getting a deal would be so very catastrophic.

Tánaiste Eamon Gilmore has suggested that the Coalition would be in jeopardy if a deal is not reached. As if things were not bad enough, this would raise the prospect of a coalition of parties with even less in common than the incumbents. How that might undermine the stability needed to continue the programme of essential reforms and the confidence needed to entice foreign investors here hardly bears thinking about.

Opponents of the Government, and in this increasingly polarised society there are more and more every day, will point to one false dawn after another. They will wonder, and they are entitled to, if there is any point in having faith in remarks made as late as yesterday by Finance Minister Michael Noonan that the Government will “in due course” get “an appropriate deal” to make the deal seem even a shade less draconian. It is not hard to have some sympathy with this position. Unhelpfully, the fear it provokes undermines confidence, especially for businesses, individuals’ sense of worth, and possibility. Waiting and wondering eats away at the national karma too.

There is a third constituency; those who advocate defaulting on the debt. Should we ever reach that point, no matter how attractive an option it might seem if you use the black-and-white rationale of the Old Testament, we would have to prepare for a fundamentally changed and far colder Ireland almost overnight.

The conversation seems to focus exclusively on what might happen if we don’t get a deal, but little, if any, discussion seems to have considered what might happen if we do get one. It would be more than innocent to imagine that it would not come with some obligations. Neither would it be surprising if these focussed on the pace of reform or how sectional interests have been, or have not been, challenged since our first bailout.

They might also reflect on how we have or have not moved a whole range of pay and pension scales far closer to the European norm. Neither would it be surprising if a deal had implications for any new Croke Park agreement. A deal might even make it impossible to deliver promises to leave core welfare rates and income tax rates unchanged.

Some of these measures would be far less palatable than others. but if they re-energised the still-critical reform of our public affairs, which seem to have run into the sand, then they would be easier to accept.

At the heel of the hunt, we need a deal and if the ECB insists on a faster pace of reform before one is finalised, then that might not be a bad thing at all.