TAOISEACH Enda Kenny said Irish people would not respond to bribes when voting on the forthcoming fiscal treaty, but what would he call the promise of access to the ESM bailout fund if a yes vote is returned — or can that assurance be, more properly, called blackmail?
Now a year in office, the Government’s claim that it is engaged in tense negotiations with the troika about our crippling bank debt, which stands at 40% of GDP, sounds increasingly delusional. Either that or our negotiators are among the worst in the world.
When the economy imploded, in the last quarter of 2008, we were told that unless draconian austerity measures were introduced the country would endure 10 lost years of recession.
Now, we’re being told that we’ll be lucky if our economic nuclear winter thaws within a decade. Things looked rosier in advance of the last election, when Eamon Gilmore thundered that it would be Labour’s way or Frankfurt’s way, and Leo Varadkar scoffed at the notion of another red cent for the banks.
As soon as the Fine Gael/Labour Coalition was sitting comfortably around the Cabinet table, fighting over who would pay their personal advisor most, the mealy-mouthed squirming started.
So, as the Government cooked up an extraordinary number of cuts and stealth taxes for its first budget, which disproportionately targeted the poor, Mr Gilmore could only muster that it was “a bit of a sickener” as billions were blithely paid to Anglo’s unsecured creditors.
Finance Minister Michael Noonan went rogue, briefly, during a trip to America in June, when he said the Government would impose losses on senior bondholders in Anglo. Noonan said he didn’t think it was right that the Irish people were forced to “redeem what has become speculative investment” and said the IMF were in his corner and its officials “would work with us to seek to [impose losses on unsecured senior bondholders]”.
“Our difficulty on this, and on previous occasions, was never with the IMF. The difficulty is what attitude the European Central Bank may take,” he said.
By November, having apparently received a good kicking from some nameless bureaucrats in the ECB for his off-message outburst, Noonan was spinning the line that the potential saving from a write-down on Anglo’s unsecured senior debt was a pittance compared with the big prize, restructuring the €31bn promissory note repayments. All of the Government’s considerable negotiating expertise was being directed at securing a deal on the agreement, entered into by Fianna Fáil, that will see this State borrow €3.1bn every year, for 10 years, so that it can be lodged in the Central Bank where it will, duly, be set alight. Eager to forget his promise to burn unsecured bondholders in a bank that no longer exists, a fiery Noonan said the Government would instead “pursue another piece of negotiation around an alternative piece of financial engineering to the promissory note arrangement”.
Regretfully, the Government was again backtracking within a couple of months, and in January the Taoiseach announced that, actually, “Ireland has not sought and will not seek any write-down. We’ll pay our dues in full and on time … we are not going to have defaulter written across our foreheads,” he said.
This dramatic news came as an unpleasant surprise to many of us, who don’t consider it fair that, thanks to the stroke of a pen, banks’ private debts are now “our dues”, and who thought the Government was working hard to draw a clear line of demarcation between the State’s sovereign debt and bankers’ gambling losses.
There was confusion in the Government at the news, with Lucinda Creighton saying that they had sought a write-down, but had been given short shrift, and the Taoiseach saying that no write down had, or would, be sought.
Meanwhile, in more unwelcome news for the Government, the Attorney General decided that a referendum on the new fiscal compact treaty was required, announcing her decision just weeks before the Government plans to make a €3.1bn promissory note repayment. Quite sensibly, one would have thought, people began to think that, perhaps, the Government could use the forthcoming referendum to its advantage and employ it as a bargaining chip in negotiations with the ECB over the promissory note repayments.
Social Protection Minister Joan Burton was among the first to say that the Irish people would be more amenable to voting through the treaty if they thought the troika was willing to make their lives just a little bit easier and restructure the banking debt that has been foisted on them.
After all, the Government doesn’t have many cards to play, particularly when the Taoiseach keeps announcing, to anyone who’ll listen, that we’re perfectly happy to repay the full burden of debt, so one would have thought that the timing of the referendum could at least be used to some advantage. Apparently not.
Content to look a gift horse in the mouth, Kenny, speaking in Brussels last week, announced that the Irish people would not be bribed and said it would be the height of foolishness to attempt to link the referendum with Ireland’s crippling debt repayments.
NOONAN was singing from the same hymn sheet, saying the Irish people “are not going to be subject to coercion or inducement” and that the promissory note negotiations are entirely separate.
Then, over the weekend, a variety of leaks from government sources were used as the basis for a plethora of news stories which stated that, while the Government was confident of a deal in relation to the promissory notes, it was unlikely to be agreed before the State hands over €3.1bn on Mar 31.
This despite an IMF spokesman, speaking on Friday, saying that the notion of restructuring the debt has “attracted a lot of consensus” and confirming that it was urging the ECB and the EU to get on board.
Now, where have we heard this before — our best friends, the IMF, backing us up in our negotiations with the troika only to, eventually, have our European partners put the kibosh on any chance of a deal?
Perhaps the support of the IMF would be marginally more comforting if it had been of any use when the Government was trying to secure a write-down on the debts owed to unsecured bondholders in Anglo. You’ll remember, on that occasion, the Government rolled over and paid up the money in full.
The president of the European Parliament, Martin Schulz, has let the mask slip, saying in an interview on Monday that “Ireland is not a special case” and the only deal we’re likely to get is favourable borrowing rates under the ESM.
However, we have to pass the referendum if we want to avail of the ESM — but, of course, that’s not a bribe. Notaccording to the Government’s peculiar definition.
© Irish Examiner Ltd. All rights reserved