First, this was not our debt in the first place. Anglo Irish Bank (some of whose executives are under criminal investigation) and Irish Nationwide Building Society ran up these debts on the basis of loans made to them by speculative investors looking to make a fast buck. Those investors gambled and they should have lost, rather than have the state guarantee their gambles and force people living in Ireland to repay debts that they had no part in creating and from which they derived no benefit. The deal legitimises an illegitimate debt.
Second, the stretching out of the repayment period (which may or may not reduce the real value of the debt – government projections on ‘savings’ are already being contested) places the burden of this debt on future generations: our children and grandchildren will pick up the tab for the gambling debts of the bondholders. Minister for Finance Michael Noonan uses the analogy of a long-term mortgage, the cost of which will be eroded by inflation, but in reality we are paying a massive mortgage for someone else’s house and will have nothing to show for it in 40 years’ time save for the scars left by successive cuts. Meanwhile, billions of euros will be continue to be taken from public spending annually to cover the interest repayments on the sovereign bonds that have replaced the promissory notes. Children will pay now through cuts to their education, community and other public services, as well as the bombshell payments of principal they will face in 25-40 years’ time. How can this be considered just or ethical?
Third, at the very least the government could have gotten a better deal by playing hardball with the European powers-that-be and saying they were going to suspend the promissory note repayments until such time as a real write-down of them was on the table. A recent High Court challenge to the constitutionality of the notes afforded the government an amazing opportunity for such a suspension – they could have gone to Europe and said “look, even if we wanted to make this payment we can’t – because it may well be in breach of our constitution”. Instead, the government’s opening negotiating position was that all they were looking for was a restructuring rather than a proper write-down – this was far too timid and weak.
The government has admitted that it never even sought a debt write-down, dismissing the idea as ‘pointless’. This was an absolute betrayal of the ruling parties’ election mandates, while earlier write-down of Greek debt (highly imperfect though it was) suggests that a tougher negotiating strategy would indeed have been worth pursuing. Instead, the ‘deal’ transfers the entire debt from the Irish Bank Resolution Corporation/Anglo (an institution we own) to the European Central Bank (which claims to be legally prohibited from writing down, or writing off, any of this debt – even if it wanted to, which it does not).
Overall, as Greek economist Yanis Varoufakis puts it:
“The Irish taxpayer will continue to be burdened with huge, unsustainable long term debts taken out by bankers who are now defunct and who should never been backed by the Irish state. Austerity-driven self-perpetuating recession, and the resulting stalled recovery, will remain the order of the day.”
An odious and immoral debt has been accepted as legitimate by the government and the bill for it has been passed on to generations as yet unborn, when the opportunity existed to write it off. How this can possibly be spun as a triumph for the government, or a benefit to people in Ireland, beggars belief.