Prominent figures at forum say State should 'hold firm' for deal

Ireland has “lots of friends” in its push for a reduction in its banking-related debt, prominent attendees of the World Economic Forum said yesterday.

Economist Jeffrey Sachs, director of the Earth Institute, said Ireland should “hold very firm” in its pursuit of final concessions to smooth a return to financial markets.

“The original guarantee was devised in the most extreme moment of crisis and pushed very hard by Germany as part of the crisis management,” he told The Irish Times. “The crisis has passed and there is no justification, either in law or in ethics, for Ireland to bear the burden for these failed banks and have this weight on future generations.”

Taoiseach Enda Kenny used meetings in Davos with banking and business leaders to outline Ireland’s reform progress and explain the campaign to adjust the terms of an EU-ECB-IMF programme Mr Kenny deems “unfair” compared to others.

“The truth is that most international organisations, most observers behind the scenes, feel this way,” said Prof Sachs.

“But Ireland has got a lot of friends in this process and should hold tight. This is not something Irish citizens want to be a party to as taxpayers, to have to bear full responsibility.”

Dangling

Several Davos attendees suggested it was unacceptable that Ireland had been left dangling on its debt question for such a long time, with many saying the time to do a deal was a year ago.

At last year’s forum Prof Joseph Stiglitz, the Nobel economist laureate, described as “unconscionable” Ireland’s repayment of unsecured bondholders.

This year he criticised the Government for harbouring false illusions and approaching its partners as “beggars”.

“Ireland is still [operating] under the belief that, if it is good enough and doesn’t say nasty things, that virtue has a reward,” he said.

“But virtue in this case is, I think, doing the wrong thing. Doing what the ECB wants is bad for the Irish economy and bad for the Irish people . . . eventually it will become transparent that this austerity package isn’t working.”

Financier George Soros told RTÉ radio that Ireland had been given a “raw deal” on the terms of its bailout.

Compared to Iceland, which “simply did not accept the liabilities of its banks”, Ireland was “not so lucky”.

He said Ireland’s partners would probably meet a “minimum” of Irish debt demands.