Ex-IMF director says Irish debt deal arguments 'grate'

Sat, Feb 2, 2013, 00:00

The former deputy director of the International Monetary Fund has said Ireland’s arguments for a bank debt deal are inconsistent and that this “grates on our partners” and is “not appreciated”.

Donal Donovan said Ireland was demanding the same treatment as other bailout states while also arguing it was a “special case” deserving of certain treatment that would have no implications for others.

“People notice this, some people notice it quite a lot actually, and it’s not necessarily appreciated,” he told a conference of the Economic and Social Committee, a European Union body representing business and social groups. There has been a lot of “anti-European opinion and anti-German feelings” over the past few years. A perception existed that Ireland had saved Europe and now “Europe owes us a lot”, he said.

‘Misreading of history’

The idea that the 2008 bank guarantee was done to save European banks was a “slight misreading of history”, he said. Europe did not order Ireland to guarantee its banks, rather “we did it for our own good or what we perceived to be our own good”, he said.

“This grates with our partners in the negotiation room when we try to say something that is not actually quite correct.”

Ireland was expected to be the first euro zone country to exit its bailout programme and how it was done would have “important implications,” he said.

The Government may prefer a “clean exit” to regain economic and financial sovereignty but there would be little sovereignty left as new EU rules would require closer scrutiny over member states’ finances, Mr Donovan said.

Minister for Social Protection Joan Burton earlier warned the conference “the EU cannot just be about bankers” but must address citizens’ needs.

Financial markets and wealthy elites also could not be allowed to “dictate our future”, she said.

“If the EU had a failing it was that it allowed the doctrine of market fundamentalism to dominate,” she added.

Youth unemployment had to be tackled “to avoid the creation of a lost generation”.

The Minister said she would ask other EU ministers at a meeting this week in Dublin to support a “youth guarantee”, which would ensure people under 25 would either have a job, training or a place in education if they were out of work for a period.