FF call to renegotiate rescue deal rejected

Fri, Feb 8, 2013, 00:00

Tánaiste Eamon Gilmore has dismissed a Fianna Fáil call for the Government to renegotiate next year’s €3.1 billion budget “adjustment” with the troika as part of the bailout programme.

Fianna Fáil spokesman Michael McGrath asked whether the net saving of €1 billion from the ECB bank debt deal would be used as a “cushion” to meet overall budgetary targets or if the Government would renegotiate a reduction in the cuts expected in the budget.

‘Amused’

Mr Gilmore said he was amused by the spokesman’s question because, two years ago, during the general election, Fianna Fáil leader Micheál Martin had stated that the Labour Party had to “stop pretending Ireland can renegotiate the terms of the IMF-EU rescue deal”.

The Tánaiste was responding to the Cork South-Central TD during Leaders’ Questions, which was devoted entirely to the bank debt deal.

Mr McGrath said the deal meant Ireland would not benefit from a banking union where euro zone member states would contribute to a central fund to provide for “burden-sharing”.

In “converting the promissory note to government bonds, we are now fully accepting that the new regime will not be retrospectively applied to Ireland”.

He added that “in essence the entire stock of Anglo-related debt will be borne by this State alone, a reality to which recognition must be given”.

Mr McGrath acknowledged, however, that the deal, with maturity dates of between 25 and 40 years, “eases the burden of repayments”.

Negotiating skills

Earlier the Tánaiste described the deal as a good day for Ireland and he praised the negotiating skills of Minister for Finance Michael Noonan and his officials. Recalling his own days as a young trade union official, Mr Gilmore said he had learned early on “never organise an ice-cream strike in winter”.

He said: “When you’re in negotiations, don’t play your hand until your hand is strong. We knew and understood that we first had to repair Ireland’s reputation abroad,” he said.

“The Government made it clear that we were willing to deal with our own problems but were carrying an unacceptable share of other people’s problems.”

Mr Martin gave a conditional welcome to the deal and said Ireland deserved a significant easing of the burden of its banking debt, but he asked what difference the deal would make to the overall stock of government debt. “Do we owe as much today as we owed yesterday?”

Sinn Féin finance spokesman Pearse Doherty derided the deal. “When you get rid of all the spin,” he said, “the €28 billion from the promissory note will be paid back in a sovereign bond and €34 billion of interest will be paid on top of that.”

The Government had turned a €28 billion promissory note, the cost of the toxic debt of Anglo Irish Bank, into a €64 billion sovereign liability, he said.

‘40 years’ of debt

“This week my youngest son began to crawl,” Mr Doherty added. “He wasn’t even born at the time the promissory note was issued by Micheál Martin and his Cabinet colleagues, yet he will be 40 years of age and the State will [still] be paying back the toxic debts of Anglo Irish Bank.”

Independent Tipperary South TD Mattie McGrath said the Government “did not deliver” and he criticised its make-up. “I do not see one businessman sitting at the Cabinet table and that is the problem because they do not understand business,” he said. “They do not understand the value of a pound.”