We need to make a stand on IBRC debt

Tue, Nov 13, 2012, 00:00

So, we’ve now given Irish children a right to have their voices heard on matters that affect them. Any chance we could now do the same for adults? Can we grown-ups finally declare that we have a right to be seen and heard?

If you talk to people around the country, as I’ve been doing in recent weeks, you get the sense that the raw anger of two years ago has been replaced by a sense of powerlessness. But “powerlessness” is not quite an adequate word – it implies a passivity and resignation that are not really there.

This is not the apathy of those who have simply given up. It is the restless, frustrated powerlessness of a caged animal pacing the floor and glaring through the iron bars. People are desperate, but desperate to do something. This is the question again and again: what can we do?

What we can do is concentrate. The Irish people desperately need to win something, to exert themselves collectively in a way that is focused, dignif- ied and, above all, effective. They need to become a presence in their own futures. But they can’t do that by raging impotently at one injustice after another. They need to pick a single big outrage and stand up against it.

In the forest of grotesqueries one stands tall above all the others – the payments on the promissory note for the Irish Bank Resolution Corporation (the zombified corpse of Anglo Irish and Nationwide). What Irish people can do collectively is to (a) make it clear that they repudiate this completely unjustifiable debt and (b) declare their intention to bring the country to a halt on March 31st next if the next instalment of €3.1 billion is paid.

The promissory notes go back to 2010, when the Irish Central Bank (an arm of the European Central Bank) pumped billions into Anglo and Nationwide. Most of this was covered by a gigantic IOU to the tune of €30 billion. The promissory note says, in effect, that the Government will give this money in instalments of €3 billion a year to IBRC, which will in turn use it to pay back the Central Bank. The Central Bank then takes this money out of circulation.

What was the purpose of this vast injection of public cash into a reckless private institution? We were told three different things by the then government.

Firstly, these institutions were basically sound but needed to be rescued from a temporary liquidity crisis. When that one died of stupidity, the next explanation was that the purpose of putting all of this money into Anglo and Nationwide was to keep them alive as lenders and get credit flowing again to ordinary Irish businesses – even though Anglo and Nationwide had never lent significantly into the real economy. And finally we were told that rescuing the two rotten institutions was crucial to Ireland’s standing with the financial markets.

Even if these explanations were honest, they were also idiotic. If these really were the strategies, they failed utterly – Anglo and Nationwide were not saved and the international markets lost faith in Ireland, precisely because the State had destroyed itself by taking on these private debts.

Everything the Irish people were told about this momentous decision turned out to be wrong. The only thing that turned out to be right was the one thing we were not told – that the Government was doing as it was told by the ECB, which threatened otherwise to turn off the flow of liquidity to the Irish banks. It is the ECB, taking advantage of the disarray of a malfunctioning Irish government and the consistent misleading of the Irish public, that imposed this scandalous burden.

The payment of the promissory notes is morally, politically and financially insupportable. Morally, there is no case for making ordinary citizens pay off the debts of casino banks. Politically, it is unsustainable to take pretty much all the money saved or raised in savage annual budgets and effectively burn it. Financially, it is blindingly obvious that we don’t have the money.

This, then, is the issue on which the public needs to concentrate. The case is very clear and there is a widespread social consensus. (Even the Government agrees that paying off the promissory notes is wrong.) And if citizens really get stuck in on this, they can make a real difference.

What’s happening at the moment is that some kind of deal is percolating its way through the system. But all the indications are that it will be a very bad deal. The International Monetary Fund has suggested the notes could be “refinanced” to “extend their debt service schedule”. In effect, Ireland will accept that these debts are legitimate and that we are committed to paying them off. In return, we’ll get to pay them over a longer time. This would be a pitiful and humiliating outcome.

But it’s all we’ll get so long as something remains absent from the negotiations. That something is the voice of the Irish people saying that we do not accept these debts and that they cannot, should not and will not be paid.

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