Government 'cleaned out' in punitive deal to 'pauperise' country

 

POLITICAL REACTION:FINE GAEL said the Government and its negotiators had been “cleaned out” because of an over soft approach to the talks on the €85 billion bailout package.

The party’s finance spokesman, Michael Noonan, said the Government had achieved very little in its talks with the teams from the European Commission, the European Central Bank and the International Monetary Fund but had sacrificed too much in return.

“I believe that the negotiators on the Irish side were soft. They have given up €17.5 billion of our own resources in sacrificing all of the National Pension Reserve Fund. The fund has been cleaned out,” he said.

“The interest rate is extremely high. If the IMF part is just over 3 per cent as reported, it must mean that the average EU interest rate must be very high, well over 5.8 per cent.”

He said the decision to allow Ireland an additional year (until 2015) to meet the 3 per cent target gave the State no advantage. What the extension would entail, he said, was an extra year of austerity measures if the targets have not been met by 2014.

“Already, there are four harsh budgets. In their own press release, the Government is accepting the impact of increased interest charges plus a softness in the growth rates they have projected. So, already there is an acceptance that 3 per cent can’t be reached by 2014,” he said.

The interest rate on Irish sovereign borrowing to date has averaged 4.6 per cent, he noted. If it remained close to that level, it would have been manageable in, his view.

Mr Noonan said the higher interest rate would impose a punitive burden on the State.

Fine Gael, he said, now believed the only way this could be met was if citizens were motivated as a people, and a national movement created to solve the problem.

He said the erosion of the pension reserve and higher interest rates would make it more difficult for an incoming Government to change the four-year plan.

On burning the bondholders, Mr Noonan said Fine Gael had argued for this but believed, since the guarantee was established, that this could only be done under the umbrella of the EU.

He said last night’s announcement was necessary, given the State had entered a process. “It gives us some certainty, which is always helpful. At least we know where we stand. Citizens and businesses can now start planning against this knowledge. The worst thing is uncertainty,” he said.

The Labour Party sharply criticised the deal as a “national sell-out” that would leave Irish citizens saddled with a crippling debt for many years.

The party was scathing at the decision to have the pension reserve fund form part of the package; about the level of interest rates being charged; and the decision to leave the majority of international bondholders unscathed.

Party leader Eamon Gilmore, its deputy leader Joan Burton, and justice spokesman Pat Rabbitte all condemned the deal last night.

Mr Gilmore said the high interest rates would mean the Irish people would have to pay billions of euro extra each year. The pension reserve had been cleaned out to bail out the banks, he said.

“The Fianna Fáil Government has shown no backbone, no negotiating ability and no authority.

“The EU and the IMF have had a walk-over in negotiations with a broken and demoralised Government, that is serving out its notice and which has neither the political mandate nor the moral authority to conclude such a deal.”

Ms Burton said it was a sad day for the country, and the last act in a tragedy that began with the blanket guarantee for Irish banks.

“The negotiators on the Irish side had no negotiating power left. If they played poker they lost. The pension reserve fund has been given up. That is an enormous sacrifice. We no longer have any room for manoeuvre,” she said.

“Developers and bankers here were crazy borrowers. But so were German and French banks which backed them with finance. The ECB has to acknowledge that in failing to create a proper structure for all this, they must also carry some of that blame.”

Mr Rabbitte said the deal would “pauperise” the country. “Now we are going to bend the knee and do as we are told by our European masters.” He said the raiding of the pension reserve fund would leave the cupboard bare.

“We have nothing to fall back on . . . The ECB has us where they want us,” he said.