Higgins attacks Kenny on treaty

 

Socialist Party TD Joe Higgins has accused the Government of treason for trying to frighten the public into voting in favour of the European fiscal treaty.

The Dublin West TD said the Government was blackmailing people into a Yes vote in the forthcoming referendum by warning the country will have no access to emergency funds from Europe if it rejects the treaty.

“We have ministers saying the country will not be able to get money from the European Stability Mechanism (ESM) if we don’t agree,” Mr Higgins told the Dáil today. “People are being frightened with a big stick held up to their faces to vote in favour.”

The Socialist Party member accused Taoiseach Enda Kenny of signing the treaty last month, knowing the threat of Europe withholding emergency funds would force the public into a Yes vote.

“Taoiseach, isn’t it true that Dáil Éireann must accept this section that money cannot be taken from the fund without accepting the fiscal treaty?” Mr Higgins added. “Doesn’t this mean that Fine Gael and Labour backbenchers must come in here and vote to give a big stick to hold over the people? Isn’t that treason for our people?”

But the Taoiseach insisted the public was not being blackmailed and said that adopting the treaty would ensure Ireland access to the ESM should it ever need it.

“We’re not talking about a big stick here. There is no big stick,” said Mr Kenny. “But in the future the economy will be much strengthened for the country and there will be jobs for the people.”

Mr Kenny signed the treaty last week but it cannot be ratified until the public has a say. No date has been set for the referendum day.

The EU deal, or the European Fiscal Stability Treaty, will see stricter budgetary control from Europe. Ireland’s borrowing and spending will be more closely regulated and penalties will be put in place should it fail to adhere to the strict rules.

Critics argue it is an austerity treaty which rather than bring stability back to Ireland, will plunge it into further economic crisis and result in a second bailout.

Mr Kenny said he was confident the public would accept the treaty and that doing so will ensure Ireland is back on track by 2019. “The message is clear: if we accept the treaty we will be able to get money from the ESM if there was any need for it,” he said.

Speaking outside Leinster House later, Minister for Transport Leo Varadkar rejected Mr Higgins's accusation and said there was "neither treason nor blackmail" involved in the treaty.

"It’s a recognition of common sense and basic political fact," he said.

"The ESM which is going to be Europe’s new bailout fund, Europe’s IMF, has to be funded by somebody. And let’s be realistic about it – by and large it’s going to be funded by taxpayers in triple-A countries like Germany and Austria and the Netherlands and Finland and so on.

"And they are only willing to put their credit rating behind that fund, and to capitalise that fund, if countries that may wish to avail of it are able to sign up to basic budget rules."

Central Bank governor Patrick Honohan is expected to raise the possibility of delaying a cash payment of €3.1 billion to the former Anglo Irish Bank on March 31st and suggest alternatives at the meeting of European Central Bank decision-makers today.

The restructuring of the promissory notes – the IOUs through which the State is paying for most of the €35 billion cost of Anglo and Irish Nationwide – is unlikely to be finalised by the time the next €3.1 billion cash payment on the notes falls due at the end of this month.

As a result, the authorities are considering alternatives to the cash payment to buy time on this instalment as the restructuring of the notes is finalised in talks with the troika.

Options being considered to delay the cash payment include a payment-in-kind by way of a Government bond or another promissory note until a long-term restructuring of the notes is concluded.

Deferring the cash payment outright without an alternative could be regarded as a default by the State.

Any alternative must be agreed by the ECB as the Irish Central Bank is the main beneficiary of cash paid to Anglo, which is now known as Irish Bank Resolution Corporation.

The promissory notes are used by the defunct bank as collateral to borrow tens of billions of euro in emergency loans from the Central Bank, with the ECB’s approval, to fund IBRC’s remaining loans. Any cash payment to the bank is used to reduce these emergency loans, which stood at about €40 billion at the end of last year.

Alternatives to the cash payment emerged as Mr Kenny dismissed suggestions a deal on the restructuring of the notes would be concluded by the end of this month. He distanced himself from the comments of Minister for Social Protection Joan Burton who linked a resolution of the notes issue to support for a Yes vote in the referendum on the treaty. No date had been set for the referendum, he said.

The last government created the promissory notes to cover €31 billion of the €35 billion cost of Anglo and Irish Nationwide but to be valued at this amount the notes must pay a high rate of interest. The interest on the annual payments on the notes, which run until 2031, will cost the State a further €17 billion. The Government authorities are working with the troika to restructure the notes to reduce the high cost of the two failed lenders.

Additional reporting: PA