We will shortly mark two years since this government took up office. The anniversary will see another outpouring of the self-congratulation which has become the hallmark of this administration. The clear and growing disillusionment of the public with the government is directly linked to the non-stop claims of action and leadership have not the slightest connection to reality.
It is obvious to anyone who cares to look at the evidence, that this government has no strategy on Europe other than the hope that something will turn up.
It has shown an absolutely inexplicable reluctance to set out Ireland’s case with clarity and urgency; it has undertaken no credible diplomatic initiative; it has refused to provide the public with even basic information; it has put domestic party politics ahead of using the strongest arguments available to Ireland; it has made the first repayment in full but claims it hasn’t paid it at all: and it has used most of its energy in trying to claim credit for deals won by others which were automatically extended to other countries.
As we rapidly approach the government’s self-declared deadline for the promissory notes, a pattern of dissembling complacency has been replaced by a full scale panic.
All of the evidence available today is that the government’s approach is doing active damage to Ireland’s interests. Annoyance is growing at the government’s inconsistent line, regular over-spinning of both minor and non-existent developments and the use of contradictory arguments.
The Taoiseach has been saying that we are already back in the bond market, while the Tánaiste says we’re shut out and facing a ‘catastrophe’ unless the ECB scraps most of the promissory note payments.
One tells Europe that the Government could fall apart without a deal and the other stands here and says that they’re rock solid and in place for a full five years no matter what.
Other ministers have said that a deal will be used to stop the implementation of planned cuts while others have rushed out to say that all planned cuts and targets will remain fully in place.
Sometimes even at the same time on different media outlets one minister says that negotiations are hitting obstacles while another claims that everything is going grand.
It is the hard reality that that the government has not supplied the Dáil or the Irish people with one single piece of proper or factual information about anything to do with this negotiation.
Having spent a year and a half relegating the promissory notes to something that was to be handled by officials at a technical level, we have suddenly seen a burst of statements and activities.
In what one journalist has said is unprecedented in her many years of covering Presidencies, the Taoiseach and Tánaiste have suddenly started talking about the promissory notes at European Council events which have nothing to do with the issue. She further stated that the reaction against the government’s behaviour has been very negative and done nothing to help Ireland’s cause.
Why the Tánaiste thought that the EU-South America Summit would take up Ireland’s cause has yet to be explained.
This new burst of activity is purely about a government trying to be seen to be doing something rather than a government actually getting something done.
As both the European Council and the Commission have said repeatedly, they wish Ireland well but have nothing to do with the final decision. This is a matter which is between Ireland and the ECB.
It could indeed have been a significant help to Ireland if the Council or Commission had stated formally that they do not see helping Ireland as prohibited under the ECB’s statutes and the Treaties.
That would have been very helpful last year when Mario Draghi was launching his radical moves to save the Euro. That was a major moment of opportunity but it was missed.
Everything that is known today about the negotiations has been supplied by journalists and ECB spokespeople. Two weeks ago the government was claiming that everything was going fine.
It did this even though it was fully aware that things were very far from being fine. In successive days we had a media report revealing that the ECB Council had reacted negatively.
This was first denied by government and then confirmed by Minister Varadkar in one of his truth-telling episodes that does so much to annoy his senior colleagues.
A growing number of newspaper and broadcast journalists have exposed major differences between what the government says publicly and what is actually going on. Each time the government goes out and dismisses the work of the journalists – and each time it emerges that the journalists have been absolutely right in what they revealed.
This started at the Taoiseach’s first summit meeting, where he claims he rejected a demand which other leaders say was never made and continues to this day.
For almost a year we were told that a breakthrough had been achieved because a joint technical paper was being drawn up – only to find out that no such technical paper existed.
As was written yesterday, on Europe ministers have cried wolf too many times and no one now believes their public statements.
As the Taoiseach knows, he and his colleagues produces a Budget and a White Paper which laid out, on the basis of existing commitments, that Ireland would achieve full market re-entry, growth and debt sustainability.
Today you are telling us that that was untrue – that in fact those things could not be achieved without a deal with the ECB. Less than two months after a Budget you are now telling us that the fundamental economic basis on which it was presented and pushed through the House was false.
You have a duty to inform the Dáil and the Irish people what the bottom line for this negotiation is. What is required to avoid the ‘catastrophe’ the Tánaiste has predicted?
Once again, let me be clear in saying that everyone in this House wants the government to get as much as possible out of these negotiations.
Outside a handful of ministers, no one believes that these negotiations have been handled competently or with the urgency they deserved. Some are again advocating policies which sound a lot like Deputy Gilmore from before the election – and their proposals are just as credible as his were.
Members of the opposition have very limited opportunities to have even a peripheral impact on negotiations such as these. However, as the Taoiseach knows, I and my party have used those opportunities available to us to impress upon other countries and the European institutions that there is a broad national consensus in favour of the idea of lifting the impact of bank-related debt on the Irish people.
While the Taoiseach waited a year and a half to make the case that Ireland’s debt was incurred substantially because of ECB pressure, we have made this case repeatedly.
The Taoiseach is wrong in saying that Ireland wants to swap an expensive overdraft for a cheap long-term loan. What Ireland has with these notes is a low-cost short-term loan. As the government finally seems to understand, the interest on the notes is nominally high but all but a small amount returns to the Exchequer.
The reason why we need a deal is because we do not want to swap low-cost short-term loans for much higher-cost medium term debt. The best deal would involve a combination of an effective write off and a long-tem, low-interest series of bonds for the remainder. At a minimum, we need a deal which places the debts on a much longer term and at the lowest possible rate.
The notes were always to be an exceptional measure taken at a moment of extreme instability and Ireland did not wish to incur the full debt. They were created at unique moment which sets not precedent because underlying circumstances have changed fundamentally. The basic framework for dealing with bank debt is completely different.
First of all, rescue funds have been put in place which will give a guarantee that governments will not left alone when faced with tackling a crisis with bank debts.
Secondly, the ECB has introduced a wide range of new policies underpinning the liquidity and solvency of the banking system which means that fears of contagion from individual failing banks have been removed.
Finally, and vitally for Ireland’s banks, Europe has moved from obsessively seeking to avoid burning bank bondholders to actually seeking to require the burning of bondholders before state investment is allowed. In a succession of countries the cost of saving banks has been cut by ‘bailing in’ bondholders.
It is no longer possible for a country to find itself in the situation Ireland was in – where it had to tackle a collapsing banking system but had no access to new supports and was obliged to honour all debts.
Ireland’s case for relief from the full impact of these debts is strong. We were denied choices open to others, we took action in solidarity with a wider European system terrified of contagion and it would economically and politically damaging to both Ireland and Europe to fail to respond to these facts.
There are a number of technical barriers to Ireland getting its ideal deal of writing off a significant portion of this debt; however there is only one significant decision required to deliver us the minimum we need.
As is confirmed again in this morning’s newspapers, an ECB Council which is increasingly irritated with the government’s grandstanding is holding the line that this would involve the effective monetary financing of a government which is undeniably prohibited under the existing law of the Union.
This ban is deeply damaging and represents the difference between the Eurozone and other more indebted currency areas which have stronger growth, lower borrowing costs and, crucially, lower unemployment.
However, it is not is an insurmountable barrier to helping Ireland. Giving Ireland the deal it needs would be a clear continuation of efforts to stabilise the financial system and protect the common currency – and all actions to achieve these objectives are fully within the competence of the ECB.
If the ECB’s measures to bring down the cost of sovereign borrowing are legally OK then only by a bizarre twist of logic could restructuring these debts be illegal.
Helping Ireland does not threaten the ECB’s inflation targeting, it does not create a damaging precedent and it will not lead to any backlash from member states.
Taoiseach, instead of giving us more banal generalities about what you’re doing while presiding over a chaotic and damaging series of outbursts from ministers, you need to say clearly what we want and what we will do if we don’t get it.
The Tánaiste has apparently told the rest of Europe and all of South America that we are facing a catastrophe and the dissolution of the government.
A panicked response to poor polls and backbench unrest is doing real damage to Ireland’s cause and it needs to stop.
You know that whatever happens by March 31st you’ll be claiming that it was a victory won through a brilliant strategy. Between now and then if there was less grandstanding and a bit more honesty it would do Ireland’s cause a lot more good.
At this summit it looks like there will be a budget agreed through the work of President Van Rompuy. It is a bad budget deal for Europe because it stops the EU playing a serious role in helping to restore growth and job creation, particularly in the hardest hit regions.
It is a budget framed with a narrow view of Europe which makes many demands of the Union but refuses to give it the resources to meet those demands.
Following Prime Minister Cameron’s recent speech the background to every summit will be the fact that a member state has, for the first time, started a discussion about leaving the Union. Ireland does not want the UK to leave the Union – but Ireland needs to end its silence about the Tory agenda.
The speech was dressed up with positive words. Look beyond these and what you find is bleak vision for the Union. This list of powers which he listed for repatriation actually comes down to a demand that the European Union cease to exist and become simply a free trade area.
However, even this would be almost impossible to achieve, as the regulations which give the single market its impact would be impossible under the Tory agenda.
If even a fraction of what is being demanded is conceded this would change the terms of our membership of the Union. This would require a referendum here – and it is one that would have no chance whatsoever of passing.
As the European issues have mounted the refusal of the government to set out its policy. What does Ireland want the Union to become? How does it see it developing? Agreeing to everything except changes that require a referendum is not a policy.