Broken promises

Fine Gael and Labour promised voters before the election that they would renegotiate the EU/IMF deal; now they promise to pay the full debts for which we have no responsibility at all. By Vincent Browne.

The first specific promise in the Labour manifesto for the election 13 weeks ago was the following: ''Put jobs first. This means renegotiating the EU/IMF deal to include a jobs strategy to share the debt burden with bondholders to reduce the interest rate, and to leave room for Ireland's economy to grow."

A few pages further on, the manifesto stated: ''Labour does not accept that the EU/ IMF deal provides a workable basis for restoring the Irish economy.

Labour in government will engage with the EU and the IMF to renegotiate the deal, so as to achieve fair and realistic terms for Ireland and the Irish people."

A few lines further down it stated: ''Labour believes that bank bondholders should share in bank losses."

In its manifesto, Fine Gael stated: ''Borrowing up to €25 billion in additional funds from the EU/IMF at 5.8 per cent to cover bank losses from fire sales of loans and other bank assets at rock-bottom prices, as the [then] government agreed, will push Irish government debt towards unsustainable levels and hinder economic recovery, threatening the stability of the entire euro area.

''A Fine Gael government will seek a mandate from the Irish people to renegotiate a more credible, fairer package that is better for Ireland and Europe."

Last Wednesday, Micheál Martin asked Taoiseach Enda Kenny whether Brendan Howlin was correct when he spoke recently of rescheduling Ireland's debt, or whether Michael Noonan was correct when he slapped down Howlin's suggestion.

Kenny replied: ''If the deputy's use of the word 'restructuring' means we are looking for a longer term to pay back the money we owe or that we are not going to pay back the money we borrowed, that is not the intention of the government.

We will pay back the loans and the debts the previous government incurred for the country."

Following interruptions, he continued: ''We are not heading towards a default by the government or a position where we will not pay back the loans and debts incurred on behalf of the people by a reckless government."

There will be the usual semantic arguments about rescheduling and renegotiating, but the reality is that Fine Gael and Labour went before the people promising they would renegotiate the EU/IMF deal.

But both parties promised 13 weeks ago that, in government, they would seek to escape from the debts the previous government had incurred and now Kenny is saying we will pay everything, all the debts the previous ''reckless government'' incurred. Many of us knew well that Fine Gael and Labour were talking hogwash when promising to renegotiate the EU/IMF deal.

We assumed they meant they would try hard to renegotiate the deal over a protracted period, using whatever muscle Ireland had.

We assumed the Fine Gael assertion that, in government, it would seek a mandate from the Irish people to renegotiate a more credible, fairer package that is better for Ireland and Europe was just an illiterate piece of drafting, and what they meant was that, in the election, they were seeking a mandate to renegotiate the deal.

The 50 per cent plus of the electorate that voted Fine Gal and Labour in the general election probably did so in the main because they wanted to get rid of Fianna Fáil.

But the FG/Labour promise to renegotiate the EU/IMF deal would have been a powerful reason to vote for these parties, and surely many did so. Insofar as Fine Gael and Labour can claim a mandate for anything it was to renegotiate that deal. Now Kenny tells us that is gone.

There is to be no renegotiation of the deal that Fine Gael asserted was ''unsustainable'' and would hinder economic recovery, threatening the stability of the entire euro area.

We can have a good guess why this is so. Kenny and the government generally were warned by the ECB that any wavering on repayment of the entire amount would wobble the financial markets, and we can't have that.

So, as a further act of deference to the Lords of High Finance - the act of deference that prompted the blanket bank guarantee on the night of 29 September, 2008 and that promoted capitulation to the EU and IMF last November - we now promise to pay the full debts for which we have no responsibility at all (and for much of which we have no legal responsibility either).

As a further debasing act of deference, Kenny, in discussions with Barack Obama last Monday, avoided any reference to the reports that Obama's treasury secretary, Timothy Geithner, had vetoed an IMF proposal during the negotiations leading up to the IMF/ EU deal that Ireland should discount €30 billion of unguaranteed bonds by €20 billion. According to Professor Morgan Kelly, that deal was torpedoed from an unexpected direction.

''At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who . . . believes that bankers take priority over taxpayers," Kelly wrote.

God save Ireland.