I share the Irish public’s dismay at the cost and unfairness of this policy

In this morning’s Irish Times, the Taoiseach, Enda Kenny, offered everyone the wisdom of his thoughts on the payment of a €700m unsecured unguaranteed Anglo-Irish Bank bond. The whole piece is worth a read.

He states that:

Part of the existing agreement with our external partners is not to allow any Irish bank, including Anglo Irish Bank, default on its debts to bondholders for fear of paralysing wider European financial markets. I share the Irish public’s dismay at the cost and unfairness of this policy and the delay it caused to the State’s recovery.

Stephen Donnelly, the independent Wicklow TD, provides three direct refutations to this over at theJournal.ie, linking to several sets of comments by the Finance Minister, Michael Noonan, that directly contradict his party leader. On one hand, Donnelly points out that Noonan stated that there has never been a threat over repudiating unsecured and unguaranteed debt (as transcribed by Name Wine Lake here). In answer to the question:

…is there a threat, Mr Noonan, from the ECB if you were to go ahead and burn these bondholders that they [the ECB] would remove that money?

Noonan said:

No, no there’s no threat and they never threaten…

Bizarrely, this point was even conceded by the Taoiseach during the exchanges that took place in the Dáil today. Donnelly also flags Noonan’s own words during a Dáil debate in 2010:

The position has now become indefensible that the Irish taxpayer, even the poorest taxpayers, should be required to underpin the speculation of hedge fund investors.

Efforts by Sinn Féin, independent and ULA TDs to hold a Dáil debate on the bond payment were voted down prompting a walk-out from the chamber. This evening, Paris and Berlin, or least their [current] resident premiers, appear to have given Greece an ultra vires ultimatum over it’s eurozone membership, largely for threatening to go to the people with a referendum.

The mechanism by which Sarkozy and Merkel imagine they can eject Greece isn’t actually clear. What is pretty evident, though, is that, as far as they are concerned, the democratic will of the Greek electorate certainly isn’t of any interest to them.

Having reached that point, the game would now seem to be up for the eurozone project.

John Ó Néill

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