Wednesday, 23 May 2012

IRELAND’S INEPT NEGOTIATORS

If you've ever been involved in negotiations, consider the following:

TIMELINE
July 11th 2011 – THE ESM TREATY: Minister Michael Noonan signs us up to the permanent European bailout fund, the ESM (European Stability Mechanism), from which euro countries in trouble will draw their funds at a rate yet to be determined. In this treaty we agree that:  
  • Every document, every act, every individual, every building of the ESM will now and forever be immune not just to prosecution, but even to investigation. 
  • Ireland will commit €11.145bn to the initial war-chest of €700bn, €1.27bn to be paid up front starting with a payment of €254m in July 2013; the remaining €9.87bn is deemed ‘callable capital’, can be called on for payment with seven days’ notice from the ESM. 
  • The ESM has full discretion to increase the size of the fund to whatever amount it wishes, whenever and as often as it decides; when that happens Ireland has committed ‘irrevocably and unconditionally’ to contribute whatever is asked of us, again within seven days.

January 30th 2012 – THE FISCAL COMPACT: Driven by Germany’s Angela Merkel, after months of negotiations all EU leaders except those from the UK and the Czech Republic but including our own Enda Kenny endorse the version of the Fiscal Compact on which we will be voting on May 31st. It has two major elements, reproduced here in shortened form: 
  • Article 3, Paragraph 1: “The budgetary position... Shall be balanced or in surplus... With a lower limit of a structural deficit of .5% of the Gross domestic product” 
  • Article 4: “When the ratio of... Government debt to gross domestic product exceeds.... 60%.... That” (Country) “shall reduce it at an average rate of one twentieth per year”
Ireland has both a structural deficit (which, by the way, can vary considerably depending on who is doing the calculating, and that is NOT specified in the Compact) and debt:GDP ratio far in excess of those above – if we vote Yes (for Stability and Certainty, you understand) when EXACTLY do these mandated adjustments start, what year, how much per year, and from where will the cuts/taxes come?

February 2nd 2012 – BACK TO THE ESM TREATY (and here is where it becomes really baffling): Only a few weeks after the Fiscal Compact agreement but several months after the wording for the ESM Treaty has been finalised, the Irish Ambassador, on behalf of the Irish government, signs us up to what has become known as the bribery/blackmail clause, a clause to be inserted in the ESM treaty that makes ratification of the Fiscal Compact a condition for access to the ESM funds.

A GRAVEYARD FOR IRELAND
Our negotiators in Europe agreed:
  • To contribute unlimited funding to a new body – the ESM – which will have complete immunity to do anything it ever wants to do without fear even of investigation; 
  • To a Compact on which we will vote on May 31st (though they absolutely DID NOT WANT us to have that vote), the terms of which will bind us irrevocably, subject to automatic penalty, to reducing our debt:GDP ratio to 60% over 20 years. Do the math, as the fella said: debt at end of 2013, c.€200bn; GDP c.€160bn; adjustment per annum, €200bn less 60% of €160bn, divided by 20, i.e. (€200bn - €96bn)/20= €5.2bn/annum. Add that to the 5% average interest on the €200bn national debt, that’s €10bn + €5.2bn = €15.2bn/annum on debt and interest payments alone; apply the new limited structural deficit, and stand back. Stand well back.
  • Not happy with having ‘negotiated’ all the above, our doughty men and women then went back to the table, agreed to revisit the original ESM agreement and insert the bribery/blackmail clause whereby if we vote No on May 31st we bar ourselves from access to a fund to which we have already committed to contributing €11.1bn and which over time can cost us much more. 

The ECB-mandated bank bondholder bailout cut the legs from under us, now what’s left of us is being torn to pieces, but not to worry, our own negotiators have dug three new graves for us. Who did our negotiating? Who sat at that table behind the label marked ‘Ireland’? They were supposed to negotiate in our national interest – is that bribery/blackmail clause in our national interest? Most certainly not; in truth it’s the opposite, it’s a betrayal of our national interest.

Now – without a hint of either shame or irony – the same government that agreed to the late insertion of that clause is using it as the stick with which to beat us into voting ‘Yes’ for the Fiscal Compact. Take away that stick and with it all those who are voting in favour purely on the basis of that bribery/blackmail clause – how many are left, how many believe that long-term, this compact is a good idea for Ireland? Makes one wonder as to why the clause was added, doesn’t it?

LIES AND CONFUSION
Last week Richard Bruton said the government had a plan B if there was a No vote in this referendum, they would simply hold another  – then he retracted, said he was incorrect in what he said; Pat Rabbitte was quoted by several people who attended a business meeting with him as saying the government didn’t in fact even have a plan A in how to deal with this current crisis, which Pat then denied ever saying. 

In the lead-up to the March 31st Promissory Notes deadline Michael Noonan and his various spokespeople assured us they were in heavy negotiations with the ECB on securing a deal, that those negotiations were delicately balanced but close to fruition; a few weeks ago the Irish Examiner made its own enquiries as to the nature of all those ‘negotiations’ in March and under the ‘right of access’ to documents enshrined in EU treaties requested copies of any requests by the Government and any negotiating documents submitted to the ECB – the findings? The director general of the Secretariat and Languages Services in the ECB, Pierre van der Haegen, said: "Having duly looked into this matter, we would like to inform you that the ECB did not receive any documents from the Irish Government on the renegotiation of the terms of the promissory notes."

With just days to go to that March 31st deadline Michael Noonan triumphantly trumpeted his ‘deal’; what had been an arguable debt was now locked in solid, a sovereign bond to be paid not by us – whose crisis this is – but paid instead by the next generation. It was an exercise in internal ‘financial engineering’ and just days later the ECB itself came out and stated, categorically and unequivocally, that there was no ‘deal’ done with the Irish government or anyone else, the €3.1bn Promissory Note had been paid on time and in full, and they expected that all future notes would likewise be paid. 

TRUTH AND CONCLUSION
We were bounced into the bank bondholder bailout, fear of being denied access to cheap money the excuse; we’re being bounced now again into voting for a compact that will tie the hands of our own governments in the event of any future crisis, fear of being denied access to cheap money again the excuse. Have we learned nothing? How ‘cheap’ was that bank bailout money? €63bn we’ve so far thrown away on our banks, and counting, the interest on that now mounting; how much debt write-down have we got? Not a cent. Living in fear, governed by fear, what has that got us but debt piled on debt.

Lies, half-lies, spin, threat, bribery, blackmail, saying and doing whatever is convenient – I don’t trust this government, I don’t believe this government. They are as inept and as incompetent as those they replaced. They betrayed their mandate on the bank bondholder bailout, they betrayed their mandate in the negotiations of the ESM and of the Fiscal Compact. Just as I say ‘NO’ to that bank bailout, refuse to be bullied/bribed/blackmailed into submission, for the same simple straight-forward reason I say ‘NO’ to this Fiscal Compact – long-term, this is a bad deal for Ireland.

Regards, Diarmuid O'Flynn.

2 comments:

  1. "€10bn + €5.2bn = €15.2bn/annum on debt and interest payments alone"
    That assumes 0% growth. Not a very unreasonable assumption but a lot lower than most commentators and if true then the rest doesn't matter.

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  2. The growth that most matters to us Eamonn is the growth in GNP, the growth in the domestic economy. More than any other country in Europe - far more than any other country - our GDP figures are skewed by the multinationals, who HAVE been doing reasonably well even over the last few years. Domestically, however, we've been suffering more and more.

    As someone who lives and works here I would love to be able to assume we're going to grow our way out of this mess, and I'm certain we WOULD do just that if the bank debt burden were lifted from us and placed where it should have been from day one, on the shoulders of the ECB, whose own negligence in oversight of the euro from the time it was launched has helped to ferment this unprecedented catastrophe.

    Here in Ballyhea we haven't given up on that happening, which is why week after week we march in protest at the bank bondholder bailout, why we're heading for Frankfurt on June 5th to try and take the matter up directly with the ECB. Wish us luck!

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