RESPONDING to the announcement today of an 85 billion euro European Union and IMF loan facility for Ireland, SIPTU General President Jack O’Connor said ‘It is now clear why the National Recovery Plan unveiled last week provided for no investment in the economy from the National Pension Reserve Fund.
‘The Fund was earmarked to be poured into the black hole that the Irish banking system has become.
‘The position now is that the National Recovery Plan must fly on a wing and a prayer with no provision for investment, nothing for job creation, and no mechanism to generate growth.
‘Meanwhile, the senior bank bond holders are to be protected while the lowest paid and those most vulnerable people dependant on public provision are to be crucified.
‘The agreement is a shameful indictment of the right-wing policies which have informed the government’s approach for the last 13 years and which now dominate thinking in the European Union institutions as well.
‘The Plan unveiled today should have been announced in Lourdes because, short of a miracle, it is doomed to failure.’
The bailout deal negotiated by the government amounts to a ‘national sell out’ that will leave the country crippled with debt, Labour Party leader Eamon Gilmore commented.
Gilmore said the potential 5.8 per cent rate of interest to be paid on the IMF/EU loans did not represent a fair bargain.
He added: ‘The Fianna Fáil government has shown no backbone, no negotiating ability and no authority,’ he said.
‘The EU and the IMF have had a walk-over in negotiations with a broken and demoralised government, that is serving out its notice and which has neither the political mandate or the moral authority to conclude such a deal.
‘The problems we have been experiencing are the fault of the Irish government, not of the Irish people. Ireland has obligations as a member of the eurozone to fix the problem, but European solidarity is a two-way street and this government has failed to secure a fair bargain for Ireland.’
Sinn Féin president Gerry Adams said the Government had struck a terrible deal. ‘The 5.8 per cent interest rate is unaffordable,’ he said.
‘The decision to force the state to take 17.5 billion euros out of the Pensions Reserve Fund to pour into the black hole that is our banking system is a disaster.’
The west Belfast MP, who is to stand in Louth at the next general election, added: ‘The costs of this deal to ordinary people will be deep and will result in hugely damaging cuts to public services, social welfare and wages.’
A government statement on the announcement of joint EU support said: ‘The Government today agreed in principle to the provision of 85 billion euros of financial support to Ireland by Member States of the European Union through the European Financial Stability Fund (EFSF) and the European Financial Stability Mechanism; bilateral loans from the UK, Sweden and Denmark; and the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) on the basis of specified conditions.
‘The State’s contribution to the 85 billion euro facility will be 17.5 billion euros, which will come from the National Pension Reserve Fund (NPRF) and other domestic cash resources.
‘This means that the extent of the external assistance will be reduced to 67.5 billion euros.
‘The purpose of the external financial support is to return our economy to sustainable growth and to ensure that we have a properly functioning healthy banking system.
‘The external support will be broken down as follows: 22.5 billion euros from the European Financial Stability Mechanism (EFSM); 22.5 billion euros from the International Monetary Fund (IMF); and 22.5 billion euros from the European Financial Stability Fund (EFSF) and bilateral loans. The bilateral loans will be subject to the same conditionality as provided by the programme.
‘The facility will include up to 35 billion euros to support the banking system; 10 billion euros for the immediate recapitalisation and the remaining 25 billion euros will be provided on a contingency basis.
‘Up to 50 billion euros to cover the financing of the State. The funds in the facility will be drawn down as necessary, although the amount will depend on the capital requirements of the financial system and NTMA bond issuances during the programme period.
‘If drawn down in total today, the combined annual average interest rate would be of the order of 5.8% per annum. The rate will vary according to the timing of the drawdown and market conditions.
‘The assistance of our EU partners and the IMF has been required because of the present high yields on Irish bonds, which have curtailed the State’s ability to borrow.
‘Without this external support, the State would not be able to raise the funds required to pay for key public services for our citizens and to provide a functioning banking system to support economic activity. This support is also needed to safeguard financial stability in the euro area and the EU as a whole.
‘The Programme for Support has been agreed with the EU Commission and the International Monetary Fund, in liaison with the European Central Bank.
‘The Programme builds on the bank rescue policies that have been implemented by the Irish Government over the past two and a half years and on the recently announced National Recovery Plan.
‘The Programme lays out a detailed timetable for the implementation of the measures contained in the National Recovery Plan.
‘The conditions governing the Programme will be set out in the Memorandum of Understanding and the Government will work closely with the various bodies to ensure that these conditions are met. The funding will be provided in quarterly tranches on the achievement of agreed quarterly targets.
‘The Programme has two parts – the first part deals with bank restructuring and reorganisation and the second part deals with fiscal policy and structural reform.
‘The requirement for quarterly progress reports covers both parts of the programme. When the documentation on the Programme is finalised, it will be laid before the Houses of the Oireachtas . . .’
‘The Programme endorses the Irish Government’s budgetary adjustment Plan of 15 billion euros over the next four years, and the commitment for a substantial 6 billion euros frontloading of this plan in 2011.
‘The details of the Programme closely reflects the key objectives set out in the National Recovery Plan published last week.
‘The adjustment will be made up of 10 billion euros in expenditure savings and 5 billion euros in taxes.
The Programme endorses the structural reforms contained in the Plan which will underpin a return to sustainable economic growth over the coming years . . .’
Eurogroup chair Jean-Claude Juncker said the funds were being provided on the basis of a programme negotiated with the Irish government. This includes three elements: strengthening and restructuring of the banking system; budgetary measures to bring Ireland’s deficit to the EU target of 3 per cent of GDP; and reforms, particularly in the labour market.
It is clear that Ireland and the Irish working class, youth and middle class are about to be pauperised with many evicted from their own country to appease the bond markets and finance capitalist institutions in a desperate attempt to save the euro and the European Union.
The Irish TUC must respond to this savage attack by calling an indefinite General Strike.
This must bring down the government and bring in a workers and small farmers government that will expropriate the banks and the major industries, putting them under workers control, repudiate all of the debts that the government and ruling class have responsibility for, and carry out socialist policies and a planned reconstruction of the economy to benefit the working class and the rural population.
Only a socialist revolution can defend the interests of the Irish people in a situation where capitalism and its banks have collapsed throughout the world and financial parasites are seeking to make fortunes out of the debacle.
