Dick Roche (Wicklow, Fianna Fail)

Talk of burning the bondholders is good for cheap headlines but bad for Ireland. As Members are aware, in Irish law, senior bond debt obligations of financial institutions rank equal to deposits and other creditors. The danger of unqualified speculation about burning bondholders was well illustrated following Chancellor Merkel's comments, when bond yields increased dramatically. Fine Gael became so concerned at that time that Deputy Noonan, who I accept has taken a more nuanced line in this regard than some of his colleagues, including the gentleman sitting to his right, urged the Government to use whatever diplomatic levers were available to get a statement on the matter from the Council of Ministers and we succeeded in so doing. Dr. Garret FitzGerald described the German position, which of course is the same position as the unqualified position of Fine Gael, as being completely destabilising.

Dr. FitzGerald has been to the fore in warning about loose talk on burning bondholders. In August 2009, Dr. FitzGerald commented that the 46 economists who had written to The Irish Times had failed to distinguish between subordinated and senior debt. He made the common sense comment in that particular article that "an attempt to resile from our commitment in respect of [senior debt] could prejudice our capacity to continue to borrow from international markets". The idea that Ireland could unilaterally resile in any degree from this is ludicrous. This is the point to which Dr. FitzGerald has returned more than once. He went on to ask the common sense question as to who would wish to lend any more to us were we to repudiate our senior bonds. Another former Fine Gael leader and Taoiseach, Mr. John Bruton, issued a warning in more unilateral terms recently when speaking about unilateral default. While backing the line taken by the Minister for Finance, he made the point that "if this generation fails to repay its debts, it would be [the worst] betrayal in the history of the country since the Act of Union in 1801".

However, people in Fine Gael were not listening to senior counsels who were involved in that party and who have a good track record in this area. When speaking on "Morning Ireland", Deputy Bruton as late as 29 November was critical of the Government and stated "it is displaying very narrow thinking in shielding bondholders from exposure to [debts]". Later on the same day on "The Frontline", Deputy Brian Hayes was asked by Pat Kenny about the IMF-EU negotiations and the question of burning bondholders. Deputy Brian Hayes made it clear where he stood by advocating without equivocation that they all should be burned. He went further, because Pat Kenny asked him specifically-----

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