Stephen Donnelly (Wicklow, Independent) | Oireachtas source

We are hearing news that the Government will make an announcement in the House at 10.30 p.m. In that context, this motion is extremely important. Under the motion, we in Dáil Éireann call on the Executive to ensure that any restructuring of the promissory note is done on the basis of a fair sharing of the burden. If it is not possible for Ireland to share the burden of bailing out Anglo Irish Bank and Irish Nationwide, then and only then should we assert that we will not continue with the payments. This is the motion that we have proposed to our colleagues in Dáil Éireann.

Why are we making this call? In total, the Government has pledged €35 billion to Anglo Irish Bank and Irish Nationwide, €31 billion of which is in the form of the promissory note, the topic for this evening. It was pledged to ensure that those banks could pay everyone they owed when they collapsed. Who did we guarantee? In September 2008, Anglo Irish Bank and Irish Nationwide had combined total liabilities of €110 billion. That is what we guaranteed. Three quarters of this amount was in deposits and the remainder, €28 billion, was in bonds.

Had the market and the rule of law been allowed to take effect, the bank would have been closed down and the creditors would have been paid out of the remaining diminished assets. It is certain that the holders of the bonds worth €28 billion would have taken heavy losses. It is entirely possible that some of the depositors would have taken losses, too.

At that point, Dáil Éireann and the Irish people could have decided what level of guarantee we would provide to those depositors. I expect we would have focused on Irish depositors. However, that is not what happened. The Irish people are on the hook for €35 billion to Anglo Irish Bank and Irish Nationwide. The Irish people bailed out everybody. One could ask why the Government did that. It was not to protect depositors. That could have been done for a fraction of the price. It was not to protect the other Irish banks; there was no risk of contagion because they were all guaranteed anyway. It certainly was not because Anglo Irish Bank or Irish Nationwide were of any relevance to the economy other than that they were trying to destroy it. Why did the Government do it? It did it because of a diktat from Europe that said no European bank could fail, no eurozone bank could fail and no senior bondholders could incur any debt. That is why the Irish people handed €35 billion to Anglo Irish Bank and Irish Nationwide - to protect the European and eurozone banking system.

In issuing the promissory notes, the Government loaded every citizen with more debt than any other European citizen has had to take on - in fact, several times more debt. The motion says that we require a negotiated agreement that results in fair burden sharing. That seems pretty reasonable. At the time the State and the people took the hit for Europe. We stabilised the eurozone system. It was of no benefit to us to do so as our banks were already guaranteed. We took the hit for Europe and now we are saying that because of that, we need a negotiated agreement that spreads the burden in a fair and reasonable manner. That is the motion before Dáil Éireann this evening.

The Government’s motion also seems reasonable. It says we are in the middle of negotiations and we are going to do our best so leave us alone. That is good, except for one point: the Government’s stated position is that it has not sought, is not seeking and will not seek a write-down of the total quantum of debt. It will seek to extend the terms and reduce the borrowing costs through interest rates but as a point of principle it will not seek a write-down. On his way out of the Chamber last night, Deputy McNamara said a guarantee is a guarantee. The Taoiseach has said we will not have "Defaulter" written across our foreheads. The Government will not even seek a write-down. It is not that it cannot get it. It has stated that it will not seek one.

We do not know what deal will be announced in the House at 10.30 p.m. this evening. We do know that one option the Government was pursuing was a 40-year bond. I understand that it could alleviate short-term financing pressures and stop us potentially putting €3.1 billion into two dead banks this year which could be used for investment or closing the deficit. I accept that, but there would be no burden-sharing. The people who benefited from that act of lunacy - namely, the rest of Europe - would not be sharing the burden. In fact, the total payments to this country would increase. We would be getting a 40-year interest-only mortgage. That is not an acceptable solution for the Irish people. It is not European solidarity.

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