Wednesday, 8 June 2011
Ceisteanna - Questions
It was a very good and welcome visit, carried out in a very positive manner and, in my view, the Taoiseach made a good speech. I did not refer to the aspect of his quotation from the President's speech, which tells us a great deal. Clearly, when the Taoiseach implements all the policies of his predecessor without acknowledging them he pays homage to the policies of the outgoing Government. We can understand that.
We can take some solace that this was really what the Taoiseach means, now that subordinated bondholders are being burned and Deputy Brian Lenihan's policy is being acted upon. However, the real issue, the core of my question, concerns a serious allegation. The Taoiseach's speech did not mention this - it was clearly decided not to mention it - namely, that the United States Administration intervened to stop Ireland moving against certain senior bank bondholders last year. Given that this was not mentioned in the Taoiseach's speech, in his discussion with the President about the speech, or elsewhere, is it the Taoiseach's official position that he has no intention of asking President Obama about this allegation which has been in circulation for some weeks? Did the Taoiseach ask President Obama about the assertion concerning Mr. Timothy Geithner's intervention to stop Ireland from burning bank bondholders? What happened at the meeting in that regard?
I have no evidence concerning any discussion which took place at that meeting in Asia. Professor Kelly made an assertion in his article that Mr. Geithner made comments at a meeting about the matter in question.
I was not aware of this allegation when I met Mr. Geithner in Washington. As the Deputy knows, this was not referred to, either in the speech of welcome I made to the President or in his speech, which spoke for itself. We discussed with him the corporate tax rate in this country, the issue of the undocumented Irish, the need for action on that here and the President's response on immigration and the different elements in regard to different diasporas in the United States, a matter in which he has an interest. Those items were discussed but I did not have any detailed discussions as to whether Mr. Geithner made the comments he is alleged to have made in an article by Professor Morgan Kelly. I have no evidence of it.
Did the Taoiseach ask the President to outline his views on the burning of senior bank bondholders? It is a simple question. This question does not apply to Ireland alone - it applies to the eurozone and across the globe. It is a simple and straightforward question. When the Taoiseach met President Obama, he had an opportunity to raise this fundamental issue and to ascertain the views of the US Administration on a policy initiative that could be to the advantage and benefit of Ireland. The initiative in question is being discussed following the leaking of a letter written by the German Finance Minister on the restructuring of Greek debt. A pattern seems to be developing. When the Taoiseach meets people like Prime Minister Cameron or President Obama, he avoids asking hard questions or raising awkward issues. Such meetings seem to be about backslapping, getting the old photo calls right and getting the optics right. I do not get a sense that the core issues that were identified by the Taoiseach - burning the bank bondholders, getting the interest rate reduced and bringing sustainability to recovery programmes within the eurozone - have been raised in a substantial or fundamental way when the Taoiseach has met key people in recent months. That is why I am surprised the Taoiseach did not ask President Obama to outline his views on the burning of senior bank bondholders.
As the Deputy is aware, the ECB comprises the governors of the central banks of the eurozone countries. We have discussed the ECB's position on burden sharing with Mr. Trichet and with politicians and finance ministers from all of those countries. We have now arrived at a position where subordinated bondholders are contributing. As I said earlier, a case before the courts at the moment will determine whether the Minister for Finance can continue to do that. Our bailout agreement is with the ECB, the IMF and the EU. The European Commission and the IMF favour the position Ireland has adopted. We are locked into a position, but we are negotiating a reduction in the interest rate and continued improvements in the deal. I do not deal in assertions, frankly. I do not know the truth or otherwise of the allegation Professor Kelly has made. I will raise it with Mr. Geithner the next time I see him. The last time I met him, I was not aware of the assertion in the article in question. We will continue to focus on our priority, which is securing an improvement in the deal and an acceptance of the principle of an interest rate reduction.
I have asked the Taoiseach the same question on several occasions. I would like to refer to an issue that was mentioned earlier by Deputy Martin. A question I tabled on this subject was disallowed, inexplicably as far as I can see. The question should have been before the House today.
The question that was disallowed related to whether the Taoiseach raised with President Obama the allegation that Mr. Geithner intervened on the matter of bondholders. I cannot understand why the Taoiseach is disallowing questions like that.
On the substantial matter, I find it inexplicable that the proposal to burn unguaranteed senior bondholders was not pursued. If it had been accepted, we would be talking about a lesser burden of €20 billion. Apparently, such a proposal was being discussed at the time of Mr. Geithner's alleged intervention. It would have made a difference of €20 billion to the Irish people. Given that it would have funded 100 of the Government's jobs initiatives, it would have alleviated this country's unemployment crisis. The Taoiseach is telling us that he did not raise the matter with President Obama. He seems completely uninterested in whether this allegation is true.
If the Taoiseach happens to see the US Secretary of the Treasury, Mr. Geithner, perhaps he will raise this matter with him. I suggest it is more serious than that, however. Do we not need to know whether the policy of the US Government is to force the burden of the gambling debts of bankers and financiers onto the backs of Irish working people, while vetoing any attempt to relieve that burden? Should the Taoiseach not want to know whether that allegation is true? It is absolutely bizarre that he would not ask about it.
Deputy Boyd Barrett should rephrase his questions if he is encountering difficulties with them. He is entitled to ask about the Taoiseach's meetings with the US President or with any other Head of Government or State.
If Deputy Boyd Barrett, who is very welcome in this House as a new Deputy, rephrases his questions, I suggest he will find that the system accommodates them. I do not deal in allegations and I do not deal in assertions. I do not know whether Mr. Geithner made the comments that Professor Kelly says he made.
If I were to live on that sort of diet, I would not get very far. We are dealing with a serious position, in so far as the country is concerned. The economic challenge we face is unprecedented. We are measuring up to very difficult conditions. We are trying to help our indigenous economy to grow. We are trying to improve our export position, which is very strong at the moment. We want to continue to trade our way out of these difficulties and get our people back to work. I am quite sure Deputy Boyd Barrett is interested in facts, as distinct from asking me about allegations or assertions of which I have no proof at all.
It is said that imitation is the sincerest form of flattery. I am sure the Taoiseach's homage to the US President was appreciated, albeit with nothing like the utter gratitude of Fianna Fáil for the Government's pursuit of its policy agenda. I am more interested in what the Taoiseach might have told President Obama about his attitude to burning senior bondholders. I pursued the Taoiseach this morning on the matter of burden sharing. He referred consistently to "subordinated bondholders", but what about senior bondholders? I mentioned this morning that senior, unsecured and unguaranteed bondholders in Anglo Irish Bank were paid in full last week for a €200 million bond. How can he defend that? The bonds in question were unguaranteed and unsecured. Given the circumstances we are in, why in the name of any kind of logic or decency is the Government allowing that debt to be met? What did the Taoiseach tell the US President? I hope it was not the same message he gave the diplomatic corps and staff and the world at large, which was that the world is all right with Ireland and we will meet all of these debts. That is not acceptable.
In return for that, the ECB made it perfectly clear that regardless of whether there is downgrading, it will continue to provide funding for Ireland. That was a very important statement about our economic strength in its own right. As the Deputy is aware, Anglo Irish Bank was not involved in the strenuous stress tests that were carried out initially. I have made clear that bondholders in Anglo Irish Bank are in a different category than those in what are the two pillar banks arising from the Government's decisiveness in dealing with a situation where there were six dysfunctional banks and no capacity to either lend or extend credit to small and medium enterprises for the creation of jobs and opportunities. From that point of view, I gave the US President a clear rundown on where Ireland is in terms of meeting our challenge and how we continue to renegotiate to have improvements and follow the principle agreed of a reduction in interest rates.
Whether the United States Secretary of the Treasury, Mr. Geithner, did or did not make the particular remarks is not the issue. The fact is that the issue was flagged. As the Taoiseach's borrowed rhetoric in College Green soared to lofty heights, and no doubt he was concentrating on that, he also was looking at tens of thousands of citizens, the victims of the financial crisis. Should it have occurred to the Taoiseach to raise with the President of the United States, whose economic power stretches into all areas of the globe including the International Monetary Fund, the principle of whether the people of a state such as this should be forced to carry the burden for the failed gambles of European banks and whether the United States - as, the Taoiseach states, a friendly country - should support the people of a small state in asserting they have no responsibility to carry the bad debts of failed gamblers?
The people, both at home and abroad, were forthright in their comments about both the visit of Queen Elizabeth and President Obama. The two words that came through to me in the many thousands of messages I received were "respect" and "pride" in our Irishness and in ourselves.
The American President recognises very well the challenge that Ireland faces and made comments about the scale of the challenge that his own country faces and was forthright in his public support for Ireland - Deputy Joe Higgins will recall his words to that effect - and that continues. During our conversation, I referred deliberately to the strong connections between Ireland and the United States, to the strong ongoing connections in foreign direct investment here and, indeed, to Irish investment in the United States where, through 40 states, there are 80,000 Americans employed in Irish-owned companies. In that regard, the extent of trade both ways across the Atlantic, both between Ireland and the United States and between Europe and the United States, continues to grow and we want to see that happening.
On subordinated debt about which the Taoiseach made play this morning, the bottom line is that is made possible by legislation brought in by the outgoing Minister for Finance, Deputy Brian Lenihan, that the Taoiseach trenchantly opposed at the time, but matters have changed and the Taoiseach is implementing that. The issue is the senior debt. In terms of the Taoiseach's meeting with President Obama, irrespective of what United States Secretary of the Treasury, Mr. Geithner, may have said, there is a fundamental issue about ascertaining the attitude of the US Administration towards restructuring senior debt or burning senior bank bondholders. It is incredible that the Taoiseach did not raise that issue with the US President and seek his perspective on it, given the significant influence of the US Administration on global economic affairs. In terms of the canvas for the appointment of the new senior official in the IMF, we understand the influence of the United States on the outcome of the competition for that post. It is extraordinary and incredible that on what the Taoiseach identified during and after the election, and when he came into Government, as the most serious issue, that is, restructuring debt and dealing with senior bank bondholders, he clearly has abandoned any commitment to getting that sorted-----
Our dealings in this regard are not with the United States. We are very clear where we stand with the IMF and it has been very favourable in its comments on Ireland meeting its challenge. Our priority here is to deal with the ECB and President Obama does not control the ECB.
-----in terms of the IMF-EU-ECB bailout. That is where the continued negotiations, the rebuilding of our reputation and the reconstruction of connections between this country and Europe is concerned, where Ministers of the Government of which Deputy Martin was a member either did not bother to turn up for meetings-----