Shane Ross (Independent)

It is difficult to approach this subject. From an Independent's point of view it is even harder than it is from the Government's in some ways because the wish is that any package of this sort should be successful. Indeed, there is a reluctance on the part of Opposition Members even to oppose it in its entirety or to criticise it because it appears that one may be in danger - I do not overestimate the power of Independent Members of the Seanad or Opposition Members in the Dáil - of damaging what is perceived as the national interest in that some state, I think wrongly, that to reject this plan would take us into an abyss, which is unknown, unfathomable and possibly even more precarious than the situation we are in. I understand that point of view and it is made with genuine feeling from the Government benches. They believe there is an obligation on everybody to support the package because, possibly, the alternative is so horrific. However, I find there is an element of a Government and Establishment mindset which means there was a lack of imagination in the negotiations, which is staggering. I notice the Minister of State said - I suspect with some pride and to endorse and bolster the strength of the negotiations - that they had been conducted under direction of the Minister for Finance and the Governor of the Central Bank, both of whom are very eminent and able people, and by the most senior officials in the Department, the Central Bank, the Office of the Financial Regulator, the National Treasury Management Agency and the Office of the Attorney General. The latter does not fill me with such confidence as the former and my guess is that, having been given marching orders, those negotiating were thinking with the mindset that they should go in and, within certain parameters, accept what they were given.

There is an element of force-feeding about the package. I suspect the initiative for it comes as much from elsewhere in Europe as it does from Ireland; I suspect it comes as much from Germany, France and other nations because they saw extraordinary dangers in Ireland defaulting which would not be in their interests. The letter written by the Minister and the Governor of the Central Bank to European officials and the IMF has all the hallmarks of a complete surrender written to European leaders accepting what was dictated to them. They stated they offered their plan; it was not theirs. Throughout the document there is a pretence that this is the Government's preferred choice; it is not. There is every sign that the Government had very little input into what happened.

I was struck - I will be interested to hear the response of the Minister of State - by the fact that when Patrick Honohan and the Minister for Finance, Deputy Brian Lenihan, responded to questions about defaulting on the senior debt, they both stated it would not be countenanced by the Europeans. It is obvious that this, the most vital, controversial and important alternative, did not even reach the table. It is obvious from what was stated that defaulting on that debt was not even going to be considered by the European leaders and that we accepted this. That is a pity, but the possible clue to it is in the identity of the negotiators. They were all Establishment and official Ireland figures, deeply plugged into the ordinary, conventional and traditional way of thinking, to whom the idea of defaulting on the debt would be abhorrent. It is not encouraging.

In many ways, Matthew Elderfield, Patrick Honohan and Deputy Brian Lenihan were wonderful people to have directing these negotiations. However, we have the same problem we had in dealing with the issue of the banks this morning. Underneath the people negotiating - the Minister of State said it with a great deal of confidence - were the most senior officials in the Department, but this does not inspire anybody, bar the insiders, with confidence; ditto with regard to the most senior officials from the Central Bank and the Office of the Financial Regulator. All three contain exactly the same people who were there at the time of the bank guarantee and a large number of them were there at the time when the banks were not regulated. The Minister of State also mentioned officials from the Office of the Attorney General. I know it is difficult and countercultural to speak about officials in a derogatory way or to dismiss them, but we have to accept that the negotiators were the people who, as Senator MacSharry stated, certainly had been advising the Minister with information which, at the most charitable, had led him to make decisions which were more than questionable.

The default issue should have been tackled at the negotiating table. The Minister of State said defaulting on senior debt was unthinkable because of the reaction in respect of foreign direct investment; such investors would baulk at it. However, he said this without much evidence. If there was a quick and clean default in respect of senior bondholders, would Intel, Google and others flee the country? I am not sure this is true. I would have thought a clean default, admitting that we could not and would not pay the people concerned would have been perfectly acceptable in this sense. It seems the idea of not paying senior bondholders will suddenly go out of fashion in 2013 but is beyond acceptable now. One wonders why it is being imposed on Ireland that it will not be allowed to default in respect of senior bondholders, yet in years to come others will be able to do so. This leads me to question whether the Spanish, Italian or Portuguese would put up with this treatment. Will the great powers of Europe be able to tell the Spanish Government, if it gets into trouble in the coming weeks, that it will have to accept a diktat from other powers such as France and Germany? I do not think so. Portugal, Spain and Italy would be offerd a better deal. There is not much to be said for Mr. Berlusconi, but he is erratic. If I had a choice between taking Mr. Kevin Cardiff on one side of the table or Mr. Berlusconi on the other, I would take Mr. Cardiff as a negotiator any day because Mr. Berlusconi is a wild card. If it comes to this with Italy, the Italians will not put up with this treatment.

This is a major humiliation for the country. I do not wish to knock people in their hour of need, but I do not believe our negotiators at any stage took, or even threatened, the attitude that the nuclear button was there for them to press. What would have happened if they had stated they would default on the debt and that they were walking out? Would we have been left to swing or would the European governments have come back and stated we could not do so and that they would fix the problem somehow? The motivation came as much from elsewhere in Europe as it did from here because it involved self-preservation. Of what were they frightened? They were frightened that our banks would go under and for one reason, that it would affect their banks. There is no great philanthropic move in this instance. That is why Britain came in; it did not do so out of love for Ireland. That is why the Scandinavian countries also came in. Denmark did so because of National Irish Bank. The British did it because of UBS and a few others.

We had some negotiating power, but it does not show in the results achieved. What we should have been prepared to do was to default, to state we were not paying and would take the consequences. I ask this question about Spain and Portugal; I hope it will not affect Spain but let us see. There is no way they will treat the Spanish like they treated the Irish, because Spain is too big. We were just there. We were the shield and first firewall and I suspect we have accepted that lying down.

There are other alternatives. I have not seen the devaluation option being talked about. While it would not be impossible, it would be a difficult option because one cannot exit the euro easily. The debt equity swap does not appear to have been considered at any serious level although it is a perfectly normal transaction across global markets. I cannot understand why this was not done. I believe a serious mindset compelled and thrust us into the humiliating position which has got us what looks like a very bad deal. I have not seen any convincing argument for the growth rate being 2.8% over the next few years. That argument has been somewhat spoiled by the European Commission's growth rate projection, which came in the day before yesterday almost simultaneously to the deal. The European growth rate projection came in on one day, but a completely different one came in on the second day. Ireland has, unfortunately, got a bad deal out of this.