Irish decide against asking Europe for better bailout terms

 

David McKittrick
Monday 11 June 2012 11:48
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Irish ministers yesterday did not, as some had expected, attempt to use the Spanish deal as leverage in their continuing efforts to ease the country's debt repayments in the wake of Ireland's own bailout.

But one of Ireland's main opposition parties reacted with anger over the agreement, claiming that the conditions imposed on Spain in return for its bailout appeared to be significantly less severe than those imposed on Ireland.

"Many people will ask why the government could not have secured the same terms," a spokesman for Sinn Fein said. The Irish government denied that it had got a bad deal, and insisted that the money would be advanced to Spain on the same terms as the €85bn made available to Dublin in November 2010.

"This is the same money that was lent to us; in terms of the cost it is the same that is going to be lent to Spain," according to the junior finance minister, Brian Hayes. "To present this as some better deal for Spain is just not right."

Ireland will, however, continue in its efforts to achieve an easing of its debt burden by varying the terms of a promissory note for the huge debts racked up by the now-defunct Anglo Irish Bank. This commits it to repaying around €30bn at an annual rate of €3.1bn.

According to Mr Hayes: "We want a re-engineering of the promissory note, which is effectively paying for all of the toxic debt concerning the failed Anglo Irish Bank." The aim, he said, was to repay "over a longer period of time at a more competitive rate which will make our debt position much more sustainable".

His words were echoed by the finance minister, Michael Noonan, who described the Spanish deal as satisfactory, and said Spain had not received a better deal than Ireland. They signal that Ireland will not be arguing that the Spanish have received more-beneficial terms. This appears to contradict reports from Brussels that Ireland would seek to renegotiate its overall rescue plan.

The Irish approach has been to stick to the terms of the deal, even though it has been politically unpopular in many quarters. It has led to a significant drop in support for the Labour Party, the junior partner in the coalition government.

The strategy of easing the terms of the promissory note has yet to bear fruit, but the government describes this as a medium-term approach. It hopes it will eventually receive beneficial treatment because of its commitment to austerity, and because it successfully delivered a "Yes" vote in last month's referendum on the fiscal treaty.

EU Bailouts: the conditions

Greece €110bn in May 2010

l Cuts in pensions, healthcare, defence spending.

l 15,000 public-sector job cuts.

l Lowering of minimum wage by 20 per cent to €600 a month.

l Liberalisation of labour laws.

l Progress in achieving targets is monitored quarterly.

Ireland €67.5bn in Nov 2010

l Cut spending by €2.09bn and cut capital spending by €1.03bn.

l Reduce public-sector pensions by 4 per cent and cut the minimum wage by €1 an hour.

l Introduce property tax, increase carbon tax and capital gains tax.

l New legislation for failing banks which gives Central Bank power to appoint chief executives.

Portugal €78 bn in May 2011

l Reduce public-sector wage bill by freezing wages for three years.

l Slash central government jobs by 1 per cent a year, regional government jobs by 2 per cent.

l Freeze minimum wage until 2014.

l Raise VAT, including on car sales and tobacco.

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