Michael Burke: Ahead of tomorrow's Budget, it may be worth taking stock and posing the question, How did it come to this?
The Irish Times leader column titled Was It for This? caused something of a stir by contrasting the national humiliation of the EU/ECB/IMF landing party to the expression of national independence in 1916. The editorial paints a confused historical picture of how this debacle came about, but the context, and contrast, is not misplaced.
It is clear from the 4-year and wholly misnamed 'Recovery Plan' that the intention is to bind the citizens of this state and their elected representatives to a set of economic, fiscal and social policies that are designed to be wholly immutable. Tomorrow's Budget will fill in the awful details, but the main elements are already in place.
The documents agreed between the government and the international bodies who are actually in charge also make it abundantly clear whose interests are being represented. It is stated that the IMF portion of the package will command an interest rate of just over 3%. If, as stated, the average interest rate is 5.8%, then the EU, non-IMF portion (two-thirds of the total) must be at a rate close to 7%.
It is further stated that, of the €35bn in further funds for the banks, only €10bn is for their immediate recapitalisation- the remainder is for 'contingencies' in the banking sector (which is almost exactly the same as the NPRF's former level of assets, just to underline who it is here that is being protected. It turns out the NPRF was 'rainy day' money for the banking sector, not its contributors.).
This further lifeblood for what are already zombie banks will cost over €1.7bn annually at a 7% interest rate. This annual cost is a large proportion of the planned cuts to current expenditure in December's Budget (€2.09bn), including social welfare, public sector job losses, public sector pensions and 'other expenditure' on goods and services.
Or, it is amost exactly the same as the planned reduction of €1.8bn in govt. capital expenditure.
Irish taxpayers are being foisted with a near-doubling of the national debt- in the name of debt-reduction. The government aim is to keep alive a failed banking system so that it will not pull the plug on property speculators. But the ultimate beneficiaries are British, German and French banks who will be paid out in full despite the stupidity of their lending and in violation of the free-market principles which they extol. These are the real 'vested interests' which determine policy.
Prophetically, Liam Mellowes once said, "Ireland, if her industries and banks were controlled by foreign capital, would be at the mercy of every breeze that ruffled the surface of the world’s money-markets." His response was, "The Irish Republic stands, therefore, for the ownership of Ireland by the people of Ireland."
The current arrangements are the negation of a Republic.