Promissory notes as the price of ‘yes’ to Treaty change?

This post was written by Stephen Kinsella

Morning Ireland this morning carried an interesting exchange with Minister Rabbitte and his interviewer Cathal Mac Coille. At about 8 minutes in, talking about the EU-wide debt situation and Enda Kenny’s meeting with Dr Merkel, the Minister says the following:

Rabbitte: …. The Minister for Finance has hinted at areas where we are trying to alleviate the burden of debt that is on Ireland as a result of the legacy and the circumstances we’ve inherited from the last government and within the terms of the Memorandum of Understanding. I think he has set that out for example in maybe not explicit terms but significantly explicit terms in respect of the promissory notes arrangement entered into by the previous government where in excess of 30 billion debt—private debt—is expectedto be born by the government here. In the general arrangement, you know, it is a circumstance that this burden was placed on Ireland in order not to infect the banking system of the Eurozone. Now that is a very unfair burden and given the way we have complied with the strictures on us we are looking for alleviation on that.

The interview continues:

Cathal MacCoille: What about Treaty change? What is our position? It seems to be getting closer and closer, and the Germans are talking harder and harder about it.

Rabbitte: …no Irish political party wants a referendum, but I don’t think we shouldn’t dismiss sight unseen. I’ve great confidence in the common sense of a majority the Irish people. If there was a pathway out the morass we find ourselves in now, and if there was a significant alleviation in terms of the debt burden promised as a result of whatever Treaty changes might be contemplated then we would have to look at that situation very seriously. We’re not looking for a referendum we don’t want a referendum  but I’m not prepared to dismiss the idea of a referendum out of hand without knowing the context and without knowing what it would offer the Irish people.

Cathal MacCoille: It sounds like the money terms would need to be right.

Rabbitte: Debt sustainability is still an issue, but yes.

Is this the new talking point? Is it that case that Ireland’s promissory notes are the price of a ‘yes’ from the government to a possible Treaty change? If so: what should the ‘discount’ be? Karl (and indeed Lorcan) have been spending quite a bit of time on the promissory note story, and given the sums of money involved, it’s something we should keep an eye on.

47 Responses to “Promissory notes as the price of ‘yes’ to Treaty change?”

  1. Carson Says:

    As I understand it (from reading Seamus Coffey’s writings about the promissory notes previously) if we are to see a significant reduction in the burden of these notes it must come from a reduction in the overall figure of €30bn rather than merely and extension of the term and a reduction in the interest rate. The reason being that most of the interest is paid to the central bank of Ireland which ultimately returns it to the exchequer.

    So what price for our vote on a new treaty? I suppose it would depend on what exactly is in the treaty. If the EFSF was prepared to inject half the money that the Irish government already has into the banks, allowing us to halve the size of these promissory notes, then I think voters’ ears might be pricked.

  2. Pope Epopt Says:

    Only slightly relevant - but illustrative of the way so little has changed in Ireland since the financial crisis. It will be interesting to see what sort of fuss comes of this - or to what extent it is hushed up.

    The UniCredit Ireland whistleblower has gone public in a documentary by ABC. He was a risk manager who was ordered by his bosses at UniCredit to cover up their blatant breaking of existing bank regulations as ’system errors’. Four years ago, and eventually went to the Financial Regulator to blow the whistle. David Norris brought it up in the Senate. And what happened? Precisely nothing.

    He describes it as being like, and I paraphrase, “walking into a police station covered in blood, holding a knife and confessing to a murder, and being told not to do it again and being sent on his way.”

    This is an offence for which he and his superiors could (theoretically - when has a banker ever gone to prison in this juristiction?) get five years in prison, he says.

    So much for regulation and a change of regulator. Global default and destruction of he banks is the only way to deal with systematic corporate crime.

    The ABC programme.

    The Golem XIV post.

  3. Robert Browne Says:

    Ireland is firing blanks as usual, having given away all our trump cards. The people will be whipped into line to vote “yes”. We all know it. The government would not last very long if it did not deliver a “yes” vote and that is why they are already campaigning for a “yes” vote. They hope to be drawing pensions by the time the CCTB is brought in. Hopefully, the craven antics of lurching from one bailout to the next will not be tolerated by markets when they call Ireland’s bluff end of next year and tell us to to get stuffed. Of course that presupposes we still have an EU by then the markets can end this quickly.

  4. seafoid Says:

    “In the general arrangement, you know, it is a circumstance that this burden was placed on Ireland in order not to infect the banking system of the Eurozone”

    Sure. More like to let the insiders get their money out with a dumb excuse for Paddy.

    Anyway now the whole EZ has contracted MRSA

  5. Livonian Says:

    @Stephen

    “re price of a yes”.

    IMHO it is even more subtle (or “hardball”)than that.

    It looks to me like Ireland (and many other member states of the EU) does not want any more discussion about treaty changes.

    The “price” may well be that Ireland will stop “mentioning” referanda in return for debt concessions.

    I found an interesting link on the The Irish Times to a draft copy of Mr Kenny`s speech today to the Adenauer Foundation. IMHO it is well worth reading.

  6. Tim O'Halloran Says:

    Does this imply that the ECB insisted on the Guarantee before it happened, something Eamonn ryan keeps implying but steps back from whenever pressed?

    Am I missing something? Is Rabitte really claiming we took one for the team by giving the guarantee or is he rewriting history like Eamon Ryan?

    There is no real evidence despite Ryan’s blusterings that the Brians ever came clean with the ECB before the guarantee so there is no way the ECB can be blamed for the foolish guarantee. Certainly Lagarde inists she knewnothing until Lenihan rang her up ( in perfect FRench as he pointlessly boasted). I assume Lagarde is telling the truth.

  7. Stephen Kinsella Says:

    @Livonian I’ve searched for that but no dice, can you pop it up here?

    @TimOH: there’s nothing to suggest this isn’t an early morning history revision-wheeze by Pat Rabbitte, but I doubt it. I don’t think it matters whether the ECB knew beforehand or not, I guess what matters most is whether they are prepared to let us pay back the 31-odd billion off over 50 to 100 years or not, and at what price.

  8. Livonian Says:

    @Tim

    With hindsight and” reading between the lines” (as well as recalling the reaction of the Cabinet and Oireachtas on 30 September 08) IMHO it is very easy to speculate that the ECB “insisted on something” but also offered a reassurance in return.

    While I am sure BL RIP had “perfect French” the fact that he spoke to his his French counterpart (who we know speaks excellent English) in French may indicate that he felt he had his “back covered” .

    I cannot imagine any Irish official (or public representative) deciding to speak in French about such an important decision unless they felt that Irelandś “friends” were backing them up.

  9. Joseph Ryan Says:

    If the government stiffs Anglo on €24 billion promissory note on its balance sheet at June 2011, then Anglo must in turn stiff somebody.
    The only somebody Anglo can stiff is the €40 billion owed to the Central Bank.
    There is a few odd billion owed to bondholders, maybe 4billion at most but hell, they need the money.

    Should the full promissory be a bargaining chip. You betcha.

    Ireland has been burned badly with the worst yet to come, by the European powers.

    If Europe wants Ireland to make another gesture to save the euro, then this time the answer is no. Hard cash on the table this time. We want our ‘Save the Euro’ contribution back.

    When every other country has put 40% of its GDP into saving the Euro, then they should Ireland a call to pass a referendum.

    And the worst is yet to come. Anecdotal evidence is that November consumer spending has collapsed.
    Expect January 2012 job losses to be up there with January 2009.

    The ECB/BUBU austerity mullahs have won.
    Europe is now the subject of a banker inspired austerity /deleveraging experiment. The devastating results are everywhere to be seen, visible even to those conducting the experiment. But they remain unfazed. They expected this devastation because some studied economics and knew what the result would be and because this is not really an experiment.
    It is a policy designed for debt collection.
    These people could not care less if it causes recession or mayhem or worse. They just suffered some gambling losses and they have no intention of paying for those losses themselves.

  10. ObsessiveMathsFreak Says:

    I don’t know why people think we need to have a referendum in this country on any changes to any EU treaty.on Europe. The 28th Ammendment (Lisbon II) changed the Irish constitution to reverse the Crotty decision and make it so that Irish referendums on the EU were no longer neccessary.

    For those of you who actually read the amendment, you might remember this section, now section 29.4.4 of the Irish constitution

    6. No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State, before, on or after the entry into force of the Treaty of Lisbon, that are necessitated by the obligations of membership of the European Union referred to in subsection 5 of this section or of the European Atomic Energy Community, or prevents laws enacted, acts done or measures adopted by—

    i. the said European Union or the European Atomic Energy Community, or by institutions thereof,
    ii. the European Communities or European Union existing immediately before the entry into force of the Treaty of Lisbon, or by institutions thereof, or
    iii. bodies competent under the treaties referred to in this section,
    from having the force of law in the State.

    Basically, full Franco-German supervisory control of our budgets can be mandated in law in this country without a single voter ballot being cast. It’s really there in black and white.

    And before anyone asks; Yes I voted “Yes” to the Lisbon Treaty, and yes I do now feel like an absolute fool for having done so.

  11. Georg R. Baumann Says:

    @ Stephen

    http://www.irishtimes.com/focus/2011/kennyspeech/index.pdf

  12. Livonian Says:

    @ Steven

    This is very curious.

    Now I cannot find it either.

    I am sure it was an “external” link on the Irish Times website (although I also read Indo and RTE this evening) and it was definitely a draft copy as it had a “pencil scribble” at the beginning and grammatical/spelling errors. Approximately 14 pages of double spaced typing.

    The content (which I read) is to long to summarise here and although it was assertive and interesting it was diplomatic and not something IMHO which would be at variance with current policy.

    Perhaps you could try Mr Kenny`s office or the Irish Times . If it was a “leak” (which somehow “appeared” on my terminal) I would prefer to keep well away from it.

  13. Georg R. Baumann Says:

    @Livonian

    see my link above

  14. Livonian Says:

    @Georg Baumann

    Many thanks.

    I actually went so far as to tweet Minister Creighton to ask her if she had a copy of Mr Kennys speech to the Adenauer foundation and if so would she be kind enough to post it here.

    Just because I use a pseudonym I feel it is very important not to spread false information and always advocate ethical behaviour on social media which (by itś very “openness”) is vulnerable to manipulation.

    Best…L :)

  15. wow Says:

    I think a factor to be considered here is the willingness of the Franco-German leadership to see states leave the EZ.

    Not an insignificant factor I think

  16. wow Says:

    OMF,

    Dont feel bad about voting Yes to Lisbon lots did. I always found it funny that people who voted no were supposed to be ill informed yet many who voted yes did so because it was “good für Europe good for you” , for jobs, or to be at the heart of europe.

    If there were ill informed reasons to vote then surely they were them, every bit as much as the reasons no voters voted the way they did.

    By the way just to be clear I am not saying your reasons for voting as you did were invalid (have no right to say that) but am just commenting about double standards in the media on why people voted as they did.

  17. Livonian Says:

    @Joseph

    “If Europe wants Ireland to make another gesture to save the euro, then this time the answer is no. Hard cash on the table this time. We want our ‘Save the Euro’ contribution back.”

    After reading media reports and the draft copy of Mr Kennys Adenauer foundation speech (kindly posted by Georg Baumann)I have a very strong feeling that was the underlying message of todayś visit.

    One thing we need to remember about Enda Kenny, Michael Noonan and Pat Rabbitte is that they are around a long time before many of todyś EZ/EU leaders were introduced to the “quaint” concept of Democracy.

    Consequently IMHO they have strong opinions about where the EU is headed. Ireland made good use of EU/EEC transfer funds.

    While some pundits like to (IMHO incorrectly) say we were using a “begging bowl” over the years at least the funds did not go into a “urinal” as it did/is in other recipient countries.

    In addition to wanting our “Save the Euro” contribution back now is probably a good time to try and get “our Europe” back instead of “haring off” after some more “quick fix” efforts. .:)

  18. David O'Donnell Says:

    @all

    Separate issues - no necessary or essential link between them …. Pat simply sending an ‘How’re Ya?’ signal to the SPD.

    http://www.irisheconomy.ie/index.php/2011/11/08/burning-ourselves/#comment-188729

    @Livonian

    Lovely to hear that Lucinda Tweets … Dulcet tones one assumes …

  19. ObsessiveMathsFreak Says:

    To elaborate on the point of my previous post:

    The government is trying to trade the promissory notes in exchange for a yes vote. The working behind this are as follows

    The German’s want further European “integration”/debt collection, which requires the peripheral/debtor states to agree to them. Most countries can just pass a normal bill to do this. But the Irish government–as a result of the Crotty decision–has always had to hold a popular referendum on EU treaty changes in the past. (This is the critical point).

    So, the Government can’t just pass a bill on EU integration and will have to hold a vote. But the Irish public are deeply unhappy with Europe. So the Government can argue that they’d love to give France and Germany their Imperial Sceptre of Integration, but that the public will need a sweeter in the form of a €28 billion Anglo Bond debt write-off in exchange.

    In short, €28 billion is to be to Ireland in 2012 what the £398,085 10 shilling Equivalent was to Scotland in 1707; the price of our sovereignty.(And our ATMs).

    However the Government is holding a dud card. Lisbon II explicitly removed the need for referendums in Ireland on any EU treaty changes, or internal EU measure which need to be adopted. The German’s don’t have to pay for anything and can simply bully the Irish Government into passing whatever laws they please.

    Now, you could well argue that the Irish Government could just hold a referendum anyway. However, the last Prime Minister who tried that found his nation threatened with an Immediate and Terrible Bankruptcy by Merkozy and the ECB. Given past Irish responses to such threats(and their continued sound-bites on sovereignty), it’s safe to assume that FG/Labour will bend like willows in the gale of such threats, and freely give up our nation’s sovereignty in exchange for continued working ATMs and Friday night take-aways.

    And the loss of sovereignty would be no small matter to this country. Regardless of how EU integration is implemented, it will note bode well for Ireland. The last time and Irish Parliament gave up its powers, in the 1801 Act of Union, the country was swiftly and permanently ruined. Dublin in the 1790s–Gratton’s parliament intact–was the second city of the British Empire, wealthy, cultured and industrious, competing in every sense on a European level. By the 1830s, the city was already in decline; 5000 hands employed in the woollen industry had declined to only 600, with the tale repeated across all sections of the economy and society. The Duke of Wellington certainly spent the better part of his life outside his home city after 1800.

    The Great Powers of France and Germany have been perfectly happy to see 400,000 unemployed in this country, and even ask for more money and cuts from us to pay for their profligate banks. What fate do you think awaits this country should we give them even more powers over us? And for what price will we sell our liberty? For €28 billion of debts that we didn’t owe anyway. It makes even The Equivalent seem generous by comparision.

    It’s not worth it, and the Government won’t even get the write off anyway, as no referendum needs to be held. This country should not even consider further EU integration of any kind. We must regain our independence from Europe, and not allow ourselves to be bribed, blackmailed or badgered into placing the shackles of vassalage on this country once again.

    The Government should leave the Euro, set up a Punt-Nua, and work to re-establish the EU as it was, as a community of equal states, and not support what is has become, which is a dictatorship of Great Powers and iniquitous money men.

  20. seafoid Says:

    The bank guarantee gets another year.
    When will the banks be able to stand on their own 2 feet again ?

  21. Enda H Says:

    @ObsessiveMathsFreak

    The 28th Ammendment (Lisbon II) changed the Irish constitution to reverse the Crotty decision and make it so that Irish referendums on the EU were no longer neccessary.

    You’re incorrectly stating this as fact.

    Maybe, and it’s a very large maybe, the High (and ultimately Supreme) Court will someday decide that Lisbon can be substantially altered without a referendum but they have not done so. Crotty remains a relevant precedent in Irish law.

  22. CeterisparibusCeterisparibus Says:

    “Nov. 16 (Bloomberg) — The head of the International Monetary Fund’s European department quit less than a year into the job and was replaced by an in-house economist.

    Antonio Borges, a Portuguese native whose unit oversees bailouts in the euro region, left for “personal reasons,” the Washington-based IMF said today in an e-mailed statement. His successor is Reza Moghadam, the fund’s director of strategy.

    “Antonio Borges has led the European Department during an extremely difficult period for the region’s Eurozone members,” IMF Managing Director Christine Lagarde said in a statement.

    She added that she looked forward to having Moghadam “applying to our work in Europe the same strategic vision, drive, and thoughtfulness that he has demonstrated in his previous position.”

    Borges joined in November 2010 after overseeing a group in Europe that set standards for the hedge fund industry, the London-based Hedge Fund Standards Board.

    Borges was a former vice chairman at Goldman Sachs International in London from 2000 to 2008. He was a professor of economics and dean of INSEAD Business School in Fontainebleau, France, from 1993 to 2000 and a deputy governor of the Banco de Portugal from 1990 to 1993. Borges received a doctorate of economics from Stanford University in California.”

    The Squid is everywhere.
    Wonder why he bailed out…stress perhaps?

  23. CeterisparibusCeterisparibus Says:

    @OMF
    On the face of it the amendment would appear to have the effect you contend for. However, you cannot look at in isolation. The Constitution in its entirety must be considered.

  24. Desmond Brennan Says:

    So in many months time that demented fudgepot Merkel wants minor treaty changes, that will only address part of the problem …and at that partly ? Is there anything this woman doesn’t do by inadequate miniscule measure ? What she does is akin to homeopathy… if she was organising a piss up in a brewery, you’d be lucky to get even a drop, and that would be after having signed an agreement to not to fly to Mars when drunk.

    And don’t forget, not merely is this dithering fudgepot failing to solve the problems of yesterday…worse still is that she’s doing nothing about the problems of tomorrow…and worse again,whilst she dithers, the rest of us can’t make plans for good stuff tomorrow.

    The IMF+USA+BRICs need to intervene, Berlin’s approach of keeping the problem in stasis for (many,many more) months until we find a partial solution, is nonsense.

  25. Ceterisparibus Says:

    @ Desmond

    This guy thinks its all over in any event….

    “David Heathcoat-Amory, Britain’s former Europe minister, said Berlin will do whatever it takes to try to save EMU. “The Germans will pay up, accept eurobonds, and mobilise enormous firepower. They are not out of ammo yet.”
    “But this won’t save monetary union in the end because it is not a debt crisis. It is a currency crisis. The weaker states are uncompetitive and you cannot force them to deflate their way back to competitiveness by cutting wages 30pc. The EU elites won’t admit it, but the euro experiment is over,” he said.”

    Maybe that’s why Borges bailed out…wouldn’t look good on the cv presiding on a calamity.

  26. Ceterisparibus Says:

    Forget that last comment…apparently this is the guy that said last month that the IMF could bu Spanish and Italian bonds and had to quickly backtrack….
    So I now think he just fell on his sword.

    http://www.reuters.com/article/2011/11/16/us-eurozone-idUSTRE7AC15K20111116

  27. Ceterisparibus Says:

    In the midst of this article is a short tidbit of information….
    http://www.nytimes.com/2011/11/17/business/global/germanys-bitter-recipe-tests-euro-zones-solidarity.html?pagewanted=2&_r=1&hpw

    Watch Milan.

  28. grumpy Says:

    @stephen k

    ” I guess what matters most is whether they are prepared to let us pay back the 31-odd billion off over 50 to 100 years or not, and at what price”

    Have you thought about the effect this would have on the valuation of the promissory note for repo purposes with a Eurosystem CB?

  29. David O'Donnell Says:

    Kenny Live in Berlin I

    http://www.reuters.com/article/video/idUSTRE7AC15K20111116?videoId=225195631

  30. David O'Donnell Says:

    Kenny Live in Berlin II

    http://www.reuters.com/article/video/idUSTRE7AC15K20111116?videoId=225193831

  31. Desmond Brennan Says:

    @Ceterisparibus
    There’s a lotta voices, and naughty briefings going on. Schäuble in my view has a pathological condition, he has a disturbed relationship with reality…and is beyond redemption. Fraü Merkel is sane, but engaged in neurotic dithering/over perfectionism…and the Bundesbank folks et al are just about ideological purity, rather than empiricism. An admission even of the problem, won’t come from Germany.

    Sad thing is, the French are also not helpful…pure jingoistic oppurtunists. Outside intervention will be needed…a negotiated settlement is doomed to be ineffective.

  32. PR Guy Says:

    @OMF / Enda H

    “The 28th Ammendment (Lisbon II) changed the Irish constitution to reverse the Crotty decision and make it so that Irish referendums on the EU were no longer neccessary.”

    I think what this clause does is to leave the door open to enable a referendum bypass if and when it’s needed. It would take a lot of jiggery pokery in the High Court to get the Lisbon treaty changed without a referendum ….. but you can be sure Germany would provide the government with the very best European legal minds to help achieve that.

    There is a reason why everyone keeps saying they don’t want a referendum. We have a track record of giving the ‘wrong’ answer and if we were forced down the ‘vote again until you do it right’ path, it would fatally expose the lack of democracy in Europe these days.

    Anyway, this is probably all academic. We could be well beyond worrying about the Lisbon treaty in the new year the way things are going. We might not even be one of the countries asked to form a tighter fiscal union. The optics on that one are going to be interesting to present to the Irish people. I of course will stand by to help my country in their hour of need should extreme ‘presentation’ be required…. at the usual daily fee of course.

    The rumour mill says Borges bailed out because he found out that Portugal is one of the countries earmarked by the new ptb for a Euro exit and that he wants to distance himself from it so for ‘personal reasons’ I guess you could read exactly that.

  33. Donal O'Brolchain Says:

    re. EU Treaty changes

    Germany may join Ireland in having a referendum on EU and €urozone governnace.

    “A German Referendum on Europe?
    Merkel Eyes Constitution Revamp to Boost EU Powers

    Constitutional judges in Karlsruhe: Are changes to Germany’s cherished consititution afoot?

    Germany’s constitution is highly respected, but it also obstructs the transfer of power from Berlin to Brussels — a fact that has hindered the rescue of Europe’s common currency. At the CDU’s party conference this week, Angela Merkel may push for an overhaul of the Basic Law in order to hasten euro bailout efforts. ”
    http://www.spiegel.de/international/europe/0,1518,797584,00.html#ref=nlint

    As this would be the first Federal referendum since the FRGermany was founded, the outcome cannot be guaranteed - regardless of what question or questions are put.

    In 2005, the French voted against the EU Constitution in a referendum - after the Luxembourgers and Spaniards had passed it in referenda. Among the opponents were a former French Socialist Prime Minister Laurent Fabius - something which raised eyebrows in Germany.

    Below Federal level, some parts of Germany use direct democracy - one element of which is included in the Lisbon Treaty.

    Is this the start of a new way of governing EU and/or €urozone?
    Time to brush up on how Switzerland (a highly federalised state, with German/French/Italian influences, with Romanch as a fourth official language, few natural resources, strong currency etc ) governs itself.

  34. Chris Says:

    “Is it that case that Ireland’s promissory notes are the price of a ‘yes’ from the government to a possible Treaty change?”
    Clearly not.
    I have a feeling that whatever treaty change being proposed would be positive for Ireland, e.g. greater fiscal integration, reform of the ECB.
    In any case the government should anaylse the treaty change without thinking about some limited monetary gain.

  35. Joseph Ryan Says:

    @PR GUY

    re Borges Out

    “The rumour mill says Borges bailed out because he found out that Portugal is one of the countries earmarked by the new ptb for a Euro exit and that he wants to distance himself from it so for ‘personal reasons’ I guess you could read exactly that.”

    And of course Madame Legarde’s hand is strengthened in making sure the final solution is to France’s liking. [The newcomer appointed is in house and probably carries little weight and owes his appointment to her]

  36. Paul Hunt Says:

    I’m quite surprised that so little attention is being paid to An Taoiseach’s speech to the Konrad Adenaur Stiftung. It is probably the clearest statement we’ll get on this Government’s overall strategy as decided by the Supreme Command (aka the Dirty Dozen) cf:
    http://www.independent.ie/opinion/columnists/fionnan-sheahan/fionnan-sheahan-kenny-presides-over-shift-in-the-corridors-of-power-2934195.html

    The only difference between this approach to developing and implementing an economic policy strategy and the previous approach (which got us into this economic mess) is that the various influential vested interests are not affecting policy outcomes as visibly as they previously were - but we can be sure that they’re there in spirit. The outcomes of this horse-trading behind closed doors will be delivered and spun as a fait accompli and the majority of citizens will continue to pay to keep the various well-entrenched vested interests in the style to which they have become accustomed - and to which they believe they are entitled.

    As to the content of the strategy I would be surprised if others don’t have views, but I would like to highlight one or two aspects. First, I think it may be asserted that Ireland is the only EZ member that has taken a full hit on trying to sort out its banks - and has taken an even more serious hit to allow other members toavoid doing so. This is mentioned in An Taoiseach’s speech, but I would hope it has been hammered home in private conversation with the German Government.

    Second, I simply cannot understand this fetish about export-based growth. If every economy that’s flat-lining focuses on exports who will do the buying? Fundamentally growth is driven by increased productivity and efficiency across all sectors of the economy and by ensuring the conditions for efficient investment. Squeezing disposable incomes while price gouging and ineffeciencies abound in the sheltered sectors is totally perverse and counter-productive. Providing opportunities for regulatory capture by a handful of the leading professions and part privatisation of a financially integrated and gloriously inefficient semi-state are sick jokes at the expense of the vast majority of citizens.

  37. Tim O'Halloran Says:

    @Sterphen Kinsella

    ” I don’t think it matters whether the ECB knew beforehand or not, ” ie the guarantee.

    Actually I think it will matter in a referendum situation , and probably will be the main argument in any such campaign. What could be more relevant to a sovereignity discussion, whether we broke the country ourselves or whether the big bad EU did it. I think the Brians did it, myself.

  38. Chris Says:

    “Is it that case that Ireland’s promissory notes are the price of a ‘yes’ from the government to a possible Treaty change?”
    No.
    I have a feeling that whatever treaty change being proposed would be positive for Ireland, e.g. greater fiscal integration, reform of the ECB.
    In any case the government should anaylse any treaty change without thinking about some limited monetary gain or political point scoring.

  39. Bond. Eoin Bond Says:

    @ Joseph/PR

    re Borges

    the simpler explanation is that he made a major embarassing cockup in September when he declared that the IMF could start buying Eurozone debt, and then had to reverse course quick-sharp about two hours later when it was pointed out to him that the IMF has absolutely no mandate or want to do such a thing…

  40. Paul Hunt Says:

    The principal institutions of democratic governance in Ireland are perfectly fit-for-purpose; it’s simply that, by turns, the necessary processes have not been applied, or they have been abused or suppressed. But there is absolutely no popular demand to restore and apply these processes. And those who fail to apply, abuse or suppress these processes have absolutely no incentive - and every incentive not - to restore and apply these processes.

    The defining feature of democracy is that, should voters make the mistake of voting in to power the inept, corrupt or downright dangerous, they can vote, in a few years, to replace them with others who may have succeeded in conveying the impression of being less inept, corrupt or dangerous. But, from those elected to govern, voters should demand a little more to secure effective democratic legitimacy between elections. However, in most parliamentary democracies, once governments are elected and they can manage or minimise backbench revolts it is truly an ‘elected dictatorship’ until the next election and little restraint is exercised on their behaviour. And the potential to extend this elected dictatorship may be enhanced by employing the powers and patronage of, as is the case in Ireland and the UK, an excessively centralised and expansive state to pander to vested interests and to secure corporate donations to boost the election war chest - the ’survival of the fattest’ (cf Prof. Paul Collier on elections in the very poor developing economies.)

    However, it appears that the majority of Irish citizens are perfectly content with the effectiveness of their ability to kick the rascals out at a general election and see no need to have processes that will exercise restraint, apply effective scrutiny and enforce accounability on governments between elections. And while this remains the case, we will be stuck with elected dictatorships pandering to the whims of powerful and influential narrow sectional interests.

  41. Eamonn Moran Says:

    The Promissory notes should be exchanged for ECB QE money or Euro bonds.
    We can argue about the level of pressure put on Lenihan by Trichet to save the Irish insolvent banks in 2008 but its well documented that we were told to save our banks.
    How can Ireland be expected to pay such a large amount for Irish Private bank private losses when France was demanding that Europe as a whole pay for its banks as yet mainly hidden losses.
    I guess the answer is “The Guarante” but the punishment does not fit the crime. The immediate benifits of that guarantee (No Irish bank runs followed by european bank losses/runs) were enjoyed by all of Europe.
    Treaty or no treaty the burden we are being asked to bear is not just unfair it is a mistake.

  42. PR Guy Says:

    Sorry Eoin but there are no such things as simple explanations in these games ;-)

  43. David O'Donnell Says:

    @Bond

    re Borges

    Agree. He made a monumental balls-up of a comment …

    I continue to view Squid influence as highly pernicious to citizens - everywhere.

    @OMF
    ‘The last time and Irish Parliament gave up its powers, in the 1801 Act of Union, the country was swiftly and permanently ruined. Dublin in the 1790s–Gratton’s parliament intact–was the second city of the British Empire, wealthy, cultured and industrious, competing in every sense on a European level. By the 1830s, the city was already in decline…..’

    Agree. Shortlty afterwards the process to replace people with cattle was let loose upon the Irish lifeworld of the serfs and the spalpeens …. and the export guarantee on grain ensured its acceleration in the 1940s and for the next century and a half or so …. And look at who inhabits that fine building now! …. but with sufficient cattle, the blood of the remaining serfs is simply to be extracted to its finite limits … and, ably assisted by the PD/FF sense of the fullness of time, the land will be restored to the wooly sheep of the Cotswolds hence fulfilling the dream of Lord Salisbury and ensuring empirical support for the theses of Malthus, Merkel, and neoliberal Monetarism. And the great bleating silence will descend upon the pristine Irish landscape as the sheep will be sheparded by a couple of digital drones flying idly by ….

  44. Donal O'Brolchain Says:

    @ Paul Hunt at 11.05
    I can only presume that you are trying to provoke a debate with this posting.
    Most of the assumptions offer great comfort to the status quo, the incumbents and the powers-that-be. Among the examples are
    “The principal institutions of democratic governance in Ireland are perfectly fit-for-purpose;….
    “Looking at democratic governance in other better-governed countries is largely academic.”

    This whole train of thought is a recipe for a do-nothing nihilism about our way of governing ourselves.

    Compare and contrast this with the following confession of ineptitude from the governing elite “In the past decade, Ireland’s approach to fiscal policy, prices, costs and financial regulation were not sufficiently adapted to the disciplines of a single currency” NESC Press Release August 2010
    http://www.nesc.ie/dynamic/docs/The%20euro%20MEDIA%20RELEASE%20from%20NESC.pdf

    With this admission, who can be surprised that the markets and EU-ECB-IMF troika formed the view that our governing institutions are not fit for purpose?

    We clearly lack the checks and balances needed to limit the scope for excess by the powerful - whether they be elected or appointed, public or private. Maarten van Eden, who worked in Anglo-Irish was reported has having said
    ““Apart from the recklessness, overconfidence and the total lack of professionalism, one sees clearly a lack of checks and balances not only within Anglo but within the country/ system as a whole,”
    http://www.irishtimes.com/newspaper/frontpage/2011/0905/1224303500416.html

    As I have pointed above, anyone who thinks that the status quo - within Ireland or Europe - will continue should pay attention to recent reports from Germany on holding a referendum for the first time since the Federal Republic was founded)

  45. Paul Hunt Says:

    @Donal,

    Less an intent to provoke debate and more a statement of weary and despondent resignation. I remain convinced, however, that the structure is sound; it is simply that the processes are abysmal.

    And, perhaps, an attempt to broaden the focus from the horse-trading suggested in the original post to look at policy and strategy formulation and content and at the process of democratic governance in the context of An Taoiseach’s speech to the KAS in Germany.

    But, apart from your laudable persistence and optimism, I don’t anticipate much engagement. In general, I would contend that countries such as Germany, the Netherlands, all of the Scandinavians, Austria and the smaller EZ members such as Estonia, Slovakia and Slovenia are better governed than Ireland and the rest of the so-called ‘peripherals’ because, to varying extents, their parliaments assert their primacy over governments. The moves afoot in Germany are to ensure parliamentary restraint over concrete expressions by government of solidarity within the EZ.

    In Ireland, we have TDs putting their duties as constituency advocates and mini-ombudspersons before their duties as legislators. (Deputy Penrose is the latest example and there are likely to be more - and they are almost certain to be rewarded by re-election). We have the Chair of the PAC, Deputy McGuinness, pleading with Minister Howlin to bring froward proposals to permit his Cttee to do its job more effectively. And we have most TDs willingly accepting - indeed, almost relishing - their impotence as legislators. The vast majority of voters appear to have no problem with this.

    Not to many reasons to be cheerful; and plenty to be resigned and despondent.

  46. Ninap Says:

    @OMF
    “I don’t know why people think we need to have a referendum in this country on any changes to any EU treaty.on Europe. The 28th Ammendment (Lisbon II) changed the Irish constitution to reverse the Crotty decision and make it so that Irish referendums on the EU were no longer neccessary.
    For those of you who actually read the amendment, you might remember this section, now section 29.4.4 of the Irish constitution:
    6. No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State, before, on or after the entry into force of the Treaty of Lisbon, that are necessitated by the obligations of membership of the European Union referred to in subsection 5 of this section or of the European Atomic Energy Community, or prevents laws enacted, acts done or measures adopted by—
    i. the said European Union or the European Atomic Energy Community, or by institutions thereof,
    ii. the European Communities or European Union existing immediately before the entry into force of the Treaty of Lisbon, or by institutions thereof, or
    iii. bodies competent under the treaties referred to in this section,
    from having the force of law in the State. “

    This argument arose during the Lisbon campaign, but it is based on a fallacy. There was no substantive change to the Constitution in this regard due to Lisbon. In fact, the existing wording (pre-Lisbon referendum) was almost identical:

    “10° No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State which are necessitated by the obligations of membership of the European Union or of the Communities, or prevents laws enacted, acts done or measures adopted by the European Union or by the Communities or by institutions thereof, or by bodies competent under the Treaties establishing the Communities, from having the force of law in the State.”

    This wording has existed since we joined the EEC. It gives necessary primacy to EU law (in areas where the EU has competence), as to fail to do so would allow for Ireland (or any State acting on the same principle) to resile from an unpopular EU law citing national prerogatives.

    The Crotty judgement (in respect of the Single European Act) related to whether ratifying the SEA was a measure “necessitated by the obligations of EU membership”, or whether it involved going beyond the original requirements of EU/EEC membership. The court ruled, narrowly, that ratification of the SEA wasn’t an obligation of membership. Successive Irish governments since have erred on the side of caution and have put ratification of EU Treaties to referendum, even when it could be argued that there was no substantive change in respective competences involved.
    In other words, the Government could decide to ratify any future Treaty change through the Oireachtas, but it would remain open to any citizen to challenge its constitutionality (just as heretofore). In all likelihood, the Government would put the issue to referendum.
    (The other Lisbon innovation that was mis-represented in the media is the simplified procedure to amend the Treaties themselves; this merely allows all EU Governments acting unanimously to agree Treaty changes without the need for a formal Intergovernmental Conference; national ratification procedures would remain as before.)

  47. Donal O'Brolchain Says:

    @Paul Hunt
    “In general, I would contend that countries such as Germany, the Netherlands, all of the Scandinavians, Austria and the smaller EZ members such as Estonia, Slovakia and Slovenia are better governed than Ireland and the rest of the so-called ‘peripherals’ because, to varying extents, their parliaments assert their primacy over governments. ….” The moves afoot in Germany are to ensure parliamentary restraint over concrete expressions by government of solidarity within the EZ.”

    Perhaps it is more correct to say that the fact that many of these countries do not make it mandatory (in law or by custom and practice) for Ministers to be drawn only from MPs leads to a wider choice of people being brought into Cabinet, while Parliament remains the key source of legitimate authority for Government action.

    For more on this see Niamh Hardiman’s 2010 SSISI paper here
    http://www.tara.tcd.ie/jspui/handle/2262/41161

    and/or my contribution to the Dublin City Business Association (DCBA) Feb 2011 “A 10 point Manifesto - Towards a Second Republic” here
    http://www.dcba.ie/static/doclib/Towards_a_Second_Republic.pdf
    (summarised on p.57-58)

    “The moves afoot in Germany are to ensure parliamentary restraint over concrete expressions by government of solidarity within the EZ.”
    Not sure what you mean by this. What have I missed?

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