By Mark Malone and Andy Storey.
Michael Noonan could have “walked on water across the Liffey” to the recent Fine Gael Árd Fheis. That was the view of one political commentator on RTÉ, following the “miracle” the Finance Minister had performed in relation to the Anglo Irish Bank promissory note, due for payment that day. This opinion was typical of mainstream media interpretation of the “deal” announced by Noonan.
In reality, the deal was a mirage, not a miracle. The Department of Finance, it is true, did not write out a cheque to the Irish Central Bank on March 31st. However, NAMA did. And who owns NAMA? That’s right, we do. So Ireland did pay the bill, in full and on time. We simply paid it out of one of our accounts rather than another. In the film Scarface, Al Pacino’s gangster responds to a rival’s pleas for mercy by saying, “Don’t worry, Frank, I’m not going to kill you”, then turns to a henchman and says “Manolo, kill this piece of shit”. Frank still ends up dead. We still ended up paying the money.
But it gets worse. The government has promised to repay NAMA the €3.1 billion. The promise taking the form of a sovereign, interest-bearing bond issued by the government. And NAMA plans to sell this bond on to Bank of Ireland, provided the latter’s shareholders agree.
If that last deal goes through, the government will owe the money, plus the interest (which might be some €90 million this year), to Bank of Ireland; so a bank that is 85% privately owned will end up making money by lending to the Irish government to allow that government to repay a debt that was not of our making and which could easily have been suspended. This is what counts as a miracle in Ireland today – it’s called a scam in most other places.
But stick with us here. Just when you think it could not get any worse, it does. The promissory note was ‘soft debt’, a debt that had limited legal status and which could have been suspended without significant complications arising. Not so the sovereign bond that the Irish government has issued to NAMA and that it plans to see sold on to Bank of Ireland. This is ‘hard debt’, the suspension of which would expose the government to potentially serious legal and other challenges. The government has boxed us into a corner, rendering it harder (but not impossible!) to write down this debt in the future. So it is not just a scam: it is also a stitch-up.
For weeks in advance of the March 31st deadline, Noonan waxed about negotiations and wranglings with the ECB. This was framed as realpolitik and strategic political manoeuvring. The reality is far more prosaic, but also completely damning. Pierre van der Haegen, director general of the Secretariat and Languages Services in the ECB, was asked via a freedom of information request to provide documents submitted by the Irish government as part of the negotiations. His official response? “Having duly looked into this matter, we would like to inform you that the ECB did not receive any documents from the Irish Government on the renegotiation of the terms of the promissory notes”. A political stitch-up indeed – one entirely organised by our ‘own’ side.
The decision by successive Irish governments to force people living in Ireland to pay for debts incurred by Anglo Irish Bank is one of the most blatantly unjust acts in the history of the State. We are faced with a bill of between €35 billion and €80 billion for the actions of a bank still under police investigation for fraud. A 14-year-old could tell you that’s dodgy.
The same 14-year-old will have lived through a generation of state-imposed austerity by the time we have paid this bill (while a few people will make a handsome profit). To put some context on these figures, €3.1 Billion (the annual repayment expected of us) would pay for the running of the entire primary-school education system for a year.
In 2008 it became clear that Anglo and Irish Nationwide, headed respectively by Seán Fitzpatrick and Michael Fingleton, did not have the assets to repay their debts to bondholders (the speculators who had lent money to them). Infamously the two Brians, Cowen and Lenihan, simply agreed with the banks that people living in Ireland would cover these bondholder debts. But where would the cash come from?
The European Central Bank, and its franchise the Irish Central Bank, whose main interest was stopping contagion to European money markets, created the money out of nothing and called it “emergency liquidity assistance” (ELA). To qualify for ELA, Anglo and Irish Nationwide – by this point rebranded the Irish Bank Resolution Corporation (IBRC) – had to put up some collateral. However, both were broke. So Lenihan wrote out IOUs, known as promissory notes, to act as collateral.
Anglo got its cash which was transferred almost immediately and in full, to its bondholders. Now we are being forced to pay back the ELA by redeeming the promissory notes. So far, €5 billion has been taken directly out of the economy, and given to the ICB/ECB.
What uses did the ICB/ECB find for it? Answer: they simply wiped it off the system.
A civil-society coalition was formed early in 2012 to campaign against this egregious injustice, arguing that we should suspend the promissory note payments and enter into negotiations to write down the debt. We felt confident that people in Ireland could devise a better use for the money than seeing it sucked out of Irish society and then taken out of circulation.
A wide range of groups came together: global justice organisations such as the Debt and Development Coalition, academic departments such as UCD’s School of Social Justice, community groups such as Kilbarack Community Development Programme, faith-based groups like the Irish Missionary Union, and the trade union UNITE. We called ourselves the Debt Justice Action network and the campaign against the promissory notes was launched as Anglo: Not Our Debt.
We sought to make a direct intervention in a public conversation. One focus was on increasing economic literacy about the socialisation of debt. We have held public meetings in communities around Ireland that are in part educational, but that also created space for people to make direct links between their own experiences of enforced “austerity” and larger issues of debt and power.
As well as traditional media work, we have used social media to engage with new emerging public spaces and networks of social and political discussion. We created educational videos and have staged symbolic protest actions – such as mock sacrifices of community services to “appease the ECB gods” during the week of the Spring equinox.
Despite Noonan’s March stitch-up, we are not giving up. We are going to intervene in the fiscal treaty referendum debate and are going to keep making the case that this is an illegitimate debt that needs to be written down. Fitzpatrick and Fingleton caused this mess, together with the gamblers who gave them the money to speculate with in the first place. It is not our debt and we should not pay it – now or in the future.
Mark Malone and Andy Storey are representatives of the Anglo: Not Our Debt campaign