New Publication from Afri
PRESS RELEASE, 31 December 2010
A campaigning group is calling for the cancellation of Irish bank debt on the grounds that it is unjust and unsustainable, and for a renegotiation of the EU-IMF ‘bail out’. The call will be made at a press conference (taking place at 12 noon in the Central Hotel, Dublin, on Friday 31st January) to launch an Afri Report entitled ‘The IMF and Ireland: What We Can Learn from the Global South’.
Action from Ireland (Afri) claims the loans from the EU and the IMF will be used to repay the bondholders (mainly European financial institutions) who lent to those Irish banks that have now crashed and burned, and whose liabilities the Irish state has recklessly guaranteed. Afri chairperson Andy Storey said that “these debts were not incurred to run Irish public services but by private speculators chasing a quick buck – why should ordinary Irish citizens now pick up that tab?”
He accused the Irish government of acting as debt collectors for foreign banks. Afri, he said, has extensive experience of the negative impact of the IMF, especially in Developing Countries, and, based on this experience, is well placed to warn of the danger of accepting diktats from such international institutions.
The report claims Ireland would not be isolated from international financial markets and be unable to raise the funds to keep basic state services running in the event of defaulting on bank debt. Dr Storey, citing research by Irish and international economists, pointed out that the markets are currently punishing Ireland (through exceptionally high rates being charged on Irish bonds), and the ratings agencies are downgrading Ireland’s credit rating, precisely because they see the attempt to repay bank debt in full as futile. “Drawing a clear line between the portion of the debt that guarantees the bank bondholders (and which should not be paid) and that portion that is the government’s own debt would actually serve to calm the markets, and allow Ireland borrow the money necessary to cover government running costs at a reasonable rate of interest”, said Dr Storey.
The Afri report makes the case that the Irish debt will still end up being restructured at the end of the ‘bail out’ period – but that, by then, the private institutions will have gotten off the hook to a significant extent and the write-downs will be largely borne by the public sector. Dr Storey described this as “the privatisation of profits and the socialisation of losses”. Quoting the Italian playwright Dario Fo, Dr Storey concluded that “Irish people need to insist that they ‘can’t pay, won’t pay’ – and shouldn’t pay. This should be our new year’s resolution”.