How the Irish people were robbed by banks, the Commission and their own government

European Parliament. Plenary session week 16 – Discussion: Current situation in Cyprus. Demonstration: “Hand off – Cyprus, Portugal, Greece, Spain, Ireland”. MEPs protesting over the treatment saved to five EU Peoples in order to save bankers and banks. (EP Audiovisual Services).

In 2007 Ireland’s sovereign debt was 25% of the country’s GDP. After the financial crisis – and €140 billion later – in 2012 it reached 120% of the GDP at €190bn. Yet the Dublin government this week celebrated the Irish ‘exit’ from the EU-ECB-IMF troika’s surveillance programme, that brought the 4.5 million people nation to its knees and has mortgaged the country’s future for the next thirty to fourty years. If this is a good reason to celebrate, then why doesn’t the average man and woman in the towns and the villages of this beautiful country see it?

During the same time period from 2008 to 2012, unemployment skyrocketed from around 5% to 15%. Today the Irish labour market still suffers from recession and the country’s young emigrate anywhere in the world from Australia to the US, looking for a job and a better life. All that just because the country’s banks, the Bank of Ireland, the Allied Irish Banks and the Anglo Irish Bank proved to be not only careless in conducting their business, but they consciously mortgaged the country’s future for their own ‘investments’ and ‘profits’. As if they knew that the average Irish wage earner will undertake to pay for their rescue.

Salvaging whom?

On 26 February 2010 the European Commission issued a note saying that “The European Commission has approved, under EU state aid rules, the establishment of the National Asset Management Agency (NAMA), an impaired asset relief scheme for financial institutions in Ireland. The Commission is satisfied that the scheme is in line with its guidelines on impaired asset relief for banks that allow state aid to remedy a serious disturbance in a Member State’s economy. The scheme will help address the issue of asset quality in the Irish banking system and promote the return to a normally functioning financial market “.

This announcement made it sound like Brussels offered a great service to Irish people, by letting their country’s bankrupt and fraudulent lenders be rescued with taxpayers’ money. Given that the money was not enough to pay for the debts of the failing banks, the Irish exchequer had to borrow, heavily mortgaging the country’s future for the sake of the banks.

Again on 29 June 2010 the Commission issued another announcement stressing that “The Commission authorised the extension until 31 December of an Irish guarantee scheme for credit institutions, which was initially approved on 20 November and extended on 31 May 2010. The Commission considers the extension of the measures to be in line with its guidance on state aid to banks during the crisis and the recent adjustment of the rules for state guarantees, endorsed by the ECOFIN Council of 18 May 2010 on the phasing out of support measures for the financial sector”.

Rescuing banks burdening the people

At that time, this was a standard procedure in Brussels, ‘authorising’ member states countries with failing banks to borrow in order to repay the lenders’ debts. The Commission and the ECOFIN Council didn’t see any breach of competition laws, while the banks, with taxpayers’ money, repaid their debts. But to whom were those billions delivered? Obviously to those who had lent tens of billions of euros to the Irish banks, who were equally careless and fraudulent like the three banks. At the end, Ireland was placed under the ‘support’ programme of the troika, because the credibility of its exchequer had evaporated and the debts of the three banks were still unpaid. In this way, the three banks dragged with them the entire country to bankruptcy, just because the government decided to rescue them. Consequently the country in its turn had to be ‘rescued’ by its peers in the Eurozone and the IMF.

This programme was sold by Brussels to the Irish people as a brotherly salvation effort, but it was exactly the opposite. The €87 billion Ireland got from the troika of EU-ECB-IMF, together with an almost equal amount the Dublin government had already borrowed while still creditworthy, all went to repay the ‘investors’ who had lent money to the Irish banks. Still today nobody knows who they were. They can be held accountable of carelessness and even fraud for not caring about the risky placement or other semi-legal ‘investments’, their money were used for. However, instead of being prosecuted, they were repaid in full with taxpayers’ money. Dublin was not allowed to bargain with them and their names were kept secret.

In a similar case, when the US bank loans to South American countries went bust in the 1980s, Washington didn’t compensate the New York lenders in full. After bargaining with them, their bad debts were compensated with taxpayers’ money up to around 30% of their nominal value. Unfortunately in the case of the Irish lenders this was not the case. Why? As it is common knowledge in Ireland but nobody talks officially about it, the final destination of the money was Germany, France and to lesser degree New York.

It was the German, French and probably New York banks, investors, insurance companies and privates who had risked their money, by lending it to Irish banks. Finally they pocketed not only the high yields during the boom time of the Irish real estate sector, but they also got back their capital in full. If this was not a robbery then words have lost their meaning. Instead, the Brussels Commission and the Dublin government celebrate the exit of Ireland from the ‘programme’. O tempora o mores…even capitalism is not what it used to be, perfectly described by the phrase ‘no pain no gain’. Today’s capitalists pocket gains without pain, just because they have become ‘systemic’.