By Luke Ming Flanagan MEP
IRELAND AGAIN PUTTING ON THE ‘RICH MOUTH’
In the early 1940s, during another Emergency, it was that great Irish Times columnist Myles na gCopaleen (Brian O’Nolan) who gave us ‘An Béal Bocht’, the Poor Mouth – pretending you’re much worse off than you actually are.
Earlier this year, in the throes of another Emergency, another great Irish Times columnist, Fintan O’Toole, has given us its 21st century equivalent, ‘An Béal Saibhreas’, the Rich Mouth, a practice first indulged in by this current government when they blandly (and blindly) proclaimed to the world that Ireland is doing fine, thank you very much, we don’t need or want any debt relief.
Last week, in no less a forum than the United Nations General Assembly, official Ireland was again putting on ‘An Béal Saibhreas’, the Rich Mouth.
I sent the following e-mail on Wednesday last to Declan Gallaher, the Irish Permanent Representative to the EU here in Brussels (essentially our Ambassador), who had asked to meet me:
Unfortunately I can’t meet you this week, hectic schedule. I do however have a request.
Tomorrow, Thursday September 10th, the UN General Assembly will be presented with a set of proposals titled ‘Basic Principles for Sovereign Debt Restructurings’, which have already been adopted in Committee. This is a very important step along the road to establishing an international legal framework that will allow troubled countries to emerge from their indebtedness in a fair, structured and controlled manner, and remove the ability of vulture funds to undermine deals done with the majority of creditors.
Last year, and shamefully in my view, Ireland voted against such a move; I’m asking now that Ireland support these proposals that will be presented tomorrow and further, that in November, when a new ‘Modalities Resolution’ is proposed that will eventually lead to the multilateral legal framework for Sovereign Debt Restructuring, Ireland would again support the initiative.
Luke Ming Flanagan MEP
Next day I received the following reply:
Dear Honourable Member,
Following the discussion of this issue at Coreper yesterday the EU has adopted a common position in relation to the proposal concerning ‘Basic Principles for Sovereign Debt Restructurings’. The agreed EU common position is to not vote in favour of this proposal. Ireland will be among a large number of EU Member States abstaining from the vote later today in New York. No EU Member State will be voting in favour of the resolution.
Ireland will continue to engage on this matter with our EU colleagues and with the G77 countries.
With best regards,
THE BACKGROUND TO THIS PROPOSAL
If you get into financial difficulty at either a personal or a business level there is a way out, either through personal bankruptcy or business bankruptcy. At the sovereign level however, and as those of trapped in the eurozone have learned to our cost in the last few years, for insolvent or near-insolvent nations, no such facility currently exists. That needs to be corrected, and that’s what this proposal was all about.
Currently, if a sovereign country gets into severe debt difficulty and needs relief, this can be done only with the voluntary agreement of the creditors. Unlike personal or business bankruptcy, there are no courts to assess the debts and the difficulty of repayment, to make fair and binding decisions on ‘haircuts’ for the creditors, and to then enforce those decisions. This would spread the pain across creditors and debtor, would then enable the distressed sovereign to get back on its feet, a fresh start.
In the absence of such a facility we witness a developed European country, Greece, forced to its knees by a Troika that then feigns concern for the citizens subsequently brutalised; we see another advanced economy, Argentina, forced by an American court into a situation last year of involuntary redundancy, because a vulture fund purchased some of the holdout creditor debt from Argentina’s genuine default of 2001, then swooped to demand full payment, though they themselves had paid merely cents on the dollar for that debt.
PRESSING NEED FOR AN INTERNATIONAL COURT
The major problem at the moment is that whether in a ‘controlled’ default, as in Greece, or a unilateral default, as in Argentina, the ordinary people are going to suffer immensely. With the creditors calling the shots, demanding payment no matter the social cost, the people are forced to carry a massive and disproportionate burden.
Were this proposal in the United Nations to be carried through, however, this burden – while still being painful – would be considerably lessened.
It was designed by what’s known in the UN as the G-77 group of countries, originally 77 developing nations that came together back in 1964 but now with 134 countries. Traditionally, those sovereigns most vulnerable to insolvency came from that group – no more. Ireland recently found itself in that position and there is no guarantee it won’t happen again.
Even the much-criticised IMF, those with the most experience in sovereign debt ‘restructuring’, accept that there is a problem here but all their efforts to set up any such international court for sovereign insolvency settlement has been stymied by the very powerful creditor nations, nations such as the United Kingdom, the United States, Germany and so on. If they wouldn’t allow the IMF set up such a court, rest assured they will resist any efforts to so do by the United Nations, which would have even stronger willing standing.
Ireland though should be fully behind this proposal, not because of selfish self-interest, but simply because it’s the right thing to do.
Instead, and as evidenced by Declan Kelleher’s mail above, we have chosen to hide behind the tainted skirts of the EU.
As outlined above, the countries who DON’T want to see this proposal go through are those with the greatest vested interest in seeing troubled sovereign nations under the heel, to be exploited in every way possible.
These are the countries with whom Ireland has now aligned itself. As with Enda Kenny, Joan Burton and the rest who aligned themselves similarly against Greece in the recent crisis, it’s yet another example of this government playing ‘The Rich Mouth’.
Yet again, this government has sold us out.
Luke Ming Flanagan MEP