Over the weekend reports came filtering in that the ECB had rejected a proposed deal from the Irish Government on the treatment of its promissory notes relating to the bailout of Anglo Irish bank.
As it stands Ireland has to cough up EU3.1 bln every March until 2023 to service the existing agreement which was taken on in a time of high drama and peril in both global and Irish financial markets.
Now that the waters have calmed and a large chunk of the storm has passed Ireland is looking for debt restructuring. It has complied with the majority of onerous demands by the troika and despite the rumblings and grumblings the people have for the most part complied with the savage restructuring and cutbacks also even while other peripheral nations have been causing social unrest the Irish public for the most part of it got on with it.
I think this is perhaps over zealous reporting to say a deal has been out-right rejected and there is still a deadline in March to be worked towards. The EU has a tendency to take these things right down to the wire so no-one loses face all in one go. I do expect some kind of forgiveness to be shown as an example to other peripheral nations that if you get your house in order there are incentives.
Ireland has done a good job of steadying the ship and got themselves back to a more competitive place and even capable of raising money from international investors at interest rates that echo those of pre credit crisis levels. What is hampering growth at the moment are two major things.
The EU recession is hindering the comeback kids as a nation heavily dependent on exports, as internal consumption is still to a large extent suffering from the effects of negative equity and immigration. Also the relatively high interest payments in discussion i.e the payment out of 3.1bln every year till 2023 would put a dent in any small nations pockets.
Regardless of whether we got ourselves into this mess or not it is not in the EU interest to make an example out of us, as we can make an example out of them. Ireland’s efforts during austerity so far have been praised around the world, to be seen to not be rewarded for that by the powers that be in the ECB would be damaging and certainly would not provide Spain, Italy, Greece and Portugal any incentive whatsoever to reform.
I dont believe we are asking for debt forgiveness, we are asking for debt restructuring and that is a process of negotiation, give and take. I believe Ireland has given a lot and now it is about time the EU pulls us close to its bosom and gives back.
Do not be too down hearted over the headlines over the weekend there is till a bit to go, its the sound-bites around the end of Feb and early Marc that you want to pay more attention to as it gets closer to the deadline for the 2013 March payment due.