By Luke Ming Flanagan

First it was Ashoka Mody, now it’s Chopra, the two economic heavy-hitters who were central to the IMF element of the Troika in the Memorandum of Understanding ( I refuse to call it a ‘bailout’ – the only bailout was of the banks, with Ireland handed the bill, plus interest).


In February of this year Mody talked about the very strong mandate this current Irish government had when it was elected four years ago, to burn bondholders. “The new government had so much going for it,” he said; “It was on that premise that it won the election. What the deal at that time could have been I don’t know, but it should certainly have been a superior deal. That deal would have required a clear premise on some amount of debt restructuring.”

He went further, suggesting that some of that bank debt is what is called ‘odious debt’, bad debt which in international law, doesn’t have to be paid by any state. “There was a burden of debt that would legitimately be declared as an odious debt and this was not necessarily because there was something unique about this particular government, but because there had been severe and egregious errors that it inherited”.

That’s all pretty clear-cut, isn’t it? You would imagine that on the back of those statements alone by someone so senior in the IMF, every major media outlet in Ireland would by now have adopted the Ballyhea Says No bank-debt write-off campaign as their own and be hammering on the doors of our politicians to chase this down in Europe.

Unfortunately that’s just what you would be doing, imagining, because it hasn’t happened.


It’s not even happening now, following the recent comments by Ajai Chopra about the infamous Trichet letters (Jean-Claude Trichet, former President of the ECB) to the late Brian Lenihan, when Mr Lenihan was Minister for Finance, and I quote: “The letters actually pressed Ireland to do fiscal consolidation, it pressed them to undertake vague structural reforms without specifying what these were and that – in my view – is an outrageous overreach by a central bank.”
Overreach? Trichet and the ECB were doing what his successor, Mario Draghi, is doing today through more subtle means – he was dictating fiscal policy, a point made by Chopra. “That is not their job. Their mandate is to meet (control) inflation and if you lecture the ECB as to how they might go about that, they talk about their independence. But when it comes to lecturing others about fiscal policy or structural policy, they’re not at all hesitant. I’m not surprised that the people in Ireland were very upset about these letters from Trichet.”

Both Mody and Chopra also insisted that the TINA argument – There Is No Alternative – put forward by so many, that the failed bondholders had to be paid in full and with all interest (which is what we did, and are still doing) simply doesn’t hold water. Chopra: “The IMF staff right from the beginning was very much in favour of imposing losses on senior bondholders. The EU partners were dead against it, especially the ECB. The reason given by the Europeans was exaggerated. Yes, there would have been spill-overs. It would not have been so much of a disaster, but the Europeans were just terrified about the implications for bank funding markets.”


It’s not just the IMF either. Philippe Legrain is a French economist, was an advisor to former European Commission President Manuel Barroso for three years of the crisis, up to April 2014. Last year Philippe published a bestseller called ‘European Spring: Why Our Economies and Politics are in a Mess – and How to Put Them Right’.

In that book, which looked at the entirety of the crisis, Philippe had a few very pointed things to say about what happened in Ireland, including who was really bailed out – “had Irish banks defaulted on all their debt at the end of September 2010, German banks would have lost €42.5 billion, British ones €27.5 billion and French ones €12.3 billion.”

But of course Irish banks did NOT default – why not, Philippe? “Euro zone policymakers, notably ECB president Trichet, outrageously blackmailed the Irish government into making good on its guarantee, by threatening to cut off liquidity to the Irish banking system – in effect, threatening to force it out of the euro.” Yes, blackmail, yet STILL there are those here in Ireland who would claim that the ECB did nothing wrong. Not Philippe. “This was a flagrant abuse of power by an unelected central banker whose primary duty ought to have been to the citizens of countries that use the euro – not least Irish ones. Bleeding Irish taxpayers dry to repay foreign debts was shockingly unjust.”


With all this testimony from some of those who were central to what happened, why is it that there is still no real outcry in Ireland about this, an outcry that should be led by our governing politicians, cheered on by our media? Why indeed.
Far from their being an outcry, even as the government of Greece battles to save its people from even more suffering at the hands of this Troika, our government stands shoulder-to-shoulder with that same Troika, in fact is happy to have itself pushed to the front in the condemnation of what Tsipras, Varoufakis and their government are trying to do.

Meanwhile on the media front, those ‘expert’ economic and political commentators who led the cheers through the boom and who then led the cheers for the austerity policies of this government, now also add their tamed and captured voices to those with whom they break bread on a daily basis in the Dáil dining-room, then share a cheap pint in the evening.


Those commentators still spin the TINA nonsense when we now all know – because those such as Mody, Chopra and Legrain tell us – that there WAS an alternative.
Our media tell us ‘It’s too late, the bank-debt issue is water under the bridge’ – outright lies, given that we are just now in the early stages of selling the Promissory Note bonds, then destroying the billions raised, a process that can be stopped right now and if it is, will save us over €70bn.

Out here in Brussels that’s one of my major focuses, stopping the sale of those bonds. It should also be a focus in Ireland. Trying to get money back, once spent – regardless of the circumstances – is a hell of a job; we can stop this now.

How? Philippe Legrain has this simple advice – “Ireland needs to play hardball. It’s in a much better position now, borrowing at record-low borrowing rates. The State must use any leverage it can to negotiate a write-off. Its best weapon is any proposed changes to EU treaties because Ireland constitutionally has the right to hold referendums on these changes and can use this as a bargaining tool.”

The next election can’t come soon enough.