Anglo Irish bond holders (promissory notes)

Deputy Olivia Mitchell: I understand why the motion was tabled and I agree with other speakers in that there is nobody in the House or the Chamber that is not sick to the stomach at the prospect of paying this money to the bondholders in Anglo Irish Bank. The truth is that the day Anglo Irish Bank was nationalised, that bank debt became sovereign debt forever. People argue that this is not our debt but that is not true, although we wish it was not our debt. Making it our debt was a catastrophic mistake for all of us but it is now our debt. By all the laws governing civilised nations in international affairs, it is our debt.
We could renege, as is suggested in this motion, but there would be consequences. I know there has been a great deal of debate about such consequences but in truth, none of us know them. Perhaps the troika would pull down the curtain and end the money supply, perhaps it would put more onerous conditions in place or perhaps it would make the money dearer. It could be any or all these possibilities. We should bear in mind that when we got the bailout, it was largely to prevent a default. There was a fear about our defaulting and the impact of this on other countries and their banks, so we know for certain that the troika feels strongly enough about defaults to give us a bailout. The kinds of pared services that are now possible would not be possible in the event of a default.
People have said that the markets have no memory and that within weeks, there would be lending to Ireland, which is true. However, that would come at a very high price. It is not true to say markets have no memory as credit histories count, for individuals and countries; they are not forgotten and are priced into what is charged for every penny lent. The markets would only lend money to Ireland at a very high price for a very long time. Does anybody really believe that if we decided not to pay our debts today, it would not frighten the ECB, which is exposed by more than €100 billion to Irish banks? It is charging a pittance in interest on that money so do Deputies not believe it is worried about it already? It would be very worried if we indicated that we would not pay our bills. I know how I would react if people told me they would not pay their debts but would like to keep borrowing anyway. If Deputies believe the banks are strapped for cash now, imagine what would happen if the shutters came down and the consequent impact on the economy.
This morning Deputy Ross suggested that we should default like Argentina and that we would be back in the markets in no time. That country returned to the markets a few years after default but it went through absolute hell. My colleague, Deputy Michael Creed, was in Argentina in 2003 and has an abiding memory not from the slums but in boulevards of the capital city, where people sat on footpaths trying to sell furniture. That was outside the houses most had already lost. That was their reality; we believe we are in purgatory but those people suffered hell for quite a long time. There are consequences.
It would be irresponsible at this stage, having repaid nine tenths of the bondholders of Anglo Irish Bank, most of it by the previous Government, suddenly to decide now we are not going to pay the last tenth. We have taken the pain. We have perhaps got some of the credit for that with the people who are lending to us, but not to pay the last one tenth would be stupid apart from anything else.
I will not go into detail on the promissory notes of €3 billion because it would be purely irresponsible to suggest not repaying it, but I hope whoever advised the late Minister, Mr. Brian Lenihan, on that kind of device to pay his bills did not get any kind of golden handshake because it is such an onerous arrangement that it is usury. It is approximately €17 billion on €30 billion. The Government is correct to go back to Europe to say that we were early movers to save the banks and we did it under intense pressure from Europe to save their banks. We paid too high a price and Europe must respond to that now.