Irish Bailout Is a ‘Terrible Deal,’ Gerry Adams Says
Following are comments about Ireland’s 85 billion-euro ($113 billion) emergency-aid package from the European Union and the International Monetary Fund. The three-year package, aimed at propping up the country’s battered banking industry and to help service its sovereign debts, will require Ireland to repay the money at an average interest rate of 5.8 percent.
The “government has negotiated a terrible deal. The decision to protect bondholders is disgraceful. The costs of this deal to ordinary people will result in hugely damaging cuts.” Gerry Adams, leader of Sinn Fein, an opposition party
“The interest rate of 5.8 percent is far too high and verges on the unaffordable. The government was cleaned out in the negotiations.” Michael Noonan, finance spokesman for Fine Gael, the largest opposition party
“The EU-imposed aid package is not in fact aid, but a whipping of Ireland at the stocks. The European Union has saddled Ireland with an unsustainable amount of annual interest payments that cannot, in any way, be met. This is a terrible deal for the people of Ireland. The path is to fiscal ruin.” Mark Grant, managing director at Southwest Securities Inc. in Fort Lauderdale, Florida
“The senior bank holders are to be protected while the lowest paid and those most vulnerable people dependent on public provisions are to be crucified. The plan should have been announced in Lourdes because, short of a miracle, it is doomed to failure.” Jack O’Connor, head of SIPTU, Ireland’s biggest union
“The program for assistance announced late last evening probably is, as the Taoiseach conceded ‘the best available deal for Ireland.’ It represents nonetheless a defeat for this state which has turned us, in the blink of an eye, from European success story to a people at the mercy of the benevolence of others. It was notable that the announcement was made in Brussels and only after that was the government able to hold its press conference in Dublin.” Irish Times editorial
“We will face years of hardship. But it is well to know the worst, and now we have reason to believe that we know it. Armed at last with some certainty, and calling on our reserves of courage and resilience, we can win through.” Irish Independent editorial
“Ireland’s bailout -- around 20 percent of which is actually a raid on Ireland on its own pension fund -- also has some good news, but less than before. The hope is investors won’t turn on other countries, but the likelihood is that they will.
“The lending terms aren’t ideal for Ireland: the bailout looks both expensive, and lacking in transparency, because of the many different lenders. Still, the 5.8 percent interest rate is roughly in line with what was asked of Greece, after adjusting for the longer maturity.” Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin
“The clarity presented by the announcements should help to defuse somewhat the tensions that had been intensifying during the course of last week. In particular, markets are likely to breathe a sigh of relief that the senior debt of Irish banks has not been subject to haircuts as part of the financial-sector bailout, while markets are also likely to welcome the decisions agreed to safeguard the financing of the Irish government, as well as to recapitalize and restructure the banking sector.” Julian Callow, chief European economist at Barclays Capital in London
“Even if the adjustments will be painful, the Irish deal seems rather favorable. Overall, the plan should allow Ireland to meet the repayment schedule and we are confident that now that European leaders announced a formal crisis resolution mechanism, the Irish bailout will eventually contribute to calm market fears regarding a possible contagion to other euro-zone countries. This might be the last chance to bring stability back to the European’s financial system.” Oscar Bernal, an economist at ING Groep NV in Brussels
“We see the Irish deal this weekend as possibly buying some time. The accord on some aspects of sovereign restructuring mechanisms represents the beginnings of a solution.” Ciaran O’Hagan, a fixed-income strategist at Societe Generale SA in Paris
“What the ECB says on Thursday is key, particularly given that to date the bailout has not stopped contagion spreading.
“It now seems very likely that Irish government debt will be above 120 percent” of gross domestic product “by 2014. Moreover, the fact of the matter is that the heavy lifting in terms of deeply unpopular fiscal cuts have yet to really begin.” David Owen, chief European economist at Jefferies International Ltd. in London
“The fact that senior bondholders will be left intact should help risk assets and prove near-term support for the periphery and especially Spain.
“There are some local concerns that a new government may seek to renegotiate the terms of the deal, but overall we expect a broadly positive near-term reaction. This is, however, unlikely to be enough to prevent Portugal’s access to the EFSF.” Harvinder Sian, a senior fixed-income strategist at Royal Bank of Scotland Group Plc in London
“With this rescue program, Ireland has bought itself time to restructure the banking system. The credit is enough to keep Ireland above water up to 2015.
“The risk of Ireland ultimately having to restructure its public debt is not yet overcome. We expect risk premiums for Irish government bonds to remain at a high level. In the long term, Ireland will only be able to manage its exploding public debt if the country’s economy returns to a course of strong growth. We have doubts whether this can be achieved.” Christoph Weil and Rainer Guntermann, economists at Commerzbank AG in Frankfurt