View Full Version : Statement from the Socialist Party on IMF/EU Bailout and Election

Jolly Red Giant
24-11-2010, 05:28 PM
Sunday 21 November, the day the Irish government formally applied for a bailout to the EU and IMF, should be marked as the day that the Irish capitalist class were exposed as a rotten, despicable failure, bankrupt in every sense and incapable of offering any way forward. The significance of these developments cannot be overstated; they are a turning point in Irish history and will impact on other countries in Europe and the EU itself.

This is all about saving the Euro and capitalism

A bail out was inevitable, it was only a matter of when. But the government were bounced into it now at the behest of the sharks in the markets and the EU. This bail out is not about solving the crisis in Ireland. It and the new austerity programme that is coming will make the crisis much worse. Working class people in Ireland are being prepared as the sacrifice so profiteers can make more profit and so the Euro and the EU can be maintained.

Angela Merkel talked recently of orderly insolvencies. But this process will not be orderly; it will be convulsive. Right now the EU has forced Ireland into this bail out to save the Euro and the EU. However, in future they could force Ireland or other countries out of the Euro altogether, to safeguard their own capitalist interests. The existence of the EU as we know it is and will be challenged over the next years.

The worsening crisis in Ireland spelt crisis for the EU

From its high point, the southern Irish economy has declined by nearly 15% and the hopes of the capitalist establishment that the economy would begin to recover and grow this year have been dashed, mainly because of the depressive effect of the draconian cuts of €15 billion that the government has already imposed.

In a country with a workforce of less than 2 million, 450,000 are currently unemployed. The official figure is not beyond half a million only because very high levels of emigration have returned. With mass unemployment and attacks on pay, mortgage arrears are growing very quickly and indicate that a new crisis for the Irish banks was imminent.

The weakness of the banks was a vital factor in provoking this bail out. Notwithstanding the government’s bank guarantee, probably more than €25 billion worth of deposits have been taking out of the Irish banks this year in a flight of capital, with the bulk since September. Despite earlier bailouts, the banks do not have the necessary capital requirements to be solvent on an ongoing basis and they were not able to borrow on the commercial markets this autumn. Instead they borrowed huge amount from the European Central Bank (more than €90 billion) and from the Irish Central Bank (€20 billion). Irish banks currently hold 20% of all the monies loaned out by the ECB.

The prospect of the banks recovering was inextricably linked to a recovery in the property market and the economy generally. That hasn’t happened and in fact will be undermined further by the new IMF/EU austerity programme. More so even than in the case of Greece, British, French and German banks have very significant amounts of loans tied up in the property market and banking system in Ireland and a banking collapse here had to be avoided.

At the same time the value of the Euro and the interest rates being charged to Spain and Portugal were also adversely affected by the instability surrounding Ireland. A delay in acting, which was a feature of the EU during the crisis in Greece, was not an option this time round. The nervousness about contagion is a real indication that the fundamentals of the European economy and the EU are far from sound.

Rip-off and robbery already indicated

It looks like this bail out will be over €80 billion but less than €100 billion. Britain and Sweden have also offered additional direct loans to Ireland. There are indications that the EU/IMF will seek that a large amount of the money will be handed to the Irish banks who will then give it straight back to the ECB to pay off some of the €90 billion plus they borrowed. The remaining amount will be held by the government to help fund its own budgeting requirements.

At the stroke of a pen, the EU and ECB will get a lump sum back but also a huge additional payment in increased interest. This loan may be cheaper thanon the bond markets but it’s far from cheap. The original money that the Irish bankers borrowed from the ECB was at an interest rate of 1.5%. This money in this bail out will most likely be charged at an interest rate of between 5 – 6%! The EU has basically renegotiated the terms of its own loan to Ireland and given themselves three or four times the interest rate, robbing the working class again.

When the details of this bail out and of the new austerity programme become clear, they will constitute a declaration of war on the working class and young people. In September, Taoiseach (prime minister) Brian Cowen said that there would be €3 billion cuts in this December’s Budget. The government over the last weeks doubled its proposed cuts and are now talking about a staggering €6 Billion of cuts in the Budget, to be followed by another €10 billion cuts before 2014!

This was the austerity plan hatched at the behest of the markets but before the EU/IMF bail out. Now there is speculation about what conditions the EU/IMF will impose on top of these vicious attacks from the Irish government. Whether the EU would force the Irish government to scrap its very low 12.5% rate of corporation tax has also been a big issue.

The EU/IMF may not immediately force huge additional attacks on top of the governments’ austerity proposals or the scraping of the terms of the Croke Park trade union agreement. In reality both the EU and the IMF have had officials in the Department of Finance for many months and undoubtedly they have already been instrumental in pushing the government to double its proposed cuts since September. There is also likely to be increased taxes imposed on ordinary people. This will be the fourth and biggest austerity budget yet, to be followed by at least another three. By 2014 they aim to have cut over €30 Billion from the budget, which fi they are successful, would be practically a 50% reduction on the budget of 2007! The pain and destruction that such cuts would cause would be unprecedented.

Bail out will not work

But crucially, the EU and the IMF now have the power to enforce additionalconditions on this or any future Irish government. Given experiences the world over, they will undoubtedly insist on a destruction of pay and jobs and attacks on the working class generally. There is talk of cutting 20,000 plus jobs from the public sector. As a symbolic indication that all the gains from the Celtic Tiger will be attacked, just as the bail out was being announced so too that the minimum wage will now be lowered!

This neo liberal, slash and burn policy could well cause a deflationary spiral to develop in Ireland. The cuts being proposed are part of a plan to reduce the current budget deficit from 32% of GDP to 3% by 2014. They are basing this plan on an assumed growth rate of 2% over the next years. There is a collapse of investment and such growth will also be impossible with such
draconian cuts and that will cut government revenue further. In turn the EU/IMF is likely to demand more cuts to compensate for the lack of growth! Far from overcoming the debt crisis, this plan will not work and will likely result in spiralling debt crisis.

The Irish government, the EU and the IMF are preparing to turn Ireland into a wasteland. Rarely if ever in the history of capitalism will the working class have experienced such highs and lows over such a brief time frame. From the promise of the Celtic Tiger boom to the intense insecurity of a great depression. Now it seems the hopes of escaping from a past of poverty and emigration have turned out to be just a mirage after all.

Profound impact on working class - hatred of the government is tangible

The idea being touted in the media that people will be accepting of the EU/IMF and the austerity package, relieved that finally someone will take the hard decisions that have been avoided, is completely off the mark. The entry of the EU/IMF is a confirmation of the working classes worst fears. While hoping for the best, it’s been clear that most people knew that the crisis was getting worse. That the EU/IMF are now centrally involved will deepen people’s sense of foreboding about the future. People know that the IMF isn’t just along for a holiday and know of their reputation and record.

Right now the disgust of the working classes is mainly focused at the government and Fianna Fail in particular. The declaration from the Greens that they will vote for the budget but then in early January will demand that a general election takes place in late January, has completely destabilised the situation. All forces, including backbench TDs and Independents are now manoeuvring for advantage and this has raised the possibility that the government could even collapse and a general election held before Xmas but without agreement on a budget or the 3/4 year austerity programme. The political situation is now a mess and extremely unstable

Fianna Fail, along with their builder and banker friends, is seen as being primarily responsible for the economic crash. In the general election in 2007 they got 42% of the vote. The latest opinion poll conducted just before the bail out gave them an historic low of just 17%. The bail out, the fact that the country has been forced to go cap in hand to the major capitalist powers, has guaranteed that Fianna Fail, who have dominated politics in Ireland since the foundation of the state, will be decimated in the general election. The hatred and contempt that exists towards them is tangible.

Before this bail out the trade unions, under pressure from the working class, had called for a pre budget mass mobilisation in Dublin on November 27th. It was always likely to be big but this demonstration could now be huge and symptomatic of the potential that exists for a huge struggle
against the government, the EU and the IMF and their austerity policies. Depending on what happens, the demonstration itself could alter the situation and destabilise the government and create the conditions for struggle which the leaders may find difficult to sell-out again.

Since the crisis hit in 2008, the trade union leaders have sold-out and twice defeated the desire for a generalised movement that was developing in the working class, first in the spring of 2009 and then again last December. While the arrival of the EU/IMF can have initially have a shocking affect, their room for manoeuvre is about to disappear and the unions will be faced with a stark choice, either reflect the deep anger that exists or be pushed to the side. The TEEU, which organised the successful week long strike of 10,000 electricians a couple of years, has said that it thinks civil unrest the likes of which that hasn’t been seen in decades is on the cards.

Huge potential for the left, socialist ideas and for internationalism

This bail out by the EU/IMF is a watershed. It is now becoming clear that the hopes that there would be a recovery and the prospects for a future are being crushed under the jackboot of the dictatorship of the markets and capitalism. The shift in consciousness that had already been evident in the last months will be given a profound impulse as people, young and old, search for real solutions and a way forward.

That peoples lives are been destroyed so the banks can be maintained and so bond holders get huge profits, will create the conditions that will create revolutionaries. The extreme and brutal policies of capitalism will impose will create an extreme response. The Socialist Party will intervene into this crisis with a programme to point the way to how workers and youth can
fightback and the urgent need to build the socialist alternative.

Read more here -

C. Flower
14-12-2010, 01:04 PM
Any plans for a demonstration tomorrow ?

14-12-2010, 09:17 PM
I have my own views on banking which the SP would oppose-they are not my poarty's views, and I have not raised mine with them. I believe that there should be, if feasible, public and private banking. The public banks could be based on the sustainable credit union models, only with higher end public financing such as state mortage schemes, state loans to SME's for a % stake in a public/private enterprise scheme. The private banks would only be ones that never placed a burden on the state-at present that amounts to foreign financial institutions and ILP PLC. I feel that if we had a stock market controlled primaraily by the state, like that of Vietnam, much of this would be possible. Certainly investing money in small business projects in return for, maybe a 1/4 of the business, is a good idea in my view.

I am wondering, what does the SP think of the high economic success of Vietnam? This is a country with a devalued currency worth a 1000th of a US dollar, industry diversification both with domestic and foreign firms which trade internally and externally, and above all a state controlled stock market which allows the government to make sure no speculation against it occurs on its own doorstep. This is the result of a communist and social democratic executive coalition. What is anti-e's view on this? Personally I think the vietnamese way of running a stock market is unique and unrivalled anywhere, except perhaps in China(which also has a devalued currency).

Both countries have the key industries as state owned, and world class health care and third level education(numbers have doubled in college since 2005 with 159 colleges then becoming 299 as of y/e 2009) systems. Surely all of this proves that China and Vietnam have shown how socialism and economic marxist applications, whilst reforming broken capitalist systems of exchange and trade, is the key to sustainable economic success? Scandanavia also has heavily regulated systems of exchange and devalued currencies-so these are things worth looking at in my view, no matter how ant-anything that resembles capitalist systems ye may respectively be. Out of hand dismissal can be foolish in some quarters-even lenin kept some state privitization.

C. Flower
15-12-2010, 10:48 AM
Eírígí has a couple of statements on the IMF on its website. This one on privatisation of assets is worth reading: it gives examples of IMF induced sell offs that have left people without basic services - also, the Bolivian "water war" which was won by the people, not the IMF :)


http://www.eirigi.org/images/pat_kenny.jpgThe day after the publication of the so-called Memorandum of Understanding between the Dublin government and the IMF/EU, RTÉ’s Pat Kenny chose to lead his current affairs radio show with a half hour slot upbraiding and demonising public sector workers.
The immensely wealthy Kenny and the not so intrepid reporter Ingrid Miley reeled in horror at the discovery of a devious plot by low-paid public sector workers to cause economic carnage by availing of a long standing agreement to take one half-day per year to engage in a spot of Christmas shopping. To listen to the RTÉ pair one would be mistaken for believing that it was the half-day Christmas shopping that beggared the nation and not, in fact, the low tax and deregulated financial regime imposed by consecutive Fianna Fáil governments, or the hundreds of billions gambled and lost by bankers and developers, or, indeed, the tax dodging by multinational corporations and wealthy individuals.
Not satisfied that public sector workers have already taken a 15 per cent pay cut, that 27,000 will lose their jobs over the next four years and that pensions have been slashed, media figures such as Kenny and his cohorts in the Sunday Independent will not rest it seems until public sector workers have been driven into a state of destitution. Kenny, a staunch defender of the ‘free market’ who bags almost €1 million [£850,000] per annum from the public broadcaster, seemed reassured that the IMF was here to impose some free market discipline upon the workers and to threaten them with further pay cuts and job losses if they do not acquiesce.
There is a serious intent behind the ceaseless attacks upon public sector workers and their unions. Advocates of the market are given regular and unchallenged slots on the state broadcaster to ceaselessly spout the message that the economy needs to return to ‘competitiveness’. In other words, workers must take a pay cut and work even harder in order to improve the rate of profit for the bosses.
By constantly belittling, demonising and scapegoating public sector workers and their unions, the establishment also seeks to undermine the confidence of all workers and to drive home their message that competition is the driving force of society. According to the market philosophy, decent pay and conditions, trade union representation and universally accessible public services are a barrier to the free flow of competition, which is, after all, the lifeblood of capitalism.
That this philosophy provides the cornerstone of the IMF’s Memorandum of Understanding with the Dublin government should not, therefore, be of any great surprise. Notwithstanding the utter devastation that this economic system has wrought, its incessant crises and disastrous policies; capitalism is made to seem like the only show in town. The capitalist vulture is now circling over the carcass of the Twenty-Six County economy, ready to swoop upon all public assets.
Dressed up in the oblique language of the technocrat, the Memorandum announced the proposed sell-off of public assets and the surrendering of control over both our energy and water supply in the following terms: “Any additional unplanned revenues must be allocated to debt reduction.”
http://www.eirigi.org/images/imf_logo.jpgIn addition, by 2012, there will be an independent assessment of electricity and gas sectors. In other words, profitable, publicly-owned companies such as ESB, Bord Gáis and An Post will be privatised and the public water supply commodified in advance of its eventual sell-off.
There is an added sting in the tail. Appalling as these proposals are, the fact that any monies raised will be used to bail out the banks represents the final sell out of the interests of the Irish people to the demands of a powerful elite. ESB, Bord Gáis, An Post and port companies all provide important dividends to the public coffers and all are of strategic importance in the planning of the Twenty-Six County economy.
Yet, in the narrow world view of the free marketeer where competition is worshipped, publicly-owned is shorthand for ‘inefficient’. Await the corporate media and establishment onslaught against the likes of ESB and Bord Gáis as ‘monopolistic’ and ‘inefficient’ and of the ‘need’ to introduce competition into the energy market in order to encourage investment into the economy.
Meanwhile, Pat Kenny will have a field day denouncing how domestic households are ‘wasting’ water and how ‘market efficiencies’ will train the plebs to conserve water. All of which is absolute nonsense but it will not stop the maniacs from flogging a dead ideology.
Indeed, these Structural Adjustment Programmes are an essential component in the armoury of the IMF and have been deployed with devastating effect around the globe. Placing essential public services and utilities into the hands of private corporations whose sole concern is ‘shareholder value’ has proven disastrous for those countries subjected to the IMF’s weapons of mass destruction. Denial of access to water, massive increases in utility bills to householders, job losses and a general deterioration in service has been the common experience of those exposed to ‘market efficiencies’.
A review of these programmes, carried out over four years from Asia to South America, concluded that “adjustment policies contributed to further impoverishment and marginalization of local populations while increasing economic inequality”.
Further examples demonstrate that privatisation has little to do with the public interest and everything to do with private profit interests. In South Africa, 25 per cent of the country’s 44 million people had their water and electricity disconnected after the service was privatised, while, in Mexico, between job losses and anti-trade union practices, membership of the rail workers union fell from 90,000 to 36,000 in the 1990s after private owners took control. In Britain, the privatisation of the water service created a profit boon for investors and company executives. Between 1989 and 1995, there was a 106 per cent increase in water rates and a 50 per cent increase in service disconnections, while company profits soared by 692 per cent and salaries for CEOs increased by 708 per cent.
http://www.eirigi.org/images/colm_mccarthy.jpgThis is what the future holds for working people in the Twenty-Six Counties if the Dublin government and IMF are allowed to proceed with this insane plan. The Dublin government has already appointed Colm McCarthy, its own personal hatchet man and author of the infamous McCarthy Report, to chair the Review Group on State Assets and Liabilities. This body, while having a rather innocuous sounding title, has a very specific and destructive remit, which is to asset strip and sell-off public companies. Its terms of reference are very specific in this regard: “To consider the potential for asset disposals in the public sector, including commercial state bodies and to draw up a list of possible asset disposals.”
The disastrous decision to sell off Telecom Éireann in 1999 provides a salient lesson in the madness of privatisation. From being a profitable, publicly-owned and strategically important company, the newly privatised Eircom was asset stripped by a host of international venture capitalists, shed thousands of jobs, built up massive debt and failed to invest in telecommunications infrastructure.
Having passed through the hands of various corporate parasites, including Tony O’Reilly, the company was acquired last January by Singapore Technologies Telemedia for just €140 million [£119 million]. To put that figure into context, when shares in the company were first floated in 1995, a Dutch and Swedish consortium acquired 20 per cent of the company for €232.2 million [£197.4 million], which, back then, was considered well below its actual value. The company currently has a crippling debt of €3.5 billion [£3 billion] and is seeking to shed a further 2,000 jobs.
While companies such as ESB and Bord Gáis are bureaucratically run, with senior executives paid enormous salaries, the answer is not to offer these companies up to the social cannibals of the ventures markets. Domestic and international experience has demonstrated that privatisation works only in the interests of the wealthy.
Determined resistance in Ireland will be required to maintain these companies in public ownership. In 1985, the Bolivian government was forced to swallow the IMF ‘antidote’ of structural adjustment programmes, resulting in massive job losses, growing unemployment and rising prices. With little money to invest in infrastructure and under pressure from international agencies to privatise public services, in 1999/2000 the Bolivian government attempted to sell-off the water supply and signed a 40 year contract with private water company Aguas del Tunari to supply water in Cochabamba, the third largest urban area in Bolivia with a population of over one million. The contract with the government guaranteed the company on average 16 per cent rate of return per year on its investment, while bills to domestic users rocketed by as much as 300 per cent. Factory workers, peasants, trade unionists, environmentalists and community activists mounted stiff resistance and, while facing state violence, organised mass actions, demonstrations, blockades and occupations that finally overturned the privatisation deal, marking the first reversal of the IMF’s neo-liberal experiment in Bolivia since 1985.
While the coming election in the Twenty-Six Counties might change the deckchairs in Leinster House, driving the IMF out and defeating the great privatisation grab requires a much more fundamental change; change that Leinster House is incapable of delivering. Failure to resist the IMF and the privatisation agenda will enslave this and future generations. The stakes are that high.

15-12-2010, 10:56 AM
Any plans for a demonstration tomorrow ?

Is there to be a protest/demonstration today?

C. Flower
15-12-2010, 11:03 AM
Is there to be a protest/demonstration today?

I've just found this on Facebook - there were hunger strikers there over night and there is this group -

I'd be pretty sure there will be people there all day and will be going to the 6 p.m. ULA protest later -
Almost unbelievable that no party is there this morning - unless perhaps SF ?

TimeWednesday, December 15 · 10:00am - 3:00pm
LocationThe Dail, Kildare St, Dublin, IrelandCreated ByDaniel Joseph Muldoon (http://www.facebook.com/muldoon.daniel)
More InfoThe Vote in the Dail for the IMF/ECB Bailout is at 11:30 on Wednesay.
It is our only chance to stop this bad deal going any further. So anyone who want's to do something about this rather than just make some noise after i urge you to join.
Its time the people show Fianna fail who is in charge.

This protest is not affiliated with any political party.
I am just a concerned citizen that want's my 3 kids to have a future.

15-12-2010, 11:51 AM
There's a march in Limerick gathering at Pennys on O'Connell St at 6 if anyone is around reclaiming our future organised it and it will be adressed by speakers including SP and ULA candidate Cian Prendiville.