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Social Justice Ireland meets IMF, ECB and EC on Ireland's Bailout

At a  one and a half hour-long meeting in Dublin with the ‘Troika’ team from the European Central Bank, the International Monetary Fund and the European Commission on Monday, July 11, 2011, Social Justice Ireland argued that Ireland’s Bailout Agreement was a process which in reality is dispossessing poor and vulnerable people of their meagre resources so as to re-pay those banks, financial institutions and others who gambled recklessly, invested unwisely and were paid premium interest rates to do so but lost their gamble.  

The Social Justice Ireland delegation told the ‘troika’ that “an updated Memorandum of Understanding is required which would achieve economic growth and financial stability while securing REAL protection of poor and vulnerable people.

Social Justice Ireland stated that the European Central Bank and the European Commission both played a role in the decisions that caused Ireland’s problems. Now, however, these institutions refuse to accept their share of responsibility. Instead, they insist that people who played no role in these decisions (i.e. Ireland’s poor and vulnerable) must pay in full to reimburse these institutions.  This is a profoundly immoral process.

According to Social Justice Ireland in precarious times such as these a country, a government, a society or an international institution defines itself by the cuts it makes, the people it protects, its effectiveness on economic growth/jobs, its actions on public services and the values underpinning its choices. Using this yardstick, the ECB, the IMF and the European Commission have acted in the interests of the wealthy and the strong while seriously damaging those who are poor and vulnerable.
 
In its discussions with the ‘troika’ Social Justice Ireland also argued that:

*   At a macro level the Bailout Agreement requires too big a set of changes with harsh consequences and it seeks to achieve these at too fast a pace. These factors are combining to undermine economic growth and, in turn, undermine any potential for recovery. In essence, the adjustments being imposed would require the economy to record Celtic Tiger growth rates to have any prospect of recovery, job creation etc. This is not credible given where Ireland and the EU/World economy is currently and is likely to be in the years immediately ahead.

*   The scale of the challenge for 2012, for example, serves to illustrate this point. In 2012 adjustments of €3.6bn are required together with a growth rate of 2%. In practice this means that all of the following must be achieved:

  • The economy must grow enough to make up the €3.6bn
  • Beyond that it must grow to finance the multiplier effect of the removal of €3.6bn which brings the total required to about €4bn.
  • On top of this the economy must then grow by 2% which is over €3bn. So, underlying growth would need to be over €7bn in 2012 to achieve 2% growth. This is an underlying growth rate of almost 5% of GDP. 
  • All of this must be achieved without any new investment programme of scale.
Commenting on the Bailout Agreement and its impact to date, Social Justice Ireland stated:

*   Conditions are being honoured and benchmarks on a wide range of issues are being met by the Irish Government and Ireland’s citizens. 

*   Benchmarks on banks and fiscal issues set out in the Memorandum of Understanding are being met.

*   However, the promised outcomes are not materialising. For example:

  • Economic growth is not reaching the forecast targets.
  • Jobs are not being created on the scale required.
  • Unemployment is not falling at the rate envisaged.
  • Finance is not available on the scale required for small and medium enterprises.
  • Essential services are being reduced to such an extent that the health and wellbeing of citizens is being put at risk.  
  • The Community and Voluntary sector, often the place of last resort for many vulnerable people, has seen a huge increase in demand for its services. At the same time its funding has been reduced dramatically.

*   A revised Memorandum of Understanding is urgently required which would achieve economic growth and financial stability while securing real protection of poor and vulnerable people. 

*   Social Justice Ireland presented detailed proposals on issues such as poverty and income distribution, employment and job creation, securing finance for small and medium enterprises, unemployment and labour market activation, adult literacy and a wide range of public services.

*   They also argued for a fairer sharing of responsibility which, among other things would ensure: