Challenge to claim by European Commission Vice President Olli Rehn

Posted on Monday, 22 February 2010

Claims by European Commission Vice President Olli Rehn that Ireland’s bailout agreement is working have been challenged by Social Justice Ireland.  There is clear evidence that the bailout is not working.  According to the Government’s own statistics the number employed is falling, poverty is rising even though the poverty line is lower than it was, unemployment is stuck at record high levels, inequality is growing, services in areas such as health, housing and public transport are being cut or their charges are rising.  Domestic demand is also set to fall substantially in 2012.  The only people for whom the Bailout is working are banks, other financial institutions and bondholders who have been repaid in full at the expense of Ireland’s poor and middle-income people for the most part.

The main consequences of the Bailout Agreement are:

  • Conditions set by the ‘troika’ 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:
    • Economic growth is not reaching the forecast targets.
    • The total number employed is falling.
    • Unemployment is not falling.
    • Poverty is increasing even though the poverty line has fallen.
    • Finance is not available on the scale required for small and medium enterprises.
    • Essential services are being cut 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.
    • Inequality is growing
  • In reality the Bailout Agreement Is dispossessing poor and vulnerable people of their meagre resources to re-pay those banks, financial institutions and others who gambled recklessly and invested unwisely.
  • The Agreement is failing to address the situation of moral hazard whereby banks and others listed above are in a win-win situation whereby they can gamble resources recklessly and be assured of a 100% repayment.
  • The Bailout Agreement in Ireland has involved excessive socialisation of bank debt.