The Government says there's no need to put the bailout to the Dáil. I and an army of lawyers could beg to differ, writes SARAH CAREY
I THINK the economists’ work is done. It’s been lovely getting to know all the chaps – David, Constantin, Brian, Paul, Peter, Karl, several Johns, Colm and the terrifying Morgan. But what more they can do? They laid out the options. The powers that be did what they wanted anyway and all the debate was for nothing. Nothing. Programme after programme; column after column. Talk changes nothing – except our understanding of how deep the trouble is. And what good does that do? Feeding the birds is more constructive.
Marching changes nothing either. It made some people feel better for a few hours, but that’s it. You’d think they’d know better after the anti-war marches in 2003. Biggest marches ever. Pretty big war too.
People have an idealised vision of what marching achieves because of the Sixties and the civil rights movement in America. But it wasn’t marching that brought equal rights: it was sitting. Sitting in seats reserved for white passengers on buses, on stools at the diner meant for white customers and at desks meant for white pupils in the schools. Then it was about the court cases. Court cases do change things.
As far as I can see, everything from bank debt to sovereign debt to the euro could be up for grabs in the next 12 months. The crisis is spreading and the first thing you do in a crisis is lawyer up.
But where are all the lawyers? When they are forced to make a comment, all they do is hum and haw and say courts can’t be interfering with politics. I know they are establishment types by nature, but a Johnnie Cochrane for the taxpayer would be useful right now. The glove don’t fit – so let’s acquit.
The first item on the agenda is this bailout and whether or not Article 29 applies.
The Government says there’s no need to put the bailout to the Dáil because it’s just a normal loan. Mr Chopra has made soothing noises about how the deal can be tweaked. The Taoiseach says if the next government can find cheaper money elsewhere it’s free to take out a new loan. (Personally I have high hopes for the Chinese – they need a hub in Europe – why not us?)
A legal opinion has been trotted out to say that the “international agreement” referred to in Article 29 means treaties lodged with the UN.
Are we really going to take the Government’s word for that? You know it’ll say anything, no matter how outlandish, no matter how it conflicts with what it said yesterday, just to get through today.
I don’t think we should accept anything without further research.
Surely this memorandum of understanding constitutes an agreement? Perhaps in theory it can be tweaked, but what is the reality? Olli Rehn said “it would not be advisable” for a new government to attempt to renegotiate either the interest rate or the use of the pension fund. Anyway, the power is all on their side: if we don’t meet the targets, they don’t pay. Whatever about the IMF, the European Stability Mechanism is being challenged in the German courts. Why not ours? And how does Article 29 read in Irish? What does “agreement” mean as Gaeilge? Answers on a postcard please.
The second issue has to be the legal obligation to pay bondholders. There’s no point arguing about the loans from the EU or the IMF if we still get stung on the bank debt.
The Government says we must pay because of pari passu. It refers to a legal convention that if a company goes down, all creditors must be treated equally. In a bank’s case it would mean that bondholders and depositors (that’s you and me) would rank equally. It means that if we diddled the bondholders then the depositors get done too. It means your savings are gone.
Or does it? I've been reading up. A perfectly respectable paper in a perfectly respectable publication – the New York Law Journal– discusses this point. Based on recent case law and quoting other authoritative sources, it concludes that this pari passubusiness is not cast in stone at all.
It says when it comes to payments, you can rank creditors. If default is only a matter of time and if bondholders will sue, then let's nail pari passu. But no one's even questioned the issue so far. It's in Latin, so everyone appears to be wilting in front of it. Unforgiveable.
Then there’s the guarantee which created the mess. Why can’t the next Dáil overturn the guarantee on the basis that the previous government completely misled the Dáil – by accident or design – on the solvency of the banks? Fortunately, there is a precedent.
De Valera said the State no longer considered itself liable for the land annuities Ireland paid to Great Britain because that agreement had been made by a previous parliament to which a new Dáil was not bound. In fairness, that claim did kick off the Economic War which didn’t turn out too well.
Nevertheless, if it was good enough for De Valera, is it good enough for us?
And even if it’s not, what legislation, law, constitution or international treaty was ever irrevocable? The notion seems preposterous.
Other wars were fought on land, in the air and on the beaches. This one will be fought in the courts. Any volunteers?