Even though the Fine Gael party had harsh words for the 85-billion-euro ($112.72 billion) bailout package put together by the European Union (EU) and the International Monetary Fund (IMF), Ireland’s Finance Minister Brian Lenihan pushed it through Parliament on Wednesday by a margin of only six votes, having some harsh words of his own for the protesters.
According to a Reuters report, Lenihan told Fine Gael that its proposals to make senior bondholders share the losses incurred by the banks would fail because the European Central Bank (ECB) opposed such measures. He said, “Those who think we can unilaterally renege on senior bondholders against the wishes of the ECB are living in fantasy land.”
Fine Gael is opposed to the years of cutbacks and tax increases to be faced by Irish citizens so that senior bondholders can be repaid in full through the rescue funds. That party is expected to lead a coalition government in 2011 once an election is held, and has been outspoken in advocating that senior bondholders holding debt not covered by a government guarantee—some 15 billion euros—should have to accept some losses as well. That would cut the amount Ireland would have to borrow.
Passage of the measure eased spreads on 10-year Irish bonds, although the unpopular Fianna Fail party is expected to be ousted in next year’s election, perhaps as early as March. Investors are unnerved by the prospect of a change in power, particularly considering Fine Gael’s stance on the bailout. It and center-left Labor, expected to lead the country together, are already talking about renegotiating the bailout terms.
Michael Noonan, Fine Gael’s finance spokesman and possible future finance minister, said of the measure, “You have the obscene situation now where the poorest of the poor in Ireland, through their taxes and welfare cuts, are being asked to guarantee the speculation of investors in hedge funds.” He added, “Ireland has no moral or legal obligation to cover this debt. That's why it's a bad deal, that's one of the principal reasons we're going to vote against it, and that's why it has to be renegotiated.”
To further stir up bad feelings, Britain announced on Wednesday that it will make 440 million euros in fees and interest from its loan to Ireland.