Irish debt audit finds banks are main culprits
The audit gives hope to everyone who looks forward to the opening of national accounts as a means of engaging the Irish people with the issue and dealing with it.
It was carried out by a team of independent researchers from the University of Limerick led by Dr Sheila Killian, and commissioned by the trade union UNITE and civil society groups AFRI (Action from Ireland) and Debt and Development Coalition Ireland.
Activists ask for donations for the 'Final Nail', mocking the then-governing party Fianna Fáil's bank bailout in 2010.
Irish national debt has risen during the financial crisis from just under €40 billion in 2007 to more than €91 billion today. Using publicly available information, the audit scrutinised the origin and scale of the debt to help explain the current position of the country and clarify the responsibilities for the debt boom and the subsequent austerity measures and depression.
One of the main goals of this effort was to make facts and figures publicly available, in an accessible and understandable way, to the Irish people, who are called to bear the burden of austerity cuts. Inspired by previous debt audit initiatives including in Ecuador and Brazil, it provides a solid base for future research and action for debt cancellation. It is also an invaluable example to promote citizens’ audit initiatives in other countries like Greece and Portugal.
During the three years of the financial crisis, there has been a shift in the identity of debt holders, especially after the Irish state started to financially support the Irish banks. Initially, the Irish public bonds were considered low-yield, but soon the country became a target for speculative attacks, by the use of financial tools that influence the credit risk of public debt. The volume and variety of financial transactions increased greatly throughout the period, signalling the deterioration of the Irish debt condition.
In 2009 there were attempts to control the debt, with initiatives for quantitative easing (introducing more money into the economy) and deficit reduction. There was a shift in the identity of the bondholders and this was coupled with a substantial increase in speculative activity on the Irish economy. There was a widespread usage of Credit Default Swap (CDS) contracts by bondholders and speculators alike, ‘betting’ on a possible Irish default to ensure their share if it happened. However, despite the fact that Ireland has not resorted to the financial markets since 2010, these contracts are still being traded in the derivative markets and profits were still being made on the volatility of the Irish and Euro-zone economies.
A cement truck plastered with the slogan 'toxic bank' was parked in front of the Irish parliament in protest against Anglo Irish Bank in 2010.
The report also underlines that the Irish debt is part of the bigger picture in the Euro-zone, where debt climbed from 66% of GDP in 2008, to more than 86% now. The function of the EU Emergency Liquidity Assistance (ELA) played an equally important role in bloating the debt, by covering the deficits of commercial banks, encouraging reckless behaviour from them.
Since the Irish debt audit reveals that a big portion of the nature of Irish state indebtedness is held by international speculators, it strengthens the voice of those who want to challenge the view that Irish people should not bear the burden of a crisis that they did not create.
UNITE Regional Secretary, Jimmy Kelly said “The figures which have been brought to public attention today are a scandal in every sense. Back room deals between gilded bankers and their political stooges have saddled the people of this country, and their children, with debts that are completely unsustainable.”
“A picture emerges that will shock those who care about Ireland’s freedom as a nation to determine its own future. It asks serious questions of the financial markets that are our new masters. It must prompt a total revision of our economic priorities. Without change we will be crushed under the weight of debt that has been placed upon us.”
Jubilee Debt Campaign acknowledges this effort and will help to promote the cause of debt justice in Ireland, in alliance with Irish social movements, as part of the wider movement to defuse the debt crisis in Europe.