Ireland - another bailout of big business on workers' backs

22 November 2010

The nationalistic outrage caused in the tabloids and in Tory ranks, by Osborne's £7bn participation in the Irish bailout, is as grotesque and hypocritical as Osborne's claim to be motivated by being "a good neighbour to Ireland". Both Osborne and his opponents are merely sweeping the real issues under the carpet - the fact that, like all previous bailouts, these funds will go straight into the pockets of the same capitalists whose recklessness caused the problem in the first place.

Contrary to what was claimed, this £80bn loan imposed on Ireland, under massive pressure from the IMF, EU, Britain and Sweden, has nothing to do with the euro. Its primary aim is to ensure that the foreign companies which, for years, have used Ireland as a playground for their speculative games, will not lose out as a result of its financial troubles. In particular, it is designed to protect the interests of big European banks - in particular, British ones - which, by a cynical twist will probably also gobble up the £4bn/yr interest due on this loan!

The explosive bill of bank profiteering

George Osborne was indeed lying through his teeth when he claimed at the weekend that: "Our engagement in this is... not because we have particular concerns about any particular UK bank."

In reality, Osborne is acting once again as errand boy of Britain's bankers, just as he did last week, by reneging on his pledge to get the banks to disclose details of the 7-digit bonuses they pay. In fact, Britain's big banks, which played a role in Ireland's present mess, are now faced with a backlash, causing Osborne to come to their rescue.

It all goes back to October, when Ireland's largest bank, Allied Irish, nearly went bust due to a mountain of unrecoverable loans. The Irish government stepped in, taking a 90% share in the bank - meaning that most of Irish banking was now being drip-fed on public funds.

Always ready to make a quick buck, speculators entered the scene to bet on Ireland going bust. By doing so, they increased enormously the cost of borrowing for the Irish government and any Irish company - even to repay their debts - thereby pushing the Irish economy into bigger trouble.

This is where British banks have a problem. Collectively, they are owed almost 25% of all foreign loans to Irish banks. On their own, RBS and Lloyds are owed £90bn by Irish-based companies. Because, while they were making billions in Britain in a speculative property bubble which turned into catastrophe, British bankers were playing the same game in Ireland, with the same result.

Moreover, a majority of the "bad loans" currently held by the Irish government are actually loans to British real estate developers. If a hard-up Irish government was to demand their repayment, a lot of big British companies would be in trouble, together with the banks which are behind them.

Against the dictatorship of the banks

As to Irish workers, they will not get any bailout, of course. This December's budget was already meant to include a package of cuts. But now, these cuts will be increased under the pretext that the bailout must be matched with even more "sacrifices"!

Although all the details of these cuts are still to be made public, it is already known that they include an average 11% cut in welfare benefits in real terms over the coming 4 years, and a similar reduction in the minimum wage, together with at least 20,000 public sector job cuts! If the Irish politicians get away with this, it will mean that, for the 3rd time, the working class will have been made to pay dearly in order to cover the losses of the capitalists and their banks, Irish and foreign.

No-one will fail to note how easily Osborne has found this £7bn subsidy to British capital disguised as an Irish loan, nor to compare it with the £6bn cuts that he wants to steal from the jobless on the grounds that their benefits are "unaffordable". Obviously, for these politicians at the beck and call of the capitalist class, welfare is only "affordable" when it benefits the wealthy and their banks!

There is no reason for this madness ever to stop. The more public funds are thrown at the banks, the more they destabilise the economy - and the bigger the bill for the working classes to pay.

This mad financial casino must be stopped, by nationalising the banks without compensation for shareholders who have lived as parasites of society for far too long, and by merging them into a single bank under the control of the population - which would then be able to allocate resources where they are needed by the majority, instead of benefiting the greed of the few. Achieving this objective will be among the vital tasks for the future struggles of the working class.