Leo Varadkar responds today to Vincent Browne’s article yesterday which said he was “chancing his arm” claiming Denmark’s borrowings had increased after one of its banks defaulted on bond repayments.

The fawning opening:

Vincent Browne is an excellent journalist with an eye for detail that is unsurpassed by his peers.

 

Peels onion:

This week, the Government had to make a very difficult decision: to allow the Irish Bank Resolution Corporation (formerly Anglo) to repay a large bond.

 

Denmark? I meant Dubai

Dubai [rather than Denmark] is a better example, as its credit, construction and property bubble more closely resembles Ireland’s. In 2009, state-owned property investment company Dubai World and its subsidiary, Nakheel, unilaterally suspended payments to senior debtors. This is exactly the course advocated by some in Ireland today. This move was followed by a downgrading of state companies and utilities by the ratings agencies, and a further credit crunch resulting in the need for a bailout from neighbouring Abu Dhabi.

 

But I’m still right

The high cost of this bailout remains shrouded in secrecy. My point would have been better-illustrated by using this example, but it nevertheless remains valid.

Take that, Browne.

That’s why Browne is merely nit-picking. He takes issue with the example I gave, rather than the substantive case I made.”

“Nor does Browne challenge my view that there would be real risks and negative consequences if we defaulted on the bond.’

 

Conflict = bad

Most significantly, defaulting would bring us into sharp conflict with the ECB and other EU member states, at a time when we need them most.

Blame the other guys:

These promissory notes are an appalling, unjust and expensive sovereign commitment foisted on us by the last government.

 

Risk averse

Restructuring these €30 billion in promissory notes is a much bigger prize than imposing haircuts on the remaining rump of senior bondholders. It would not be wise to take such a big risk now, for so little potential benefit.

When I said “not a red cent”, I actually meant…

In opposition, Fine Gael said we would not inject any more money into Anglo “beyond what was committed”. Contrary to popular opinion, we have not done so. It’s being paid out of funds provided by the last government, and from the proceeds of the sale of Anglo’s North American assets.

 

Anyway, It’s old money not the new stuff:

This Government has not provided any new money for the payment of this bond. The only money going into Anglo is the promissory notes, which were committed before the election.

 

Finishes peeling onion:

We are now working night and day to renegotiate that arrangement.

 

Goes home.

Bond Payment May Earn Promissory Note Leniency (Leo Varadkar, Irish Times)

(Photocall ireland)