Richard Bruton (Dublin North Central, Fine Gael)

I wish to ask the Minister a few questions about the intercreditor agreement, which is the first item in section 1. I note that under the proposed system, a single member state can block the agreement from going ahead. When an analysis of compliance, by Greece in this case, takes place and comes to the Council for decision, that decision will be by unanimity. In practical terms, what is to happen if one member state decides to block the agreement, even though Greece has been compliant, or the others consider it has been compliant, with the terms? It appears as though an enormous sense of crisis could be created in the markets and elsewhere were a single member state to stand out against the consensus on how Greece, which is under particular scrutiny, was behaving. Hopefully this will not happen but I seek clarification on how the Minister envisages the system will work because it appears to require unanimity.

Second, I refer to scenarios whereby one member state does not participate in the loan. Am I to understand that the only circumstances in which a member state will not participate are when there is a legal impediment within that state itself or when such a state opts not to participate because the cost of raising the money was more extensive? Alternatively, can member states opt out in other circumstances? In such an event, will the contribution of a member state become greater?

I also note that on page 14, the agreement states "All Lenders rank equal and pari passu amongst themselves". I am afraid my Latin has failed me but "pari" is equal and it sounds like "equal again". My question is not whether Ireland and Germany rank equal but whether Ireland, Germany and other contributing member states are ranked equal with other investors in Greek bonds. I seek confirmation in this regard but I understand that when the IMF introduces a rescue programme of the sort that has occurred in other countries, it enjoys a preferential status in respect of its lending. My question is whether the contributors to this bilateral loan agreement with Greece will have a preferential standing over and above other holders of Greek debt. I do not mean over and above other member states, which would be unfair. The issue has been raised that effectively, there are a number of different lenders to Greece. In the event of an ultimate renegotiation, write-down or restructuring of Greek debt, how does this block of lending stand when compared with other blocks of lending that have occurred in the past? Does it stand as a preferential creditor related to the others?

The other is issue is Greece's ability to comply. How clear are the tests with which it must comply? To what degree is there a judgment? In any situation of economic evaluation, people do things with best endeavour. Things might happen that were not anticipated and they may fail to meet certain targets that were set. To what extent is this rigid in stating certain numbers must be reached or the country fails, or is there a greater judgment that looks at good faith in trying to deliver if, despite the best efforts, the country failed in one or other area? Is it a black and white situation?

What happens if Greece fails in a quarter, if it simply fails to live up to the criteria? What is plan B, are all bets off, plunging us into a crisis where nothing can be retrieved or is there a yellow card that would allow for time before we reach a situation where the agreements are withdrawn? Understandably, they are trying to design a tight framework to deal with this but, equally, we do not want it to be so tight that small errors cannot be allowed. Even if the Greeks fail to make it, there must be an element of understanding, we cannot immediately let it bring the house of cards down.

If it hinges on fine calls like this, what looks like a well-thought out strategy could fail at a point no one considered. We may create high noon situations for ourselves further down the line that have no proper economic logic. I would like a better understanding of the criteria and who will judge them. Will member states sit around the table and discuss if compliance has been achieved? What is one state is more hawkish than others?

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