Brian Lenihan Jnr (Dublin West, Fianna Fail)

High midnight rather than high noon has been the norm witnessed in recent months on this subject. It is usually afternoon when we arrive in Brussels and midnight before we resolve the issues.

The first question throws light on the last question. The Deputy asked about the rule of unanimity written into the inter-creditor agreement for each advance to the Hellenic Republic. While unanimity must exist for each advance, it is the Commission, the Central Bank and the IMF that play the crucial role in making the assessment of whether Greece is in compliance with the conditions set. The formal way it would come before Finance Ministers would be on the report of the Commission and the ECB, which both have direct representation at the euro group meetings. I am not sure how the IMF will be accommodated, its report will probably be submitted in writing by the Commission. The Commission and the Central Bank have direct representation at the euro group and will make the assessment. That is the precondition for a finding against Greece, and it sets a limit on the capacity of individual states to take a view on whether an advance should be made.

The Deputy asked what would happen if a particular member state opted out of the funding mechanism, if it would leave Ireland in a position where it had to go beyond what is in the inter-creditor agreement. The answer is "No", the limitation of the €1.36 billion applies, although that sum would be more readily reached if a member state opted out of the funding mechanism. That remains the ceiling for our contribution.

Deputy Bruton referred to the provision that all lenders will rank equal and pari passu among themselves. That of course only relates to the member states that are lending the money, they are in the same position as, for example, depositors and senior debt holders. The more important provision is on page 34 of the Bill, which deals with the more specific question, the priority as against previous obligations. Page 34, paragraph 4(1)(a) states that each loan shall constitute an unsecured, direct, unconditional, unsubordinated and general obligation of the borrower and will rank at least pari passu with all other present and future unsecured and unsubordinated loans and obligations of the borrow arising from its present or future relevant indebtedness. All the agreement provides for on the priority of the loan is that it is in the same position as existing or future creditor obligations. It is not given any priority, but equally it is not postponed to a subordinated category.

The agreement is formulated in that way because both the President of the Commission and the European authorities have made it clear there is no question of a restructuring of Greek debt being contemplated. Hence, the agreement ranks these obligations as ranking equally with those of the other existing and future obligations of Greece.

The Deputy then turned to conditionality and how clear the texts on Greece are. They are specific in terms of the agreed programme for the Greek Government. The monitoring of that is a matter for the European Central Bank and the Commission in association with the IMF.

He asked what would happen if there is a perceived breach of the conditions. In such circumstances, I assume a report would be brought before the euro group by the Commission and the ECB and the breach of the condition would be identified and appropriate action would have to be taken to resolve the difficulty that had arisen. The range of appropriate action under present Community law allows for the possibility of a fine on the relevant member state.

See this speech in context