Clare Daly (Dublin North, Socialist Party)

It is clear that the eurozone is in disarray and that those at the helm do not have a clue how to deal with it. We see that in the talks that are swinging this way and that way like a pendulum, with various solutions that do not hide the intractable problems in the eurozone. This is not an abstract crisis. Many countries are experiencing serious cuts in services and wages, falling living standards, growing unemployment and so on. Greece is the worst affected and the proposition of a 50% to 60% debt write-off in Greece recognises the fact that the troika understands the current renegotiated deal for Greece, which was supposed to provide a solution only last July, is unsustainable. The Greeks will not be able to pay back the money borrowed. We will have a major managed default in the hope that what the Greeks are left to pay back will be realisable and will help to restore confidence. That is a pipe-dream for two reasons. First, the situation facing people in Greece is cataclysmic. It is an absolute nightmare of falling living standards and austerity, where even the Financial Times has pointed out that planned tax increases and spending cuts for this year are equivalent to a reduction of 14% in average Greek take-home pay, or more than €5,000 per household. Given that the economy is contracting, even with a write-down the debt is simply unsustainable. Second, the difficulty for the Greek establishment is the resistance by ordinary citizens, many of whom have just concluded a 48-hour general strike. It is impossible for the authorities to implement austerity measures speedily in those conditions.

The elephant in the room in all of this is Italy, which faces similar problems in implementing austerity. The key point was identified in the Financial Times yesterday: "The most disturbing aspect about the eurozone right now is that every crisis resolution strategy depends on a moderately strong economic recovery." However, the policies of austerity being imposed on member states make recovery impossible. I will ask the Minister about the European semester later.

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