Mick Wallace (Wexford, Independent) | Oireachtas source

The IMF has admitted it underestimated the negative impact on growth of steep cuts in public spending. In Tokyo, the World Bank warned of cuts in growth across the developing world. Ms Lagarde said last week that eurozone countries should not blindly stick to tough budget deficit targets if growth weakens more than expected. She said they should allow automatic stabilisers, higher welfare spending and lower tax revenue to kick in if the economy deteriorates. The IMF is not saying that austerity is too hard, too unfair, causes too much pain in the short term or hits the poor more than the rich. It says that austerity may not achieve its goal of reducing debt within a reasonable time.

The largest problem cases are Greece and Spain, which mirror many of the problems here. There is little doubt that austerity is devastating the Greek people. Workers, the unemployed, pensioners, small and medium-sized enterprises, women and young people are all suffering more than they should. The economy has contracted by 22% and workers and pensioners have lost 32% of their income. Unemployment is at 24% and youth unemployment is at 55%. Austerity policies have led to cuts in benefits, the deregulation of the labour market and further deterioration of the limited welfare state that had survived the neoliberal onslaught of the past 20 years. People with common sense are screaming that we need to prioritise the needs of workers, pensioners and the unemployed, not the interests of multinationals and bankrupt banks.

For the likes of Greece, Spain and Ireland to continue to take on board the problems of the failed banks is too great a task. I hope the Government is successful in getting a deal from the Europeans so that the debt of banks is taken on by the European system.

It does not belong to the Irish State or taxpayer. This must be made clear. The EU will eventually come around to that position. It will have to. Greece and Spain will not survive if they continue to take on so much of the debt.

The International Monetary Fund, IMF, is now saying Greece needs a reduction of €30 billion in its debt and the ECB and the EU must take the hit. The IMF is not exactly a radical body, yet these are the people who are saying Greece will not meet its targets. There was a notion that Greece would bring its debt down to 120% of GDP by 2020. It is now admitted that the figure will probably be 140% unless the problem of the debt Greece cannot pay is tackled. The same applies to Spain and will apply to us.

I was amused by the announcement that the EU had been awarded the Nobel peace prize. The timing of the prize is odd. In the last few years, the EU has changed from an institution that uses economic integration to promote peace to one that is sacrificing peace on the altar of free market economics. The handling of the eurozone crisis has transformed the EU into a source of conflict and sometimes violence on the streets.

We have seen some odd Nobel peace prize winners in the past. I remember Henry Kissinger being awarded the prize in a year when 50,000 people died in Vietnam. That was the first anomaly that caught my eye. A few years ago, shortly after President Obama was elected he said he would escalate the war in Afghanistan and Pakistan. He kept his word and was given the Nobel peace prize.

The EU is promoting unemployment and class division leading to violence on the streets. I see nothing very peaceful about that. The founder of the Nobel peace prize said its recipient had to support peace in every manner. One cannot say that of the EU at present. This is the same EU that supported the war in Iraq, and many of its member states had troops in Afghanistan. We supported Israel and backed it on almost every issue regarding Palestine and we have undermined the elected Government of Palestine.

It was gas to listen to José Manuel Barroso praising the EU for its defence of human rights and saying it merited the peace prize. This is the man who, when he was Prime Minister of Portugal, defended the invasion of Iraq. How can someone who defended the invasion of Iraq against the wishes of his own people talk about human rights? I do not understand that.

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