Shane Ross (Independent)

I must admit I was staggered when I first heard the news that we were volunteering to produce in one way or another, or certainly to put ourselves on the line for €1.3 billion. I really thought there was a certain degree of unreality about Ireland which, as Senator Twomey stated, has the largest deficit in Europe and is certainly the nation which has fallen the furthest in recent times, charging in to put itself on the line for €1.3 billion. It is, after all, over a third of what the Minister for Finance will be looking for in the budget. It is an enormous sum of money for a country which is as indebted as we are and in the sort of difficulties we face.

I could not quite understand the rationale for us doing it without reservations because there is an optimism about this particular package which assumes, as I noted in the speech of the Minister, Deputy Killeen, that Ireland "will not be financially disadvantaged by these arrangements". That is absolutely true, in terms of the interest rate we might be receiving for it. The circumstances in which we would be financially disadvantaged by these arrangements is if the Greeks do not pay us back, and that is not impossible.

Of course, the reasoning behind it is to be good Europeans and the word "solidarity" appears in the Minister's speech and in other speeches throughout the presentation of this Bill. However, one of the problems with this well-meaning measure is that there is a possibility the measures for conditionality to which the Minister refers cannot be implemented.

There is a kind of starry-eyed view of the IMF — it is contributing approximately €30 billion of this — as some sort of doomsday rescue agency which comes in, sets some very tough conditions and then the nation will be saved. In this case, there are tough conditions, some of which are being contributed by the IMF and some of which are being contributed by the nations in the form of guarantees. The assumption is that these conditions, having been accepted by the Greek Government because as a Government it has no option, will be implemented. I hope they are right but there are signs of civil disobedience on the streets of Greece, to which Senator Hanafin referred eloquently, and it may not be possible to implement the measures which have been agreed by the Governments.

There is civil unrest in Greek. It is not here, thank God. However, it is dangerous to assume the IMF has come in, the European nations have corralled Greece and we will get our money back. Let us hope it is true.

The Greek situation, both in terms of the economy and of political stability, is a matter of historical difficulty which we should take into account when we are giving money to this nation. It does not have the kind of political stability we have here. Senator Hanafin correctly pointed out that the marches that took place here in the past few weeks showed the lack of enthusiasm there is here for taking to the streets in a violent way that there may be in other countries. Greece is not Ireland. It is fair to say that the responsible reply that has been given by the trade union movement as well as others to many of the measures taken here by the Government is something we should be proud of and treasure, but not abuse. That is the first point I want to make.

My second point relates to setting up funds of this sort. This €110 billion, of which Ireland is contributing €1.3 billion, is a kind of safety net, not so much a fund. Often its like sets a target for the financial markets. We should note this is not just to save Greece but was followed by the setting up of a fund of €750 billion a few weeks later. That fund was set up for a similar but not identical reason — to save the euro. Whereas the economy, credibility and credit rating of Greece are under threat and it is an integral part of the euro economy, the euro itself came under threat within a couple of weeks and is still under threat. The reality is the fund set up with a nominal value of €750 billion to save the euro had very little effect. The euro fell very steeply because the markets regarded the fund as irrelevant. It is the largest fund of this sort ever set up but the markets took the view, and it was the same in Greece, that the economic fundamentals must be got right before any action of this sort is taken. For instance, a fund of €1 trillion could be set up and the speculators would take it on if the fundamentals were not right. This is the problem, not just for Greece but also for the rest of Europe, especially France, Portugal, Italy, Greece and Spain. Setting up any number of funds for the Club Med countries will not sort out the fundamental problem of their deficits, their property problems and whatever other fundamental economic problems exist in those countries. That is what has to happen. Whereas the Fine Gael Party took the view that it did not like the fact that the budgets of the European nations would have to be inspected, peeked at or looked at by the Commission in advance, it is going to be very difficult to defend the euro if the economies are not defended and the only way of defending the economies is by reducing their deficits.

We have to be honest about it that there are certain serial offenders in this category. That is why the PIGS countries are known as such. They are offenders in this category and they do not have the same discipline as some of the other countries. No one is a paragon of virtue, even Germany. Certainly, we and others have created such a record of economic profligacy that it is very difficult to justify us going ahead on our own without some checks and balance. Neither we nor Greece, Portugal, Italy or Spain will be able to look for help from Europe unless we impose those disciplines which we agreed to and which everyone breached in recent times. It is only right we should accept that these funds which are being set up, one for Greece and the other for Europe, are temporary at best and may actually be harmful in a certain way. The speculators to whom Senator Hanafin referred have decided to have a pop at the fund of €750 billion and question how long it will last. It is purely artificial and may give a feeling of security to those nations which will prevent them from or act as a disincentive to them to curing the fundamental economic problems they are suffering.

I would not say in any way, therefore, that this is going to cure the Greek problem. I think there are real difficulties ahead. I would not say in any way that setting up a fund of €750 billion is going to assist the euro in any meaningful way. The euro has gone down in value and is being attacked since that fund was set up. I have serious reservations about the fund, although I think the reasons it was set up are understandable, and measures taken in a hurry, which is the case when currencies are under threat, are difficult measures to take, as seen in the case of the bank guarantee and other such measures.

Ireland is not a particularly suitable country for lending borrowed money to someone else when it is in the sort of state it is in. It is a bit like the extraordinary suggestion that Anglo Irish Bank should rescue Seán Quinn, that a bankrupt bank, nationalised, backed and owned by a nation in trouble, should rescue a company in great trouble. The suggestion that this nation should rescue someone else is a case of the drowning rescuing the drowning, and that is not feasible in any long-term way. It is indicative of a way of thinking which is not realistic.

Rescuing the Greeks and others is testing the patience, not only of Ireland, where we have done well in rescuing ourselves and are held up as a form template which may not work but under which we have at least made an effort to cut public expenditure, but also of other nations which may get tired of rescuing the badly managed nations of Europe. No one would have missed what happened in France and Germany during this time. There is a real danger that if we keep bailing out nations who get into trouble, break the rules or tell lies about their figures, the paymasters of Europe, the Germans, will get fed up.

It looks perfectly clear that Angela Merkel is sick and tired of some of these Club Med countries. Everyone knows that she was the hard-liner on this issue and she conceded in the end. While we do not have to worry that Greece, Portugal, Spain, Italy or Ireland will be expelled from the euro because there is no mechanism for it, we should worry that Angela Merkel, who lost very badly in the elections held in the middle of this crisis because the Germans in the regions were fed up with bailing out the Greeks, could decide she and Germany are fed up. We should worry that she would pander to German public opinion — that is what politicians do — and decide not to expel those countries but rather to pull Germany out of the euro. That is a real danger, that the euro would break up, not through excluding the weak but through the strong saying they have had enough of the weak, pulling out and going it alone. This is something the Government must be aware of and should take measures to prevent within the European Commission, the European Parliament and the European Council. The real danger is not of expulsion but of withdrawal.