Seanad debates
Wednesday, 1 July 2015
Commencement Matters
Eurozone Crisis
10:30 am
Paul Bradford (Independent)
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I thank the Cathaoirleach for allowing me to raise the matter of the ongoing crisis in Greece, and the impact and knock-on effect it has on all the eurozone countries and the entire political consequences for the EU and beyond.
A few days after the Greek election last January I tabled a Commencement matter with the Minister of State on the aftermath of the election in Greece. At the time, we were at one in pointing out that much of what had been promised and offered by way of a political manifesto, by the incoming Greek Government, would be difficult to fulfil and that there were no easy answers to the Greek problems. If there were easy answers then the matter would have been solved a long time ago. We agreed that it was a developing situation and it was one that could become very dangerous from an economic and political perspective. Sadly, that has all come to pass.
As I said in the House last week, it is fair to say that for the vast majority of politicians and political parties, in this House and in the other House, Mr. Tsipras and Syriza would not be our chosen political cup of tea. However, we must respect the fact that he and his party have been elected to govern by the people of Greece and that they have a mandate in that regard. In politics we must accept that political factors always impact on decision-making. From a Spanish perspective, the Podemus party offers a variation of Syriza. From an Irish factor, the Sinn Féin party has presented the Syriza election as some sort of new dawn. Therefore, we must be cautious in our dealings with the new Greek Government. We should not cave into the thinking and ideology that has been put forward by Syriza. That is the politics of the short term. I urge Members to look beyond the short term to the medium term and beyond. We must see the impact of what is happening in Greece, not just from the politics and economics of today, but from a long-term European perspective.
As of now the failure of Greece to make its IMF repayment has marked it down as the first developed country, in almost 70 years, to fail in that regard. There is a crisis on the streets of Greece, people are unable to obtain cash, pensioners have found it difficult to access money and a huge level of human misery has been created. I would be the first to acknowledge that much of the crisis in which Greece now finds itself stems, not just from decisions made by the current Greek Government, but from a lot decisions that were taken and not taken over the past 20 years in Greece. Those problems will not be resolved overnight.
Speaking of the medium and long term, it is only 70 years since there was a civil war in Greece. At that time it was communists versus colonels and the military. A referendum may be held next Sunday and a similar ideological divide appears to be gearing for battle with a rather simplistic left versus right. Any further division of Greek society at present is very unhelpful. I believe eurozone finance Ministers will participate in a conference call this afternoon which was postponed this morning. I hope that means some degree of talking is going on in the background and that some solution, even at this late stage, can be found.
Ireland is geographically removed from Greece but we must accept that, as a member of the European Union and the eurozone, we are equal partners on the field of play. If Greece leaves or is forced out of the eurozone then such a development will come with very significant negatives. It will clearly show that the eurozone is not a fixed project. It will clearly show that countries can either opt out or be forced out. It would also be a major blow to the concept of a strong and united European and financial Union. If it happened then it would come months ahead of a referendum in the UK on its relationship with Europe. It Greece left the eurozone it would pose serious fundamental questions about what the European Union is and what it wishes to be and to become.
The European Union is a great political project that united a divided continent and was built from the blood of millions of people. This fantastic project will be at risk if problems such as Greece continue to be unresolved. Obviously the first and longest mile must be walked by the Greek Government but Ireland must try to walk with it in a spirit of co-operation and unity. Over the next crucial few days our political priority must be to ensure that a fair and balanced solution is reached. Even if Ireland must swallow a little bit of political pride I ask the Minister of State to convey to the Government that we should look at the bigger and longer picture, and at the great vision of what Europe is and what it can become.
Simon Harris (Wicklow, Fine Gael)
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I am pleased to have an opportunity to outline to the House the efforts that are being undertaken by the Irish Government, and our euro area colleagues, during Greece’s current difficult economic times.I thank Senator Bradford for providing me with the opportunity to do so.
I agree with much of what the Senator said. It is important that solidarity is shown in Europe and people walk together. It is difficult to do so, however, when the partner one is walking with leaves the table and runs home, which is what happened at a very late hour on Friday night last. Not only did this take Greece's eurozone colleagues by surprise, it also took some people in the Greek Government by surprise and certainly took many ordinary citizens in Greece by surprise.
Greece remains a full member of the euro area and it is in all our interests that this remains the case. However, each member of the euro area has responsibilities and obligations and this applies as much to Greece as to other members of the eurozone.
I accept Senator Bradford's point about democracy. We will defend to the death the right of Greek people to elect whomever they wish to government. However, all the others around the table also have a democratic mandate. There is no monopoly on democratic mandates when European finance Ministers sit down around the table. The very essence of democracy is working one's way through problems to arrive at a solution.
The International Monetary Fund has confirmed that the €1.5 billion due to be paid by Greece yesterday has not been received and Greece is now in arrears to the fund. This is the first time a developed country has gone into arrears with the IMF in a long time. In terms of the practical implications of this development, Greece can only receive financing from the IMF once the arrears have been cleared.
As of midnight last night, the second economic adjustment programme for Greece expired along with associated disbursements. Nevertheless, there remains time for a deal to be agreed and the door is still open. Greece must put reasonable proposals on the table, however. It is in everyone's interest that agreement is reached.
Senators will be aware of the decision by the Greek authorities to impose temporary restrictions on capital flows. This measure appears to be appropriate in view of the current unique and exceptional circumstances faced by the Greek financial sector. It is, however, causing significant difficulty for Greek citizens. The European Commission confirmed on Monday that the introduction of capital controls by the Greek authorities is justified under the Treaty on the Functioning of the European Union in light of the current circumstances in Greece and with a view to maintain financial stability.
Senators will be aware that the Greek Parliament approved the call for the referendum on the policy conditionality proposals submitted by the institutions. The referendum is expected to take place on Sunday, 5 July 2015, which is after the expiration of the current programme period.
The Government and Irish citizens have great sympathy for Greek people, a view expressed by the Minister for Finance on several occasions. The Minister has also been helpful to the Greek authorities in moving to the position whereby realistic negotiations were taking place. Unfortunately, following months of negotiations between the Greek authorities and the institutions, a substantial easing in the onerous fiscal targets agreed by the previous government and a series of meetings at political level, talks concluded without a successful agreement following the unilateral decision of the Greek authorities to withdraw from negotiations.
Euro area finance Ministers met five times in ten days to discuss the position in Greece. While there were still divergences, there was enough commonality to bridge the gap and agree a single document to which all parties could sign up. This would have been a very favourable offer to Greece as it would have addressed future financing needs and the sustainability of Greek debt. It also included support for a Commission-led package for a new start for jobs and growth that would boost the recovery of investment in the real economy. Any solution must provide Greece with an opportunity to grow the economy again. Greek people need a solution and I believed we could have found one last Saturday.
Ireland, with the other member states, understands and empathises with the difficult circumstances faced by Greek people. These have been exacerbated in recent weeks by uncertainty surrounding the programme negotiations. For this reason, there has been a willingness to negotiate a way forward which takes account of the realities of the circumstances in Greece and the political priorities of its new Government, while also respecting existing commitments. The same process occurred when a new Government was elected here and we managed to reach an agreement.
The Eurogroup is closely monitoring the economic and financial position in Greece. As stated last Saturday, it stands ready to reconvene to take appropriate decisions, where needed, in the interest of Greece as a euro area member. Euro area finance Ministers intend to make full use of all the instruments available to preserve the integrity and stability of the euro area. I note that a conference call is scheduled to take place between euro area finance Ministers this afternoon. I hope progress can be made in this matter. Again, I thank the Senator for providing me with an opportunity to provide the Seanad with an update on the position.