Seanad debates
Tuesday, 7 July 2015
Commencement Matters
Eurozone Crisis
2:30 pm
Paul Bradford (Independent)
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I welcome the Minister of State and I am glad he is an advocate of the man and woman on the street and his or her views. I wonder what are the views on the man on the street in Athens today following Sunday's referendum. I debated this matter with the Minister of State at the Department of Public Expenditure and Reform, Deputy Harris, in the House last week, and while neither of us put our political prediction hats on, both of us deep down suspected that the Greek people would see fit to come round to the conventional world view of Greece and vote "Yes", but they surprised us and much of the EU and took a democratic decision to vote "No". It is not a decision we may have desired but that was the result of the referendum. As we speak, much bigger and more serious and senior discussions are taking place elsewhere between eurozone finance Ministers and eurozone leaders and, hopefully, during the next few hours and days, a solution will be put together to allow Greece to remain in the eurozone and to allow the ongoing work of the European project to continue. It would be a complete and utter economic and political disaster for the eurozone and the EU itself if Greece was forced out of the eurozone. I would be the first to concede that the management of the Greek economy by previous Greek Governments left much to be desired. The current Greek Government, having been swept to power on a wave of euphoria, dreams and promises a few months ago, has also taken unhelpful economic action. Hopefully however, arising from what it believes to be a mandate from its referendum on Sunday, it might see common sense.
The Irish government and other governments in the eurozone, as well as in the broader European Union, must be seen to work with and for a Greek solution. It may be necessary to swallow some political pride. We all know the reality of the politics of the situation. Certain countries do not want to see a win for Syriza. As a political "saddo" who watches all parties’ Ard-Fheiseanna, I was not impressed to see the now Greek finance Minister speak at Sinn Féin Ard-Fheis several months ago, highlighting the links and similarities between Sinn Féin’s and Syriza's policies. That is politics but we must move beyond this to ensure the misery faced by the people of Greece is dealt with.
Wild promises continued to be made right up until the last moment of the referendum campaign. The outgoing finance Minister said that, regardless of the referendum result, the Greek banks would be open on the following Monday and Tuesday and a solution found within 48 hours. Again, that was being overly optimistic. It is essential, however, we park the politics and look at the bigger picture to devise a workable solution.
From an Irish perspective, rather than following we should be leading. There was a time when Irish foreign policy had a strong moral dimension to it. It was one in which Ireland felt obliged, because of our colonial history, to side with the underdog, forming alliances with smaller nations. It appears now, however, that in the European Union, and in particular the eurozone, we take our leads not from the smaller countries but the more powerful. We need to work with all of our colleagues on the European stage, large and small.
Not only is there an opportunity but there is an obligation on us to be one of the countries advocating for concessions towards Greece. The Minister of State can argue about the cost to Ireland. However, what will be the cost to Ireland if Greece does exit the eurozone? What is the cost if it has a contagion effect on our nearest neighbour, the UK, and impacts on its forthcoming European referendum? We must not just be thinking in the political short term but look towards the medium and long-term necessity of keeping the eurozone strong.
I appreciate there are evolving negotiations taking place on the whole issue. What is the Government’s current thinking on the matter?
Joe McHugh (Donegal North East, Fine Gael)
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I thank Senator Bradford for putting down this matter, which is evolving as we speak. He has given a broad and holistic view on this important issue.
Greece remains a full member of the euro area and it is in all our interests that it remains so. However, as the Government has stated on many occasions, as a member of the euro area, each member state has responsibilities and obligations. This is no different for Greece.
The referendum in Greece on Sunday, July 5, resulted in a majority “No” vote, which was a rejection of the prior action list as it stood on 25 June. It should be noted this list was not a final list as the Greek authorities unilaterally withdrew from negotiations before agreement could be reached.While there were still divergences, there was considerable commonality to bridge the gap and agree a single document that all parties could sign up to. The institutions had come forward with a very favourable offer to Greece and would have also addressed future financing needs and the sustainability of the Greek debt, although this had not been discussed or agreed by the Eurogroup. It also included support for a Commission-led package for a new start for jobs and growth and would boost recovery of investment in the real economy. Greece withdrew from the negotiations and called a referendum. As of midnight on 30 June, the second economic adjustment programme for Greece expired along with associated disbursements. Therefore any further financing for Greece would likely be under a new programme with associated conditionality.
Today, the finance ministers of the euro area will meet to take stock of developments, listen to the new Greek finance minister and try to find a way forward. This will be followed by a meeting of the Heads of State and Government of the euro area, the euro summit, in which the Taoiseach will participate. The ball is now in the Greek court.
For recovery of the Greek economy to occur, difficult measures and reforms are inevitable. There is no getting away from this. It is important that the Greek authorities put forward reform measures that will put the Greek economy back on a sustainable path. Ireland is, of course, open to a new programme for Greece, but any programme must be backed by a full memorandum of understanding and a commitment to strong ownership and implementation. Time is running out, as is evident from the extremely difficult situation the Greek banks are facing.
While the governing council of the ECB maintained the level of emergency liquidity assistance, ELA, at just under €90 billion, it decided to adjust the haircuts on collateral accepted by the bank. We have great sympathy for the Greek people and the Minister for Finance has expressed this view on several occasions. He has also been quite helpful to the Greek authorities in moving to the position whereby realistic negotiations were taking place prior to the referendum and stands ready to further these efforts with the new finance minister.
Ireland, together with the other member states, understands and empathises with the difficult situation faced by the Greek people which has been exacerbated by the expiry of the second programme and the current uncertainty created by the referendum. This is why there is still a willingness to negotiate a way forward which takes account of the realities of the situation in Greece and the political priorities of its new government. We have engaged as quickly as possible. It is now up to the Greek authorities to come up with a credible plan which will undo the damage created by this uncertainty and put Greece on a sustainable path of growth.
Paul Bradford (Independent)
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I sincerely wish the Taoiseach and the Minister for Finance well today in their onerous responsibilities. The Minister of State said that the ball is now in the Greek court. The ball is in the courts of all the eurozone countries and with their leaders. We know from our history, and for geographical reasons the Minister of State knows this better than I, that when big decisions must be made and compromises found, movement is required on both sides and previously entrenched views and positions must be set aside. That is why saying the ball is in the Greek court is not sufficient. There must be movement, compromise and new, fresh thinking on all our parts if a solution is to be found. I hope Ireland is leading the charge in seeking those compromises and that new thinking.
Joe McHugh (Donegal North East, Fine Gael)
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Language is open to interpretation. I have been learning Irish in the past year. There is an old Irish saying that is valid in this debate, ní neart go chur le chéile, there is no strength without unity. We want Greece to be part of the eurozone and we want that strength in unity. When we are using language, we should go back to our first language and maybe we are better at articulating the Irish language - ní neart go chur le chéile. I hope a resolution is found and that there is a meeting of minds on all sides try to forge some way of moving this major difficulty out of the space it is in.