Saturday 3 December 2016

Ireland has only itself to blame for the costly bailout says Barroso

Sarah Collins in Brussels

Published 20/01/2011 | 05:00

Baden-Wuerttemberg's state premier Stefan Mappus, a member of Chancellor Angela Merkel's conservative Christian Democrats (CDU), welcomes European Commission President Jose Manuel Barroso (right) in Stuttgart yesterday. Barroso is on an official visit to the state.
Baden-Wuerttemberg's state premier Stefan Mappus, a member of Chancellor Angela Merkel's conservative Christian Democrats (CDU), welcomes European Commission President Jose Manuel Barroso (right) in Stuttgart yesterday. Barroso is on an official visit to the state.

The EU's top official has hit back at accusations that the EU-IMF bailout will cripple the Irish economy, saying it was Ireland's "fiscally and financially irresponsible" behaviour that caused the downfall in the first place.

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In an uncharacteristic outburst European Commission chief Jose Manuel Barroso lashed out at MEP Joe Higgins yesterday after he accused the EU of "making vassals" of Irish taxpayers.

"The problems of Ireland were created by irresponsible financial behaviour of financial institutions and a lack of supervision in the Irish market," Mr Barroso hit back in an angry exchange. "Europe is now part of the solution. It was not Europe that created this fiscally irresponsible situation and this financially irresponsible behaviour."

In a heated debate at the European Parliament's second home in the French city of Strasbourg, Mr Higgins complained that the €85bn bailout package was "nothing more than another tool to cushion major European banks from the consequences of their reckless speculation on financial markets.

Vassals

"Far from being a bailout, your IMF and EU mechanism makes vassals of Irish taxpayers to European banks and enslaves the working people of Europe to the markets, who lead you around by the nose," Mr Higgins said.

"It is a vicious weapon dictated by markets masquerading as benign."

Finance Minister Brian Lenihan this week asked his eurozone counterparts to consider a lower interest rate on the Irish loan, but a senior diplomat in Brussels says he will face an "uphill struggle" trying to sway Berlin.

The interest rate -- Ireland will pay an average of 5.8pc on the €67.5bn it is getting from EU and IMF sources -- was set as a deterrent at German Chancellor Angela Merkel's insistence.

Fine Gael MEP Sean Kelly took up the case yesterday, asking Mr Barroso and European Council president Herman Van Rompuy to "reduce the interest rates applied to the bailout, which are crippling our country".

But the Portuguese commission chief was visibly shaken during the debate, in which he staunchly defended his handling of the debt crisis that has plagued the single currency zone for almost a year.

Last week, he defied German reluctance to take on any more of the bloc's debts by suggesting the eurozone's €440bn rescue fund should be expanded.

Eurozone finance ministers are considering changes that would allow the fund to lend its full €440bn envelope -- it is currently limited to €250bn by a massive capital buffer -- and enable it to buy sovereign bonds and issue pre-emptive credit lines to solvent countries.

Eurosceptic MEP Nigel Farage of the UK Independence Party alleged the move was a "massive power grab" to allow the bloc to continue buying up its own debt.

He added that Portugal, Greece and Ireland have no place in the single currency alongside more frugal countries such as Germany.

Mr Barroso decried MEPs' attempts to create a gulf between rich and poor countries, but the debate in the parliament is a microcosm of what is happening at the heart of the eurozone.

Finance ministers from the bloc's triple A-rated countries -- Germany, France, the Netherlands, Austria, Finland and Luxembourg -- met separately in Brussels this week to discuss their added "responsibility" for maintaining the bloc's fiscal credibility.

Meanwhile, indebted countries are being told to slash spending and restructure job markets to attract investment.

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