Tuesday 25 October 2016

Greek Tragedy: should Athens be allowed to leave the euro?

Many of Ireland's shrewdest business leaders think Greece should not be allowed to fail

Gavin McLoughlin, Sarah McCabe and Nick Webb

Published 21/06/2015 | 02:30

Pro-EU protesters take part in a rally in front of the Greek parliament in Athens last week.
Photo: Yannis Behrakis/Reuters
Pro-EU protesters take part in a rally in front of the Greek parliament in Athens last week. Photo: Yannis Behrakis/Reuters

Larry Murrin CEO, Dawn Foods - "From the food industry's perspective, from an exporting perspective, I don't think a Greek exit would be immediately damaging. What is potentially more damaging is the ripple effect it would create. It would take Europe into the fiscal unknown.

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"Europe has made very significant strides in the last year. We are on the way back to stability and a Greek exit would damage that.

"Stability and certainty are crucial, not just for Irish exporters but for the entire European workforce. So I think it is in everybody's interest that some kind of deal is reached. I don't think an exit would be good for either Greece or the EU. A strong Europe is important.

"The Greek economy has deep-rooted, almost unique, problems. I think it is going to be staring down the gun barrel of serious economic reforms either way. And it'll be better positioned to handle those as part of the EU - not outside it.

"At the same time, this doesn't mean keeping Greece in the EU at any cost."

Vincent Carton Managing director, Manor Farm

"The biggest problem for business today from Greece is the uncertainty, and the constant returning to the same old problem.

"Even if you give them money this time, I actually don't believe that it's going to solve the problem. They're going to need debt writedown - and the Germans just aren't going to do that.

"If they were to leave the euro, it would have two effects on our business - but they may knock one another out.

"One is that our costs - many of which are denominated in sterling and in dollars - would rise, because the euro would fall.

"But exports would also rise, particularly to sterling areas - our biggest market - and to China which is a big market for us for dark meat products. I think they should be let go."

Mark Bourke Chief financial officer, AIB

"Speaking in a personal capacity, I think a Greek exit would be a very negative outcome. Any country leaving the union undermines the permanency of the construct. In short, it is best for monetary policy, and for Greece, to stay in the union.

"I think the argument that now is the time to force everyone's hand, to find a solution once and for all, is an illusion.

"The level of brinkmanship has reached insanity. Positions have become very entrenched and that is unfortunate.

"Ultimately I suspect a deal will be done. Opinion polls show that the Greek people want to stay in the EU. Let's hope politicians can deliver on that."

Tom Noonan CEO, Maxol

"I think what will most likely happen is there will be some kind of elastoplast solution created, which will only carry us to the next crisis… and then the next, and the next.

"Europe might be better advised to deal with the question now. Obviously there will be huge problems created by a Greek exit, but I think one sharp shock at this stage is preferable to a long, drawn-out battle.

"But I hope decisions are being made in an informed manner, not panicked. One of the things the banking inquiry has shown us is that sometimes very important decisions can be made in situations that no one really has a handle on - they were making a decision in a vacuum.

"Let's hope that Greece is not the same, that the people doing the negotiating are not relying on incorrect information. But I'm sure that's not the case.

"Certainly we are better prepared to deal with the aftershock of a Greek exit now that we were five years ago or eight years ago.

"The other thing to consider is that, if concessions are granted to Greece now, that only encourages a pattern. It encourages Greece and other countries to seek more generous concessions in future. That's not what the union is about."

Frank Murphy CEO Monex Financial Services

"When Iceland faced economic collapse, a government minister informed the international bankers that they had no money but plenty of fish - and they were very welcome to the fish.

"However this may not be the best time for Greece to execute such radical action.

"To the general euro community, an exit by Greece may only register a minor blip. However from Greece's perspective, the country may have more to lose at this juncture and may be best advised to work to remain within.

"We have witnessed on a global scale that there is no entity outside the possibility of 'failing'. Having endured severe levels of austerity to date, leaving the euro before reaping the benefit of a recovery would seem to be a counter-intuitive act for Greece."

Tanya Airey Managing director, Sunway

"I would be against the exit of Greece from the EU. Nobody knows exactly what would happen in the event of a Grexit, but there's no doubt that the consequences would be undesirable for all concerned.

"A Grexit would likely be manageable for Ireland - but the effect on the Greek people would be catastrophic. Nobody would wish this to happen to such a lovely people. Hopefully, for all, a resolution will be found for this crisis."

Bryan Bourke Managing partner, William Fry

"It's incredibly hard to predict - but we certainly seem to be getting to the end of the road in terms of where this is going. There have been so many temporary solutions and cans kicked down the road. The outcome is uncertain.

"We think there is a real risk of exit, given the gulf that seems to exist between the parties - and the mandate that the current Greek administration sought and received in the election doesn't lend itself to compromise on that side, even if the fallout of an exit would be very hard for Greece in particular.

"It's difficult to even tell what the right outcome is - keeping Greece in and holding on for stability, or showing that the rules of the group must be adhered to. But the risk of exit seems greater in the near term.

"The outcome of an exit is even more unpredictable. It has been interesting to see the markets hold so firm this time - so much more steady than when this issue was on the agenda a few years ago.

"Markets are clearly taking comfort from the steps the ECB has taken in the meantime and from the general uplift in international sentiment. That said, its hard to see how a Grexit wouldn't raise fears and issues - economically and geo-politically.

"On top of where it puts Greece and its creditors - even if the creditors are now mostly sovereign - it raises the possibility of serious political issues as matters inevitably get worse in the economy after an exit, and for the country in the future.

"And for Europe more broadly the irreversibility of membership of the euro is then up for discussion - though the ECB will work hard to address this.

Maurice Pratt Chairman, Uniphar

"You can't look at Greece in isolation. Greece's exit from the EU will push peripheral countries' bond yields up - which means their cost of borrowing goes up, which means the cost of doing business goes up...

"Europe has worked so hard to recover from that over the last few years. The ones who will benefit are speculators - in the same way they did six or seven years ago, putting the currency and sovereign governments under pressure."

"The other thing this creates is huge uncertainty, to which businesses are allergic. They postpone investment decisions, they spend their money elsewhere."

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