Friday 30 September 2016

The euro is our currency - we must do whatever it takes to protect it

Brian Hayes

Published 29/06/2015 | 02:30

An anti-austerity protester burns a euro note during a protest outside the European Union offices in Athens
An anti-austerity protester burns a euro note during a protest outside the European Union offices in Athens

Michael Noonan is completely right when he said on Saturday that we are heading into uncharted waters on Greece. It's a fast-moving situation. Quite frankly, anything can happen between now and tomorrow night, when Greece reaches its IMF deadline and exits its existing bailout.

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Is this a moment in history like the summer of 1914, when Europe sleepwalked itself into a war that no one thought possible? When the Berlin Wall fell in 1989 and communism collapsed in Russia and Eastern Europe, the then leaders of Western Europe responded to the challenge of events. Is this a similar moment when European leadership comes to the fore? What's needed now, in responding to the Greek crisis, is high-quality European leadership and judgment. Everything must be done to avert this crisis.

The present Greek crisis has now entered a very dangerous phase. After months of negotiations, there is a rancorous mood among European leaders. You cannot make concessions or reach out to the other side if negotiations have been conducted in an atmosphere of bad faith.

The Greek government's aggressive and provocative negotiation tactics have alienated every other eurozone country, more sympathetic centre-left politicians included. In a reckless late move, the Greek government appears to be threatening national suicide in a bid to get a better deal.

What Syriza seems unable to grasp is that other countries have mandates too. With a mandate comes responsibility to make an agreement, but that requires respecting the mandate of others. The eurozone is not split on this issue. It's not a question of 10 countries arguing one course of action, while the other nine take an opposite view. The overwhelming view is to continue to provide EU financial support to Greece, with conditions. And the issue of debt relief can be a part of that package when it's obvious that conditions are being met.

But there remains some pretty hard facts that people need to know. Over €65bn of unpaid taxes remain outstanding in Greece. There are four people working for every three pensioners - no one believes that is sustainable. Major structural change is needed and the frustration is that progress was being made, as evidenced by a primary surplus and the ability of Greece to borrow again on the international money markets. All that progress is now being lost by a type of 'student prince' politics - where ideology is more important than running a country.

With one minute to midnight, the question must be asked: why has the Greek government left it so long? Five months have been wasted - did it ever want to do a deal? The Greek economy has slipped further, unemployment has increased and the banks have been subjected to a continuous run. Yet in January, the EU Commission predicted that Greece would grow by 2.5pc.

Syriza has spent the last five months lecturing us all but seems unable to get to grips with the responsibility of government. Is it the case that revolutionary political forces in Greece are willing to risk a total collapse of the Greek economy in the belief that a Greek collapse will trigger a more widespread collapse in Europe?

A Greek default will be a tragedy for Greece. It will cause terrible suffering and possible political instability and has the potential to cause economic contagion in the wider financial system. A Greek default is entering the realm of the dangerous unknown where the financial system could be thrown into chaos, as happened in 2008.

Europe has invested too much over the past seven years to be thrown into chaos again. The euro is our currency and all eurozone member states have a responsibility to do whatever it takes to protect it.

The lesson we all need to take from this is that economic instability follows political instability. An economy will not grow when politicians play high-wire tactics with their country's future. Enda Kenny has been criticised recently for taking a hard line on Greece. Yet he has shown that by working with the EU institutions and negotiating in good faith, things can improve. Which country, Ireland or Greece, is in a better place now?

Brian Hayes is a Fine Gael MEP

Irish Independent

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