Monday 23 October 2017

Richard Curran: Unfolding Greek crisis a glimpse of what 'Labour's Way' might have led to

Richard Curran

Richard Curran

Eamon Gilmore’s now famous phrase that it would be “Labour's way or Frankfurt’s way” was never really put to the test. Ireland negotiated small but helpful refinements to its debt package from the troika lenders but nothing major.

As the leaders of the new Greek government continue their tour of European capitals, we are now about to get a glimpse of what going “our way” might have meant. A massive €300bn negotiation is taking place and so far it looks like it is the Greeks who are blinking first.

After bullish pre-election rhetoric about abandoning the current plan, one of the first comments from the new Syriza government was that it would no longer deal with the troika in debt negotiations.

After that, it has been all retreat. A statement from Greece that it would not act unilaterally followed. A few handshakes and back slaps with EU leaders later, and there is no sign of a softening of the troika position on Greek proposals to swap its debt for new growth-linked bonds.

The ECB has ratcheted things up further by withdrawing a waiver that allowed banks to use Greek government bonds as collateral on financing.

There is probably some way to go in this negotiation but it does give us an insight into what we in Ireland might have faced had we gone in harder.

Of course there are differences between the two scenarios in Greece and Ireland. Over 80pc of Greek national debt is owed to public lenders instead of private bond holders. Any write-off will hit German and French taxpayers directly - as well as Irish ones.

Enda Kenny’s government has travelled quite a distance since “our way or Frankfurt’s way” and the path it has chosen has been to consistently emphasise that we are not Greece. That has yielded some positive results. The Greek experience may tell us something about whether we could have got more.

But Kenny won’t be changing the mantra in a hurry, no matter what deal Greece gets.  

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