Sunday 17 December 2017

EU intrusion on national budgets 'won't solve' the euro debt crisis

Sarah Collins in Brussels

Former Taoiseach John Bruton yesterday warned that new European budget rules that allow the EU to intrude into national budget-making will not solve the debt crisis.

Last Monday's agreement between 25 EU leaders in Brussels to write spending brakes into national law -- and hand the European Commission and the EU court the power to police them -- was not "sustainable" unless citizens had more of a say in the process, he said.

Mr Bruton, who spent five years as the EU's ambassador in Washington, questioned if the commission should be taking on huge new powers and making political decisions.

"That a body that is not elected by anybody and in which the people have no say in the naming of the members should be taking on such powers -- is it sustainable?

"Can the European Union exist on that bureaucratic integration model? My answer is no, it can't."

Speaking at a conference in Brussels, Mr Bruton said that the EU would not survive the next two decades unless it handed citizens the power to elect its top officials.

"Unless Europeans have a sense of ownership of the project, including of the currency, I don't think the European Union will survive for another 15 or 20 years -- but if we do, it will," he said.

A group of Independent TDs is campaigning for the Government to hold a referendum on what it calls the "austerity treaty", but Taoiseach Enda Kenny has said a vote will only be held if "absolutely necessary".

Obliged

Attorney General Maire Whelan is examining the final text of the treaty to see if Ireland is legally obliged to go to the polls.

Mr Bruton said the treaty lacked a banking "approach" and was being enacted to protect German taxpayers from debt problems in Europe's periphery.

"Basically the policy we're pursuing at the moment is a policy designed to protect the interests of savers, and it is not an accident that the country where probably there's the highest level of saving is Germany.

"Savers don't want inflation," he added. "Savers don't want the European Central Bank to essentially start printing money."

He said that nothing had been done in the treaty to address the fact that banks were being asked to raise at least €114bn in capital this year to guard against the effects of a Greek debt writedown.

He blamed global regulators for attaching no risk to sovereign bonds before the crash -- encouraging governments to rack up huge debts and causing banks to suffer huge losses.

"The regulatory system that was designed to make banks safe actually made governments unsafe," he said. "It was procyclical in the boom -- and we're now seeing our banking system being procyclical in a downturn," Mr Bruton said.

He predicted that the 17-member eurozone would remain intact -- with Greece inside it --because of the potentially "enormous" costs of a break-up.

"The euro will survive and Greece will stay in the euro, in my view, because the cost of leaving is so incalculably enormous," he said.

Irish Independent

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