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Saturday 24 February 2018

Gormley criticises banks and questions future of euro

Fiach Kelly and Aine Kerr

GREEN Party leader John Gormley last night questioned the entire euro project and accused the European Central Bank (ECB) of reckless lending.

In a major departure from previous Government positions, the leader of the junior coalition partner said "difficult questions" had to be asked about the euro.

Mr Gormley was speaking during Dail statements on the €85bn bailout. The bailout is made up of money from the EU, IMF, bilateral loans from Britain, Denmark and Sweden, and some money from the National Pensions Reserve Fund and other domestic reserves.

He said the ECB was partly to blame for the banking crisis, and raised the prospect of a federal or two-tier European Union.

"What has led to this problem, and let's be honest with ourselves, is the ECB has lent money in a reckless way to reckless banks and that is a fact," Mr Gormley said.

"We have to ask ourselves some very difficult questions here in this chamber about the nature of the ECB, about the nature of the euro project at this stage."

He referred to German economist Hans Tietmayer, who said the euro could not survive an asymmetric shock.

"This is what we are now experiencing. We have to ask ourselves these questions. What do we do now in relation to the euro? This question is far bigger than anybody in this chamber.

"What will we do with the euro? How can we survive this particular crisis? If the euro is to survive, it will need some form of federal Europe. We could end up with a two-speed Europe."

He said a federal Europe could lead to harmonised taxes but said these things had to be talked about in the next few weeks.

Taoiseach Brian Cowen insisted he had secured the best deal for Ireland from the EU-IMF negotiations.

Mr Cowen said the deal was essential for the State to get funding, since the bond markets are charging over 9pc at the moment. "We can now find the room and space in which to pursue a policy pathway that will enable us not only to stabilise the economy, but also to look for growth in the economy in the years ahead," he said.

Fine Gael leader Enda Kenny said Ireland is now facing a crippling debt that will leave people "in hock for the next generation".

"The bailout from the Swedish Government and the British Chancellor of the Exchequer is not what the people of this sovereign state expect from their Government," Mr Kenny said.

He said the bailout is a "bad deal for Ireland" but Mr Cowen challenged him to outline an alternative line of funding for the State.

Irish Independent

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