Monday 20 May 2019

Heroes of Europe don't do debt deals, just the Greeks

Newly appointed Greek Prime Minister and winner of the Greek parliamentary elections, Alexis Tsipras (2nd L), walks with members of his cabinet in Athens. Reuters
Newly appointed Greek Prime Minister and winner of the Greek parliamentary elections, Alexis Tsipras (2nd L), walks with members of his cabinet in Athens. Reuters
Minister for Finance Michael Noonan with Enda Kenny
Colette Browne

Colette Browne

I'm beginning to think that if the troika offered the country a write-down of debt, the Government would refuse to accept it.

Taoiseach Enda Kenny would throw his hands up in disgust, pull out the national chequebook and fling it in their direction, angrily bellowing: "I will not have defaulter stamped on my forehead."

Not when he can have "hero" stamped on his chest by the head of the IMF, Christine Lagarde, who thinks the Irish are a great bunch of lads for agreeing to repay €64bn of banking debt without a murmur of complaint.

Continuing in that non-confrontational vein, the Government has latterly rubbished the notion of European countries coming together to discuss the issue of debt - which is hard to fathom, particularly since some ministers were all for the idea two weeks ago.

Back then, Finance Minister Michael Noonan was reported as being "broadly supportive" of the idea of a pan-European debt conference suggested by Greek party Syriza in advance of its historic election victory.

Now, according to Minister of State Simon Harris, his comments were "taken out of context" and he doesn't actually support the idea at all.

Mr Noonan wasn't the only minister who sounded amenable to the idea of a debt conference before the Greek election. Tanaiste Joan Burton was adamant that she thought the idea had merit, although that was when she thought Mr Noonan was also a fan.

"In relation to the idea of a debt conference, I think the proposal has merit, as Minister Noonan indicated," she said.

So, why did Foreign Affairs Minister Charlie Flanagan announce on Monday that the Government was utterly opposed?

"We don't believe that a debt conference is in the best interest of the people of Europe, we're not supportive of it. Our Minister of Finance has made that clear," he said.

I contacted Labour yesterday and was told that Ms Burton still thinks the idea has merit, which begs the question, has she mentioned this to any of her Cabinet colleagues?

Last week, some in Labour were grumbling that Fine Gael was walking all over the party and this seems to be yet another example of the bigger coalition partner getting its way and leaving the Tanaiste with egg on her face.

What are they afraid of? Establishment politicians all over Europe have been deriding Syriza as a radical bunch of economic illiterates who are about to get their arses kicked by po-faced bureaucrats in Brussels, but their demands are not fanciful.

Up for discussion at the debt conference was going to be a simple proposal. Syriza wants the ECB to buy sovereign debt and reduce Greece's debt to GDP ratio to 50pc, with the debt being bought back when its economy grows and the figure represents 20pc of GDP.

Economist Michael Taft has calculated that if this were to happen in Ireland, our annual interest repayments would be cut by half, saving €3.7bn a year.

That sounds like an idea that at least warrants a discussion, but the Government doesn't want to have any part of it, preferring to continue taking economic advice from the same people whose failed policies have caused nearly a decade of stagnation across Europe.

'Financial Times' columnist Wolfgang Münchau, not exactly a bleeding heart liberal, thinks Syriza is one of the only political parties in Europe talking economic sense at the moment.

"The tragedy of today's eurozone is the sense of resignation with which the establishment parties of the centre-left and the centre-right are allowing Europe to drift into the economic equivalent of a nuclear winter," he wrote.

Try telling that to Mr Kenny, who is still insisting Ireland is doing splendidly - apparently oblivious to the fact that 1.4 million people are living in deprivation, or that official live register figures don't include the nearly 200,000 people who are either underemployed or in social welfare schemes.

Referring to the bailout in the Dáil recently, he said: "The challenge was accepted and, as was pointed out [by Ms Lagarde], the real winners and heroes of that challenge are the people."

So, the bailout was a challenge, which the plucky Irish readily accepted, and now everyone in Europe thinks we're great.

Why would we want to let them down and start whinging about it now? Take a bow fellow heroes and forget about debt restructure.

Irish Independent

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