Tuesday 26 March 2019

Syriza's megaphone diplomacy has not got it anywhere

Confidence has drained away in Greece. The banks are losing deposits and the economy is back in deep recession
Confidence has drained away in Greece. The banks are losing deposits and the economy is back in deep recession

Shane Coleman

As they watch Greece pushed to the very brink this week, Taoiseach Enda Kenny and Finance Minister Michael Noonan must be feeling hugely relieved the crisis here has passed. And maybe a little smug and self righteous that the "bang the table brigade" (BTTB) in this country have been proven wrong.

Over the past four years, the BTTB - in politics, the media and even among economists - have insisted Irish governments have been too docile and submissive in dealing with the ECB, the EU and the IMF. Ireland instead should have put it up to the Troika, laid down the law and, like Howard Beale in the film 'Network', declared: "we're mad as hell and we're not going to take this any more".

These siren voices got loudest when Syriza came to power. When Yanis Varoufakis, the 'too cool for school' new Greek finance minister, did interviews on Irish radio, the cry went out 'why can't we have a finance minister like that'? One leading financial commentator confidently predicted to me that the Troika would find dealing with hard-nosed and tough Syriza a little different to our meek and compliant lot.

Regardless of what deal is (or isn't) worked out in the hours and days ahead, it certainly hasn't worked out like that. Syriza's tactics have run into a brick wall. Banging the table, or megaphone diplomacy, has got it nowhere, serving only to harden attitudes in Brussels, Frankfurt and New York.

The public language being used about Syriza - best encapsulated in IMF chief Christine Lagarde's comment about the need to negotiate with "adults in the room" - is unprecedented in the history of the EU. Privately, the naivety and the inexperience shown by the new Greek government has shocked politicians and diplomats. It was evident again at the weekend in Mr Varoufakis's article in an Irish newspaper on Saturday. Revealing what Mr Noonan had said at a private EU meeting in a newspaper in his own backyard is not the way to win friends and influence people.

The grandstanding by Syriza has arguably also damaged the Greek economy. Last summer, there were signs that, after a brutal contraction, it had stabilised. No longer. Confidence has drained away in Greece. The banks are losing deposits and the economy is back in a deep recession. There is anecdotal evidence the already poor system of tax collection has deteriorated in recent months as people anticipated a potential default.

The cold, hard truth is that banging the table when you're a small country, without the means to raise money, and with a banking system wholly dependent on outside funding, is pointless.

Despite that, there has been renewed criticism of the Irish Government in recent weeks for not backing Greece publicly. The argument has been, firstly, that a debt deal for Greece would help Ireland and, secondly, it's the just and right thing to do. On the latter point, it's possible to have sympathy with the plight of the Greek people but still believe it's not unreasonable for countries, due to lend billions more to another nation, to ask that country what it is going to do with that money. And, if it includes paying pensions to 55-year-olds, not being too happy about that.

Realpolitik also comes into play. From a purely selfish point of view, siding with an isolated and alienated Syriza wouldn't be smart politics by Mr Kenny and Mr Noonan. Of course, Greece needs a break. But it also needs to be seen to give something in return. Although unwise, Mr Varoufakis's revelation about Mr Noonan's comments at last Thursday's Ecofin meeting are revealing. Mr Noonan apparently protested that ministers were being asked to participate in a discussion about Greece without being privy to the proposals being made. It indicates that the Government has concerns about how the whole process is being managed and that member countries are being kept out of the loop. The increasingly dominant role of Germany and the ECB in what is supposed to be a European Union is certainly a worry. We heard evidence at the Banking Inquiry last week about how Ireland was pushed into the bailout, with leaking from supposedly "official sources" used as part of the strategy. That raises genuine questions about democratic accountability. But the experience of Greece in recent months suggests Mr Noonan was right to make his protest privately at the meeting, rather than publicly as the BTTB would no doubt advocate. Overplaying our still relatively limited hand is going to benefit nobody.

While Mr Noonan and co seem to get that, they shouldn't be in any doubt that it's in Ireland's best interest that ultimately Greece is accommodated. The bond markets in recent weeks suggest Ireland is now viewed differently from the likes of Portugal, Spain and Italy. But nobody can be sure how the markets would react to a Grexit.

And any sense of conceit in Government Buildings at proving the BTTB wrong should be tempered by the worry that, like Greece, they themselves risk playing it a little fast and loose with our national finances. The suspicion is that Fine Gael and Labour are banking on the current benign conditions - low interest rates, a weak euro and a strong UK economy - to continue to drive the economy and fund extra spending and tax cuts.

We don't need the Greeks to tell us just how dangerous such assumptions can be. There's no room for complacency.

Shane Coleman presents the Sunday Show at 10am on Newstalk.com

Irish Independent

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