Greek crisis shows need to reform elements of EU mechanisms
Some two weeks ago when the Euro loan facility was first introduced, it was suggested it was a godsend that the Government could lend to Greece at a higher rate than the rate it would have to borrow the money. I was glad this argument did not feature in the Dáil. I was beginning to wonder if that were the case, why were we not borrowing money from the international markets to lend to countries in difficulty all the time and, accordingly, solving many of our own problems. I am glad this argument was abandoned, as no one in his or her right mind would argue this is some process in which we want to be involved.
This loan facility is about showing solidarity among members of the eurozone. It is not the solidarity we had in mind when we joined the euro or the European Union. None of us expected solidarity would require us to dig deep in our own pockets for others. However, that is what has occurred. This solidarity is predicated mainly on a sense of “There but for the grace of God go we”. There is a certain vested interest in this solidarity, as we might face the same fate as the Greeks in the future.
This so-called bailout for Greece could be transformative for the entire eurozone. However, we should rise above that particular level of discussion and argument, true and all as it may be, and start to contemplate and consider the real transformation this will likely bring, ultimately, to the whole nature of the European project, to the eurozone and to the mechanisms that have been deployed to date through the Stability and Growth Pact and elsewhere. It appears as if the Stability and Growth Pact is finished as a real mechanism or as a mechanism with credibility in any sense or one which can be restored to any level of credibility. A more complex set of measures must be agreed and imposed throughout the eurozone to achieve the type of convergence and economic co-operation or cohabitation among different economies within what is, essentially, a single currency, but also a unified economic system. There is no doubt that the mechanisms put in place at the beginning have been found wanting and that they appear to have collapsed. A meeting tomorrow of the ECOFIN Ministers takes place today to examine the implications for the future of what has occurred and to begin to ask questions about what new mechanisms should be put in place. This must be considered. It should lead to a broader political debate in this country as well regarding what we can expect in future.
Last week, there was a skirmish about sovereignty. People got very excited on the Government side at the point made by the leader of the Fine Gael Party to the effect that there was a threat to Irish sovereignty in respect of several instruments such as corporation tax. We must see beyond a reactive debate when someone makes such a remark. We must all understand there is no question but that the character of the relationship between an individual country and the eurozone will change and there will be a great political battle about this in the coming years.
Let us consider what the Germans are saying and what they wish to see take place and the changes they wish to see brought about. I realise it will be a matter for negotiation but Germany is a very powerful country and it is doling out a high percentage of money in respect of the measure for Greece. We can expect it to seek fundamental change. It may be that fundamental change is necessary. Various types of issues will arise in future. The issues of tax measures or monitoring of budgets by the European Commission are simply the beginning in terms of the demands for change that will be made by some of our partners. We should begin to hold the debate here about how we propose to respond. It is not enough simply to fold our arms and maintain we will not budge on this or that. That is not enough. I do not maintain for one minute that I agree with any of the proposals touted, either by the Germans or otherwise, but they will be the subject of debate. The last thing I seek is for an Irish Minister to go to a Council meeting in Europe, or some other such body, in three or five years time, only to return and announce a package of measures without a proper debate in this country prior to any such undertakings being given or such agreements being reached.
That was part of the problem with the Lisbon treaty. Too much of the discussion and debate occurred, essentially, behind closed doors and before there was an opportunity for it to be ventilated in public. Then we were left in a situation in which people had to defend something about which there was never any real debate in advance. However, I have no wish to go back to that issue. I am interested in the mechanism or methodology of the debate and a consideration of the ways in which this Parliament could be involved now in the debate about how the euro and the eurozone evolve if they survive – I believe they will – and what measures must be taken to ensure the failure to recognise the mismatch of economies that existed at the start of the project is addressed in a credible way and in a way we can support.
We must consider how to go beyond the narrative of fiscal discipline. I do not maintain that I am not in favour of fiscal discipline but this debate is not simply about fiscal discipline. Government representatives referred to the fact that we have performed well, that we have demonstrated to our European partners that we have turned a corner and that we are doing what we are bid do and what is expected of us, to use the words of the Taoiseach last week. That is simply not good enough. As I have stated before, fiscal discipline is a necessary part of what must be done, but as a policy it is not sufficient to be able to say to our European partners when we go to Brussels that we are dealing with the fiscal end of matters. We must have a strategy for growth.
I am very critical of the Government for seeming to reduce the debate about our economic future to how and in what manner we reduce the deficit. That is only one element of what we must do. I am critical of the Commission as well for failing to bring forward a robust set of policies in respect of growth in the eurozone, which is necessary and we constantly maintain as much on this side of the House. That is the way to bring the public along and to bring about some sense of renewed national solidarity in the country. It is not good enough for the Minister to hold that because the people he meets in Brussels maintain he and the Government are doing a great job that somehow it is the end of the matter. The test will be how we turn the corner but not only in the eyes of the markets, ratings agencies or the colleagues of the Minister for Finance when they sit down for dinner tonight. The test will be the view of the people, what they experience in their daily lives and their working lives, if they have jobs. The test will be their view of the future and their considerable desire to be part of the solution to this problem, not simply to continue to be victims of a policy determined elsewhere. This will require a new sense of national purpose. Frankly, I do not believe this will happen without a change of Government.
I do not blame my colleagues on the government side for doing so, but they continue to come to the House and refer to change and green shoots. I have no difficulty with this and I hope there are green shoots; the bigger and the sooner, the better. However, the central element of the political debate in the future, whether at election time or another stage, will not be the extent to which there is growth abroad from which we benefit, but the legacy of what has occurred in the past 15 years. We will continue to have the bill for that. We will continue to have the bills for Anglo Irish Bank and the other banks, whether there is 0%, 1%, 3%, 5% or 8% growth. Even if we return to the heady days of 9% or 10% growth, we will still have to pay that bill. It represents a massive albatross around our necks for the future and there must be a political reckoning about it, how it occurred, why it occurred and who is responsible. No Government spokesperson can get away from that central fact, even if he or she wishes to inform us about the green shoots, which we welcome and which we are greatly pleased to see.
In addition to dealing with the immediate problem of Greece, this Parliament must be part of the debate on the future of the euro and the European project. Although we are a small country and relatively insignificant in terms of numbers and wealth, we must hold the debate. We should be driving the debate and we should attempt to pick up on the type of debate that took place at the very end of the Lisbon treaty debate, due in some part to Senator Paschal Donohoe and his sub-committee. This could help to push some life back into such a debate. We must resume that debate and hold a discussion about the perspective we seek for the future, where we fit into this great project and how we will respond to the undoubted pressures that we will come under when the Stability and Growth Pact 2 emerges. There is no question but that the Stability and Growth Pact 2 is coming down the line and I have no wish for us to be a victim of something. We should be a party to the debate on how that will take shape.