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Sunday 17 December 2017

Dan White: Any Greek deal would make for a tough FG election

Minister for Finance Michael Noonan
Minister for Finance Michael Noonan

Ever since the Government was elected four years ago it has ensured that Ireland was always the best boy in the Eurozone bailout class.

Pre-election guff from then Labour leader Eamon Gilmore (remember him?) about "Labour's way or Frankfurt's way" was quickly jettisoned in favour of toeing the Troika line.

In fairness to the Coalition, this policy hasn't been a complete waste of time.

We exited the bailout at the end of 2013 without a backstop, the interest on our Troika loans was slashed and the €32bn cost of fixing the Anglo mess was pushed out into the far future through the promissory notes mechanism.

Even better, the economy is growing once again and unemployment is falling. Unfortunately for the Government, voters aren't impressed.

There is still a deep feeling of anger at the fact that the ECB strong-armed this country into paying the unsecured bondholders of the Irish banks.

As we're all too aware, our grandchildren will be paying the cost for this piece of financial blackguardism.

Why didn't we stand up to the bullyboys in Brussels and Frankfurt?

The Government line is that with this country locked out of the international bond markets and the Irish banks dependent on ECB funds to stay open, it had no choice.

grievance

This argument is not without merit. Ireland is now in an immeasurably better place than it was four years ago. We can borrow from the bond markets at extremely low interest rates - indeed, the Irish Government has repaid some of its loans from the Troika and replaced them with lower-interest bonds instead.

All true no doubt, but the sense of grievance at how we were treated by the ECB and the EU in 2010 and 2011 still lingers.

Now Greece, which has consistently been by far the worst-behaved pupil in the bailout class, is threatening to make our sacrifices of the past four years irrelevant.

The newly-elected far-left Syriza is determined not to play by the rules, insisting on a major write-down of Greece's €320bn debt.

So far the other Eurozone countries, including Ireland, are hanging tough.

Finance Minister Michael Noonan (inset) said that he was "pessimistic" about Greece's chances of securing agreement on a debt write-down. As well he might.

If Syriza can secure a meaningful deal then serious questions will have to be asked about how this Government and its predecessor dealt with the Troika.

With an election due by April 8, 2016 at the latest, the Coalition will be running on its economic record.

The narrative will be one of competence. The message to voters will be: You can trust us to run Ireland Inc. Give us another term.

A Greek debt write-down would destroy this narrative. Rightly or wrongly, the opposition parties would argue that the sacrifices the Irish people have endured since 2008, a cumulative €30bn in public spending cuts and tax increases, have been in vain.

Why didn't we stand up to the Brussels and Frankfurt bullyboys in the same way that the Greeks did? All of the old resentments would rise to the surface once again.

Enda Kenny and Michael Noonan are only too aware of the impact that a Greek debt write-down would have on their electoral prospects next year.

opponents

That is why Ireland, along with the other peripheral Eurozone countries such as Spain and Italy, are among the strongest opponents of any debt forgiveness for the Greeks.

A major Greek debt write-down would render the Coalition's already slim chances of re-election in 2016 virtually impossible.

Irish ministers will be hoping Germany, which has up to now opposed a Greek debt write-down, sticks to its guns even at the cost of Greece leaving the euro.

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