Greece’s hour of need - We’ve a lot to do to avoid a similar fate
He hoped the move will pull his country out of a crisis brought on by spiralling debt and simmering social unrest provoked by the terrible situation.
This represents an unprecedented test of the euro’s stability and European political cohesion. It may be the sternest test of European solidarity since the European Union was created so many years ago.
However sternly it tests wider Europe it will bring greater challenges to the Greek people. They have shown a capacity for protest and may not willingly accept reform, wage and welfare cuts imposed from outside of their country.
How wonderful it would be if we could be certain, or even confident, that Greece will be the only eurozone state that will have to make such a request.
How reassuring it would be if we could be certain that this is not the start of a domino-effect crisis that will cast a cloud over all our lives.
How wonderful it would be if we could be certain that Germany will continue to be the cornerstone of EU aid packages, even if Spain, with an economy five times the size of Greece, was unfortunate enough to be next in line with such a request. How wonderful it would be if we could be certain that this is not a tipping point moment towards a two-tier EU withIreland playing in the second division.
How wonderful it would be if we could believe that we can still avoid such a predicament despite the fact that we recorded — for whatever reasons — the biggest fiscal deficit, 14.3% of GDP, in the EU last year. No matter how assuredly Government ministers tell us that we have attained this dubious distinction through nothing more malign than revised accounting procedures this is a worrying moment.
The figures may be too worrying to contemplate but they are undeniable. If, as is widely accepted, it costs around €30bn to rescue Irish banks that figure must be compared to the €20bn it costs in borrowings to bridge the gap between taxation and public spending every 12 months.
Our worst-in-Europe budget deficit amounts to a bank rescue every 18 months. In that context it’s impossible to dismiss the suggestion that, if things deteriorate even moderately, that Taoiseach Brian Cowen might have to follow Mr Papandreou’s lead.
We are not at the point yet though we cannot pretend that it is not a possibility though the positive response from various ratings agencies and the European Central Bank to measures taken offer some reassurance.
It is worrying too, as was pointed out in the Dáil by Michael Noonan this week. It is foolish to expect a new regulatory regime to work while bankers untainted by the failures that got us into this mess remain in place. That principle applies equally to politicians.
Even if we fail to remove those culpable for our desperate situation from the highest levels of politics and banking it is possible that we might face the same fate as Greece. Without considerable sacrifice, social solidarity, imagination and the best of Irish luck it is a real possibility.
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