EU rescue package - Deal needs to dissuade speculators

ONE of rugby’s more articulate and qualified commentators – the great Australian out-half Michael Lynagh – once said during a preview of one of Munster’s European Cup do-or-die extravaganzas that hope had no place in professional sport.

Yet, this fine May morning, we are left with little more than hope that the support package proposed last evening by the European Union’s 27 finance ministers in Brussels will ring-fence the Greek debt crisis and restore a degree of stability to the 16-country eurozone. We can only hope that it displays the kind of tough solidarity that will dissuade speculation against the weaker EU economies, Ireland’s included.

The scale of the crisis was put in context by an intervention from President Barack Obama who said that he was “very concerned” and stressed that stabilising Greece was vital for both Europe’s and the United States’ economic wellbeing. France’s president Sarkozy echoed remarks made by German chancellor Angela Merkel when he said: “The eurozone is going through the worst crisis since its creation.”

Economic instability is reflected in political instability as Chancellor Merkel fought yesterday to defend her majority in Germany’s upper house of parliament as North Rhine-Westphalia, the country’s most populous state, went to the polls. Ms Merkel’s federal coalition has lost popularity. Constant squabbling and the growing challenge posed by the Greek debt are the primary reasons. The vote for the state legislature in North Rhine-Westphalia, a region including Cologne, Dusseldorf and the industrial Ruhr area, where more than 13 million people are eligible to vote, is a major test.

Defeat for Ms Merkel, or a substantial reduction in her authority, may make it even more difficult to sustain a commitment to EU solidarity amongst increasingly uneasy German taxpayers.

Britain has already nailed its colours to the mast by declaring, in its splendidly isolationist eccentricity, that they will not underwrite the bailout fund. This represents spectacular bravado from a country with a €190 billion deficit of its own and the probability of a coalition government too feeble to introduce the dramatic cuts in public expenditure needed to confront its budgetary crisis. Let us hope, for their sakes, that they do not have to seek help to defend their battered economy.

Speaking over the weekend former EU commission and Goldman Sachs venerable Peter Sutherland sounded a cautious note of optimism. He pointed out we – our Government – have been very successful in differentiating ourselves from Greece in the perception of international markets. He did caution though that this distinction extended only to our response but not to our position. Our finances are almost as chaotic as the Greeks’, but we have been more realistic in taking our medicine. Mr Sutherland also reminded us all of what we already know, but may prefer to forget. Any steps taken so far are just a beginning in an ongoing, a difficult and constantly renewing process of realignment.

Let us hope – once again – that the Brussels package offers the kind of possibility, comfort and optimism that will make that pain worthwhile.