As the article in yesterday’s Irish Times by Professor Morgan Kelly of University College Dublin demonstrates, there is now growing scepticism as to whether the EU/IMF ‘bailout’ of Ireland is sustainable, and whether the debt levels taken on by the Irish taxpayer can possibly ever be discharged. Just as we are facing up to this, we learn that the Greek bailout has run into trouble, and that talks are under way on the possible restructuring of Greece’s debts. In this setting it may or may not be the case – depending on whether you believe the claims and/or the denials – that Greece is contemplating leaving the Euro. A further ingredient in this unstable cocktail is the impact of all of this on the Euro’s exchange rate, which right now is at wholly unrealistic levels.
If public confidence in Ireland and elsewhere in the European response to the debt crises is to be maintained or restored, the terms of the bailouts need to be re-assessed. This is all the more important because the curtain on the really big shows has not yet been raised; I am not just referring to Spain, but also to Italy, where there are major (and so far largely undiscussed) financial issues. The suggestion that the Greeks, the Irish and the Portuguese are being sacrificed in order to save the larger Mediterranean countries could yet produce explosive results.
For the moment all the talk is about banks, debts, currency and budgets. Bubbling under, but not yet explicit, there could be a much trickier discussion about the nature, purpose and ethos of the European Union. The financial issues need to be addressed and the impact on the countries affected so far needs to be re-assessed in order to avoid much more fundamental problems for the whole European project. That project must be shown to be about something more than just protecting the balance sheets of German banks. There is much at stake.