Fianna Fáil Finance spokesperson Michael McGrath has stated that the European Union needs to take heed of the election result in Greece and ensure that action is taken to allow Greece to retain its position as a full member of the Eurozone.
Deputy McGrath stated, “The idea has been put forward that there should be a European debt conference. There is considerable merit in this even though the Minister for Finance recently told me in a parliamentary reply that the idea had not been formally considered at this stage.
“Ireland’s direct need from such a debt conference would be very different to Greece. Our focus should be on the unresolved issue of the legacy bank debt. The government seem to have given up on pursuing the option of a retroactive recapitalisation of the Irish banks by the ESM. A conference at which both the sustainability and fairness of the debt burden being shouldered by European states would be considered gives the prospect of new impetus for dealing with this.
“The scale of the crisis facing Greece can be seen from their unemployment levels. The unemployment rate in Greece is 25.5%, four times what it was in 2008. The number of people aged between 15 and 24 out of work remains over 50%, having reached as high as 60%.
“Greek debt levels are regarded as unsustainable at over 170% Debt to GDP. It is likely that there will be some form of restructuring which stops short of a further write off. However, Greece needs more than just more loans and cheap loans over extended periods. Its situation is reaching the point where it needs something akin to the Marshall Aid plan which the US extended to Europe after the Second World War. Ireland itself benefitted from the programme at the time.
“If Greece is not assisted to develop a sustainable industrial base capable of generating foreign earnings for itself, then there is every reason to believe that the country will find itself within a short space of time again in the grip of a sovereign debt crisis. It is our view that the European Investment Bank should have a much expanded role to play in this regard.
“Apart from tourism, Greece has few sources of foreign earnings. It has a very small export sector and attracts minimal levels of foreign direct investment. Undoubtedly the reputational damage it has inflicted on itself has put off some overseas investors. The country needs to be assisted to develop sustainable employment opportunities so that its public finances can be underpinned in to the future. There are also still many actions that Greece can undertake to help itself. Its record of tax collection is still weak and structural reforms to the economy have been fudged. The plight of the Greek people requires decisive European action. There are no quick fixes but we should signal our determination to be part of the process.”