GREECE’S RESOUNDING NO to the terms of an international bailout last night prompts even more questions than we had next week.
The country’s status in the eurozone is now more uncertain than ever before. The hard-left Syriza government argues it has got an endorsement from its people to renegotiate its bailout and, crucially, secure relief on its €320 billion debt pile.
Talks between Greek government officials and their creditors over the next 48 hours will be crucial. But what impact does the No vote have on Ireland?
As the result became clear last night, Finance Minister Michael Noonan wasn’t exactly welcoming the turn of events.
In a brief statement, he noted the result and said that he hoped it provided a basis for Greece continuing discussions with fellow EU members.
“Ireland will continue to engage in an effort to reach a successful conclusion to negotiations,” he said.
On RTÉ’s Morning Ireland, European Affairs Minister Dara Murphy said that Ireland’s position was the same now as it was before the referendum. However it was noticeable that the tone of the government’s rhetoric has softened somewhat. He said:
We’ve always had the view that debt relief, debt reprofiling would have to be part of an agreement once there was reforms and Greece comes up with a programme of reforms that would actually allow their economy to recover.
In a statement last night, Fine Gael MEP Brian Hayes, who has been hardline on the issue, said that the result must be respected by Europe and its leaders.
This is a strikingly different tone to Taoiseach Enda Kenny’s blunt “No” when asked if Ireland would support debt relief for Greece late last month in the midst of a series of crisis summits in Brussels.
Government ministers here have consistently said they have much sympathy for the Greek people while castigating their leaders for what’s been described in various quarters as their irresponsible approach to negotiations with lenders.
Irresponsible it may well be but the Greek people have overwhelmingly endorsed their government’s position in the last 24 hours.
Socialist/Anti-Austerity Alliance TD Paul Murphy believes the essential elements of any deal are now clear:
No deal that doesn’t involve significant debt reduction and a lifting of crushing austerity will be accepted.”
Greek prime minister Alexis Tsipras will return to Brussels talks buoyed by the result but also in the knowledge that a quick resolution to this impasse is vital to ensuring that his country’s banks start operating normally again.
He appears to have given an early concession by effectively jettisoning his unpopular (to the creditors at least) finance minister Yanis Varoufakis.
The flamboyant economist said in his resignation statement that his departure was an idea Tsipras felt would be “potentially helpful to him in reaching an agreement”.
So, in short, the situation is hugely uncertain right now and so the impact of last night’s vote on Ireland is far from clear.
If Greece does exit the euro the contagion effect that we fretted about three or four years ago is not as big now. But don’t be fooled into thinking there would not be an impact on the Irish economy from a so-called ‘Grexit’.
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Far from Michael Noonan’s infamous ‘feta cheese’ remark, Brian Hayes pointed out last week 1.4% of our GDP is exposed to the crisis through both bilateral loans and the Irish guarantees on ECB loans to keep Greek banks alive.
“While our trade links to Greece [are] small – we are on the hook like every other eurozone country if Greece defaults to the ECB,” he explained.
Greece owes Ireland €350 million that was provided through bilateral loans as part of the bailout programme. However, the total exposure that Ireland has to Greece is in the order of €2.6 billion which equates to 1.4% of GDP.
One other thing to note, the backing of the Syriza position is a tonic to Sinn Féin and the hard-left in Ireland.
Far from distancing themselves from Syriza – as the traditional political parties have claimed in recent days – the party’s finance spokesperson Pearse Doherty spent the weekend in Athens.
Just as the Greek people have re-endorsed the mandate of its left-wing government, Sinn Féin will hope to win a similar endorsement from the Irish people at the next general election.
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