Sir, – A Leavy (February 6th) is wrong if he thinks that the euro crisis was caused by domestic mismanagement. The euro zone crisis was caused in no small part by the decision of the Irish government to transfer the debts of the private sector banking system over to the Irish taxpayer, in addition to the burden we were facing as a result of domestic issues.
Both Greece and Ireland have applied sufficient austerity so that both have a primary surplus in terms of the fact both raise more in tax to cover the cost of running the country. The problem arises when you then add back the cost of servicing the element of national debt solely related to the banking sector. In Ireland’s case it comes to over €3.5 billion a year in interest alone, while in Greece the cost of the banking part of its national debt is over €6 billion a year.
If that portion of national debt was Europeanised, the way it should have been from the start, then Greece and Ireland could continue to focus on domestic reforms to get their economies working again.
It is incorrect to use the term “Greek debt” and not understand that Greece is not seeking to avoid paying the debt incurred to run the country, nor is the new Greek government in denial about the decades of cronyism and tax avoidance by the self-employed, professional and middle classes, or the endemic cronyism and corruption within Greece.
All it seeks is the basic fairness that other euro zone member states also face up to the role they played by encouraging their banks to continue reckless lending.
Let’s not forget either that for all the patronising talk from Germany about living within your means, it was Germany itself that was the first EU country to breach the terms of the growth and stability pact and when the EU attempted to apply the sanctions for breaking the rules, it was Germany, aided by France, that forced the rules to be changed so it could avoid being held to account.
So a bit less superiority from Germany and a bit less denial about the role it played in creating this crisis wouldn’t go amiss either. – Yours, etc
DESMOND FitzGERALD,
Canary Wharf,
London.