EUROPE:THERE SHOULD be a more balanced debate on European issues which is not based exclusively on national interests, the MacGill Summer School has been told.
This was the theme of a lecture yesterday by Prof Donal Donovan of the University of Limerick, a former deputy director of the International Monetary Fund.
Recalling a remark this year by the late Dr Garret FitzGerald, that Irish-EU relations were at their “lowest point” since EU accession in 1972, Dr Donovan noted the general level of anti-European rhetoric in Ireland had risen, particularly in the popular media.
This was somewhat surprising in view of the fact the EU was providing two-thirds of the bailout funds to Ireland, while the European Central Bank (ECB) was separately funding the Irish banking system by about €150 billion.
The decision to join the euro area in the early 1990s did not seem to occasion a great deal of debate. The benefits were highlighted, but less attention was paid to the responsibilities attached.
The fact that within the euro area, financial regulation would remain a national prerogative, was not seen as any cause for concern.
Since the crisis broke, it had been suggested that Ireland seemed to be interested in pursuing Irish interests almost exclusively. An image was created of the Irish as “slightly half-hearted Europeans”, which was bound to haunt us when the crunch came.
The lack of control at EU level contributed to the fiscal disaster, he said. The decision to leave financial regulatory policy in the hands of national authorities left the euro area fatally vulnerable to the kind of regulatory meltdown that occurred in Ireland and, to some extent, elsewhere.
Ireland was not urging tighter centralised control over national budgetary policies and so, in this respect, we could be thought of as jointly sharing responsibility, Prof Donovan added.
At the time of the bank guarantee decision of September 29th, 2008, in theory the ECB could have supported the granting of emergency lending to prevent the looming run on Irish banks.
There was no indication that in the days leading up to September 29th, the Irish authorities sought – or were encouraged to seek – large-scale lending aid as an alternative.
Governor of the Central Bank of Denmark Per Callesen compared the economic and fiscal situation in Ireland and his own country.
“Your recession will take longer to get out of,” he said, adding that Ireland should consider adopting the Danish mortgage system as an alternative, with its inbuilt precautionary features.
