Euro crisis: “Ireland sees the same information from the troika about Greece”

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The answer to John’s title question is, again, NO!  As the respective spokesmen for European commissioner for economic and monetary affairs, Olli Rehn, and the German finance ministry explain in this Irish Times report

“On behalf of the commission, the leaks are regrettable,” said Amadeu Altafaj Tardio. “We insist that this is a draft and that we have a legal obligation to share the information that we receive from the authorities in Dublin with the member states. This is actually our mandate.”

Mr Tardio said budget information must be shared among EU states as part of the €85 billion bailout loan deal Ireland struck with the European Commissions, the European Central Bank  and the International Monetary Fund.

“Ireland sees the same information from the troika about Greece, for example,” he said.

In a later statement, the commission’s representation in Ireland said the documents “were not final and were not signed” by the Government. “Decisions on the budget have not been taken yet.”

It said as a member of the troika, the commission has a mandate to share all the relevant information with the governments.  “In the case of Germany, we understand there is a legal obligation to share this information with the budget committee of the Bundestag as it has a central role in deciding on these disbursements,” it added. “What happened there is the sole responsibility of the German authorities.”

Germany’s federal finance ministry confirmed yesterday that it had forwarded troika documents to the 41 member Bundestag budgetary committee in line with its legal obligation under European Financial Stability Facility guidelines.

Without this obligation to inform the Bundestag we are unable to pay the next tranche. To free up the next tranche today in Brussels we had to inform yesterday about the EFSF legislation,” said a finance ministry spokesman. [added emphasis]

Regardless of what the International Representative for west Belfast Louth may believe, that’s not “another example of how the sovereignty of this state has been handed over”.

And, as UTV reports

The Taoiseach, who is in Northern Ireland for a meeting of the North South Ministerial Council on Friday, insisted the plans are yet to be finalised.

“Let me confirm something to you, the Cabinet have made no decision in regard to the Budget,” Mr Kenny said. “It is on 6 December.

“It is only after the Cabinet make decisions that these things become a reality.”

The Irish Government remains free to set whatever budget it likes… but there are consequences.  That’s the political reality of the crisis in the eurozone.

But, as Henry Farrell points out at Crooked Timber

The politics of the bailout are embroiling the national politics of different European member states in ways that are likely to increase distrust and unhappiness in all of them. Nor is this going to get better without major institutional reforms at the EU level (assuming, of course, that the EU survives long enough to institute such reforms).

Skeptics of the need for ‘more Europe’ and in particular ‘more democratic Europe,’ have some excellent arguments. It’s extremely difficult to map out the political processes through which this could happen. But the ever-more-labyrinthine entwinement of different countries’ national economic politics with each other will be increasingly unbearable without some such changes. A Europe in which Germany is both the paymaster and the taskmaster is not going to be a happy Europe, either for Germany itself or for the countries entangled with it.

Indeed.  Although the politburo Frankfurt Group includes more than just German representatives.

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  • sherdy

    Enda Kenny is not being honest with his comments. Has he given that budgetary document to the troika with the caveat ‘this may not indicate what we intend to do in our budget’?
    If the document is not a statement of intent, will the Bundestag appreciate being given a worthless piece of paper – I don’t think so!
    If I have to judge whether he is telling the troika the truth or his own people, then I’m afraid the people of Ireland come a very distant second.
    Have you noticed the length of his nose lately?

  • Alias

    “In the case of Germany, we understand there is a legal obligation to share this information with the budget committee of the Bundestag as it has a central role in deciding on these disbursements.”

    If the Bundestag has “a has a central role in deciding on these disbursements” then it has a veto over the national budgets that must be submitted to it for their approval.

    If it thinks that a budget is not diverting enough of its revenue to German bondholders via either cuts in spending or increased taxes then it can link that issue to the disbursements. A government would, in practice, have to make any alteration to its national budget that was required by the Germans or come unstuck in the process of bailing out the eurosytem.

    So that’s being a tad disingenuous to declare that states have sovereignty here. Incidentally, Merkel wants to make all national budgets subject to EU approval. She wants the ECJ to have the power to declare national budgets null and void if, in the opinion of that EU institution, they fall foul of the stability and growth pact.

    The only thing stopping the EU from making the de facto surrender of national budget sovereignty de jure is Germany’s constitutional court insistance that ‘johhny foreigner’ should have zero role in determing the national budget.

  • Alias

    To come back to the issue of budget sovereignty: that ceased to exist when Ireland joined the eurozone, not when Ireland agreed to bail-out the eurosystem (or, according to EU spin, when the EU/IMF bailed-out Ireland). The budgets of all 17 members of the eurozone are subject to the terms of stability and growth pact. Since the SGP is part of the Maastricht/Lisbon treaty, it is subject to the ECJ. Up to now, that loss of national budget sovereignty has been enforced by the EC and Council of Ministers by fines and frowns, etc. If, as Merkel wants, it is enforced by the ECJ then it becomes a matter of instant EU law that takes precedence over national law. As the SGP is quite limited in stipulation but very broad in intent that is the basis by which the ECJ can expand the specifics of it to fical control way beyond budget deficit and limits on national debt.

  • http://redfellow.blogspot.com Malcolm Redfellow

    As a necessary aside, consider Blanchflower’s piece for the New Statesman [http://www.newstatesman.com/economy/2011/11/eurozone-bank-government] suggesting there could have been an imminent, but covered-up near-collapse of a major European bank about two months back.

    Hence panic in high places.

    It’s speculative, but might explain a lot.

  • John Ó Néill

    Pete, as Alias has pointed out, I think you’ll find that Germany is legally obliged to have sight of the the government’s draft budget proposals (and by doing so authorise, or not, the next tranche of funding). The breach in ettiquette here appears to be that it is not polite to say so in public. Obviously one of the members of the Bundestag’s finance committee thought it would be appropriate to publicly remind the Irish government that this is the case, presumably on foot of the the public position the Taoiseach was adopting after his jaunt to Berlin earlier in the week. So the answer to the other thread is still YES.

  • Pete Baker

    John

    “I think you’ll find that Germany is legally obliged to have sight of the the government’s draft budget proposals”

    Everybody gets sight of them. Just as everybody gets sight of Greece’s.

    In a later statement, the commission’s representation in Ireland said the documents “were not final and were not signed” by the Government. “Decisions on the budget have not been taken yet.”

    It said as a member of the troika, the commission has a mandate to share all the relevant information with the governments. “In the case of Germany, we understand there is a legal obligation [on the German Government] to share this information with the budget committee of the Bundestag as it has a central role in deciding on these disbursements,” it added.

    The Irish Government retains the ability to set whatever budget it wishes.

    Just as Greece does, btw.

    The fact that draft proposals subsequently get discussed by the Bundestag committee, or that Germany could vote to withhold the next tranche of bailout funds, is secondary to that issue.

    The commitments on austerity measures/economy to secure the bailout funds have already been made to the troika.

    Implementing those measures is merely meeting the freely entered into conditions of the loan.

    But it’s the Frankfurt Group who are the power-brokers.

    So the answer to the other thread is still NO.

  • John Ó Néill

    Ireland and Greece can view each others proposals all they want. Germany, on the other hand, can veto them. That is the fundamental difference (that this episode was intended to make clear).

  • Pete Baker

    “Germany, on the other hand, can veto them.”

    No, it can’t.

    That’s the fundamental detail here.

  • Alias

    “The fact that draft proposals subsequently get discussed by the Bundestag committee, or that Germany could vote to withhold the next tranche of bailout funds, is secondary to that issue.”

    True, in the same way that someone holding a gun to your head and telling you to jump off a bridge is not actually making the decision for you. The decision remains with you: jump and take your chances, or don’t jump and get shot in the head.

    They don’t demand to see your budget because it beats reading Bild Zeitung on a Saturday. They demand to see it because they want to know that you are implementing their agenda, and they want to tell you how you can do better.

    The reason the Greeks get to see it too is simply so that the Germans and the EU can deny that Ms Merkel is the de facto Taoiseach. The Greeks can make any suggestion they like and no one in the department of finance will give a toss. On the other hand, when the Germans tell them to do better they do better…

    No major German bank has a leverage ratio of less than 52. That means that a loss of just 2% of the value of a major German bank’s assets is enough to wipe out all of its capital and render it legally insolvent. It’s no wonder the Germans are utterly terrified about sovereign default and systemic risk: once it starts, Germany begins its return to the Dark Ages.

  • DC
  • http://redfellow.blogspot.com Malcolm Redfellow

    Now, should we also consider, had Ireland, Greece, Spain and Portugal followed monetary policies advocated by the Bundesbank – but not enforced (as the German electorate were induced to expect) -throughout the ’90s, whether things would have been so badly handled?

    Moreover, if the 27 (not just the €-zone) are to get out of this slough of despond, it’ll need a lot more of the same collectivism. Even Mervyn King is singing from that song-sheet.

    By the way, this iPad thing isn’t working for me. Hence the unaccustomed brevity.

  • Alias

    Or perhaps they should admit that the economic case for a single currency (a few fees saved in transation charges) was a pretty dumb basis for a single currency in the first place?

  • gréagóir o frainclín

    Question: What’s the Capital of Ireland?

    Answer: Berlin!

    Dunno why some folks get their knickers in a twist about Berlin’s involvement in Ireland’s upcoming budget, after all our economic sovereignty is gone, so only right that paymasters call the shots with spendthrifts.

    BTW, Gerry Adam’s German is as bad as his Irish!