Banking Inquiry exposes lessons for the whole EU
ECB failed to act as lender of last resort and the European Council failed to show real political solidarity
Cllr. Mark Dearey, Green Party Finance Spokesperson, today responded to the publication of the Oireachtas Banking Inquiry report.
“We commend the effort that was taken by the members of the Oireachtas Banking Inquiry. Their work should have started and finished much earlier and they were constrained by Oireachtas rules, but their hearings and report confirm the broad outline set out in the existing Nyberg and Honohan reports as to what happened in our economic crisis.
“One of the most significant findings was the way in which the European institutions failed to manage the whole financial crisis in a coherent way. The European Central Bank, the Commission and the European Council have all questions to answer about the approach they took in dealing with successive Irish Governments.
“In particular the European Central Bank has questions to answer about why they twice threatened to withdraw emergency liquidity to the Irish banks should the state not ensure the full payment of senior bank bondholders. At these critical junctures the ECB failed to live up to its function of being a lender of last resort. That a key policy instrument was denied us by an institution of the EU is a shocking reminder of how the Union has been colonised by a monetarist philosophy, where member states are at the service of the markets, even when as in Ireland’s case we were completely committed to a trajectory of compliance with the annual deficit targets.
“Europe has been steered from its foundation by the Christian Democrats, who see market solutions as their guiding light, and Social Democrats, who have been seduced by those same solutions, despite their better instincts. The European People’s Party maintained control of the European Council right throughout the crisis and allowed the institution to become rubber stamp for decisions that involved bilateral agreements between larger member states. At the height of the crisis countries effected by their decisions were not properly informed of policy decisions that were being taken outside the normal institutional arrangements.
“Our party is a supporter of the Union but not when it breaks down and fails to act in a proper democratic manner. Greens see further integration of the EU as necessary if we are to effectively manage capital and meet the demands of climate change. But it is a Europe that rediscovers itself and agrees to an economic philosophy that asks real questions of the economic orthodoxy and provides protection for smaller states in the way the institutions of the Union are managed.
“If our leaders don’t understand that the heaviest price of the debt crisis has been the loss of legitimacy then the EU will gradually fall apart. We need a debate in the European Parliament as well as the Dáil if the real lessons from our crisis are to be learned.”