Monday, 28 May 2012

Interview by Dermot Murnaghan for Sky News

ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS
DERMOT MURNAGHAN: Now then, on Thursday the people of Ireland will be offered a choice to accept or reject stricter European plans for stricter budget disciplines. According to the latest polls the yes campaign is in the lead but opponents say the plans have no social or economic merit. Well joining me now from just outside Dublin is the former Prime Minister of Ireland, John Bruton, a very good morning to you Mr Bruton. Does Ireland feel the weight of European responsibility lying on its shoulders? If it should vote no, the implications for the euro could be dire.
JOHN BRUTON: Not really. In this case it will be enough for 12 of the 17 countries of the eurozone to vote yes to the Fiscal Compact for it to come in to effect so unless previous EU treaties, Ireland is not essential. On the other hand I think it is in Ireland’s interests to vote yes because that would give us the possibility of applying for funds from the European Civility Mechanism if we need them. It would also incorporate into our own domestic rules, better balanced budget controls on the government, to prevent governments – particularly in boom times – spending money that they ought not to spend and borrowing money that they ought not to borrow. The controls contained in this document are mainly to do with internal controls in Ireland rather than EU controls which exist anyway and they will I think be particularly applicable in boom times rather than in times of difficulty when you have to cut back anyway because you can’t borrow the money.
DM: The poll I referred to also tells us something interesting about Irish political life in that it seems on this issue to be dividing more than it has done in the past along class lines in that those more tending to vote no are those suffering most from austerity and recession, those at the bottom of the economic pile.
JB: I think that’s true, the polls seem to suggest that that is the case although in the last week, I think among people of the less well-off socio-economic group there has been an increase in the yes support in that camp because I think they realise that if we have to go for a second bail out, that would be a lot of it to support social welfare and healthcare schemes that benefit the less well-off people more than they benefit other people and obviously if we were cut off from funds, the people who would be first to suffer would be the least well-off. I think that message is beginning to percolate right across the community at this point.
DM: Does that tell us that those people minded, and I see on third of the electorate is still undecided, those people minded to vote no are stick of this tag that has been hung round Ireland’s neck of the poster boy for austerity, they may be beginning to feel that the Greeks are right and say let’s not take it any more, it doesn’t have to be this way?
JB: Well I think the truth of the matter is Ireland is doing well not because of austerity but in spite of austerity. We are doing well because we have a very big foreign direct investment base in this country, we are the leading attractor of foreign investment in the world, certainly in Europe, and that’s keeping our economy healthy. I think that that is something that depends very much on us being part of the European project, people invest here from America, from China, from other countries like that, because we are a fully subscribed member of the European Union. If we were to cast in doubt our commitment to the disciplines of the European Union and the euro, that would have an adverse effect on foreign direct investment which would have an immediate adverse effect on interest rates and on job creation here in this country
DM: Well leaving aside the referendum there, if Greece should exit the euro or be forced out of the euro, it’s said that this could spark a domino effect. Do you think that Ireland could be ejected from the euro or is it irrevocable, its membership?
JB: Well, legally it is not possible to eject a country from the euro. A country might decide that it had to leave but I don't think it’s likely that Greece will leave in the end because the effects on Greece would be so enormous, there would be an immediate four percentage point drop in the Greek gross domestic product, on top of all the drops that have occurred already, in the immediate effect of their leaving. If that were to lead to a break-up of the eurozone, you could have up to a twelve percent drop in income right across the eurozone, with the biggest sufferers actually not even being Greece but being Germany and France and, of course, Ireland. So I think keeping the eurozone together is a very, very high priority but clearly you have got to do that on a basis that you’re not simply giving money that is being poured down a black hole which never will come up again, you’ve got to have some controls or guarantees both in European law and in domestic law and what the fiscal compact treaty does is insist that we put it into our domestic law as well as relying on European controls which are there already under existing treaties.
DM: Just briefly, do you have any sympathy with people, maybe just to cause mischief, who have been saying in Ireland maybe you would have been better staying linked to sterling as you were forty years or so ago?
JB: Well at that time we had a situation where interest rate policy was determined in London without any Irish input and we went up and down with the fortunes of whatever suited the British economy as decided by people in Britain over which we had no say. In the eurozone we are one of 17 countries therefore we don’t determine the policy but we do have a say, we have representation in the European Central Bank, representation in the European Commission, in the European Parliament so we have more control, not complete control but more control of our economic future as a member of the eurozone than we would have if we were simply to unilaterally link ourselves to sterling and accept whatever was decided in London.
DM: Okay, Mr Bruton, thank you very much indeed for your time. John Bruton there with his thoughts on the referendum.

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