MINISTER FOR Finance Michael Noonan has said the Van Rompuy “road map” for Europe could have been a solution 12 months ago, but was still a good starting point for resolving the current crisis.
He also said he was confident a resolution could be reached at the European summit if Germany lifted its opposition to mutualising debt. Speaking at a conference in NUI Galway (NUIG) yesterday, Mr Noonan said he believed Germany’s approach to mutualisation may be a negotiating strategy rather than true opposition.
He believed Germany would move once it secured agreement on a legal guarantee that countries would abide by fiscal rules.
However, action on the Spanish and Italian situations was required immediately, he added.
Earlier, Mr Noonan told the NUIG conference on international and national perspectives on the financial crisis that there would be no “good result” from the summit unless European leaders agreed a mid-term plan.
The four-step plan on an integrated financial framework was outlined this week by European Council president Herman Van Rompuy.
Canadian finance minister James Flaherty said he believed from his G7 contact that Germany was committed to the euro, but it needed to take a leadership role.
Euro zone countries needed to “overwhelm” the issue, as the US government had previously done to stabilise markets, Mr Flaherty said. “Markets don’t respond to small measures . . . and we know that the incremental approach of the last three to four years has failed.”
Mr Flaherty, who is due to receive an NUIG honorary doctorate today, praised the policies pursued by the Irish Government.
Referring to banks, he said he was less interested in regulation than in supervision as banks that had been regulated had still failed.
NUIG economist Dr Alan Ahearne, former adviser to the late finance minister Brian Lenihan and director of NUIG’s new Centre for the Study of Irish Economic Policy, warned the euro was “heading towards a cliff” unless growth resumed.
“The US is a proper fully-fledged monetary union, as is Canada,” Dr Ahearne noted, while the euro zone was a “collection of distinct sovereign political and financial systems that share a common currency, and a crucial underlying cause of the crisis in the euro is the lack a banking union”. This had resulted in a “toxic inter-relationship between state finances and the banking sector”.
