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Greece should take Ireland's 'middle road' on debt - not the 'nuclear option'

The Finance Minister was interviewed on Bloomberg about the future of the eurozone and other things…

Image: Bloomberg

GREECE SHOULD FOLLOW Ireland’s lead of negotiating its way through financial crisis – rather than demanding the “nuclear option” of writing off debt or ditching the euro, Michael Noonan has said.

But the Finance Minister believes the eurozone will be “in a reasonably good place” in six months after the new Greek government dropped its hardline, pre-election stance on not dealing with its bailout lenders.

In a wide-ranging interview at Bloomberg’s London studios, Noonan said there was a “middle road” for countries wrestling unsustainable debts and that was to take Ireland’s approach of agreeing deals for interest relief and other concessions.

“You negotiate to make your debt more sustainable even without getting debt write-offs,” he said.

Last week former IMF chief of mission to Ireland Ashoka Mody said the government had “absolutely” missed an opportunity to secure a debt writedown deal from the troika in 2010.

Hot talks are cooling

Noonan, who was in Brussels last week for talks between finance ministers from Greece and other European countries, said the discussions were “heated” but they cooled once the Syriza administration backed down on its earlier demands.

“They campaigned on the basis that they were abandoning all programmes … so once they had agreed under certain conditions the discussion became on the conditionality,” he said.

There are a number of moving parts and it’s a question of agreeing on the parts that move to make the debt more sustainable.”

Belgium EU Finance MInisters Source: Geert Vanden Wijngaert

Greece has put together proposals including reviewing government spending, maintaining privatisation moves already in the pipeline and improving efficiency in return for a fourth-month extension on its troika-led bailout programme.

Noonan said the eurozone was now much better ring-fenced from the “contagion effects” of one country leaving the common currency than it had been only three ago.

“There is the view that the euro was kind of a flawed financial project when it was initiated because it was driven for political considerations and the architecture to underpin a common currency zone is being retrofitted,” he said.

The reason why people are of the view now that the contagion effects coming from one country aren’t as strong as they were three years ago is because the eurozone is underpinned now by real financial measures and regulations, and I think that evaluation is probably correct.”

On AIB and Aer Lingus

Noonan was also quizzed on the planned sale of the government’s 99.8% stake in AIB. He said it would offload no more than a quarter of its shareholding either late this year or early in 2016.

He was tight-lipped when asked about IAG’s bid for Aer Lingus, which has been looking increasingly shaky after running into political turbulence over the government’s 25% holding.

“A deal certainly isn’t off the table,” he said.

READ: Noonan reckons the Greek finance minister is ‘a bit of a rock star’ >

READ: Austerity is finally, officially, totally, absolutely finished: Noonan >

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About the author:

Peter Bodkin  / Editor, Fora

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