Greece

Lord Higgins Excerpts

Monday 29th June 2015 Lords Chamber

[Lord Ashton of Hyde]

I agree that we should do what we can, but it is fundamentally a eurozone problem. There is a limited amount we can do. In terms of the bailout, we would not be on the hook for that. I agree that we should do what we can. Of course, the former Leader of this House is hard at work in Europe, even as we speak.

[Lord Higgins (Con)]

My Lords, in the present confused situation, only one thing is clear. It is inconceivable that Greece will become competitive and achieve economic recovery at the present exchange rate. Therefore it will be condemned to endless austerity, abortive negotiations and financial crisis until such time as it leaves the euro. My noble friend’s Statement refers to an exit by Greece as being traumatic. The important, thing, therefore, is that we should do everything we possibly can to make it happen in an orderly way, rather than in a traumatic way, where other European countries are not taking action because they believe that it is fundamental that Greece remains in. It is not going to remain in; sooner or later, it is coming out. Therefore it is very important that we should work together with other European countries to achieve a sensible exit.

In particular it needs to be made clear that, if there is an exit of Greece from the eurozone, it does not mean that Greece exits from the European Union. From a political point of view, it is very important indeed that it should not do so. At the moment, however, I fear that we are underestimating our interest in this matter. We are of course already contributing in part to the bailout through our contribution to the IMF, and it is obviously extremely important as far as our export markets to Europe and so on are concerned. So we need to work with the other members in the European Union to seek to achieve a resolution to this crisis that is long term. That can only be if Greece exits the euro.

[Lord Ashton of Hyde]

My noble friend is obviously right. I would not swap economics with him. I accept that there are difficulties if your exchange rate is constrained by the euro and your interest rate policy is determined by the euro authorities. Ultimately, that is why it would be traumatic, as my right honourable friend said, if they leave—and it will be traumatic for individual Greeks, for whom we should feel a great deal of sympathy.

As far as the IMF is concerned, it is true that if Greece does not pay back its loan, it will go into arrears. There are contingency funds within the IMF which may cope with that. Ultimately, however, if that was the case, we would have about a 15% share of that. I agree with my noble friend that if we get to the stage of Greece leaving the euro, we should do all we can to help. I note that on Twitter today, President Juncker has said that, in his view, if Greece leaves the eurozone it will mean that it will be leaving the European Union.