After Portugal, what next?

The EU’s bailout fund should not make billions from member states’ misery.

EU leaders have just agreed a treaty change to create a permanent European Stability Mechanism to protect the eurozone – a European Monetary Fund in all but name.

The details about the fund, its lending capacity and the way it will work in practice are hazy, though leaked documents from the European Council indicate that it will have a range of financial instruments at its disposal. Given that the banks of just three EU countries – Britain, France and Germany – are exposed to over €1trn of government debt, were a country like Italy or Spain to face a Greek- or Irish-style crisis, it is questionable whether the fund would be sufficient.

The new mechanism will not help Portugal if, following the collapse of the Socialist government orchestrated by the opposition Conservatives, the country has to seek an EU bailout. But we can safely assume that should Portugal or other countries face the economic abyss, as Greece and Ireland did in 2010 (and still face), they will not be charged such punitive interest rates.

At last week's summit the Greek government was given a 1 per cent cut in the interest it will have to pay back. It will pay back its €130bn loan at just over 4 per cent, and be given seven years to pay back its debts.

Ireland was not treated so kindly. After being forced to take a €80bn loan at 6 per cent last December, the new Fine Gael/Labour government, which was elected with a mandate to renegotiate the terms of the loan, was offered a 1 per cent cut. Quite rightly, the new Taoiseach, Enda Kenny, told the summit, dominated by Germany and France, where to stick their offer.

Sub-prime cuts

What the likes of Germany and France have not grasped is that the crises in Greece and Ireland are fundamentally different. Greece faced economic meltdown when the incoming Socialist government found that its predecessors had cooked the books on an impressive scale.

The country's budget deficit was over 12 per cent – not the 3.7 per cent announced by the previous government. Market speculation, combined with the fact that Greek productivity had declined by 50 per cent compared to Germany in a decade, and a system which allowed massive tax evasion, brought the country to its knees.

Ireland's case is different. Like Britain and the US, its housing market boomed and then suddenly burst when the sub-prime crisis hit, and its banks needed huge taxpayer bailouts to stay afloat. Unlike Britain and the US, the biggest Irish banks – Anglo-Irish and Ulster Bank – were still too broke to function. A second vast taxpayer bailout and a disastrous austerity budget (George Osborne, take note) pushed Ireland's deficit to a whopping 32 per cent of GDP.

However, unlike Greece, Ireland never asked for a bailout. It was strong-armed into accepting one. The truth is that it would be economically logical for Ireland to have allowed its banks to default. Many banks would have lost billions – RBS would have lost £40bn, and Deutsche Bank a similar sum – but Irish taxpayers would not have been saddled with paying back €80bn at a 6 per cent interest rate. As it stands, it may well take a generation for the Irish to recover.

There's profit to be made . . .

It is outrageous that, in their dealings with the Irish, EU countries have behaved like the investment banks for which they blamed the financial crisis. For example, the UK Treasury stands to rake in £475m from its £7bn loan to the Irish, and it is far from the worst offender.

If the euro is to survive, this "beggar thy neighbour" approach will have to stop. If not, the stark reality is that the gap between rich and poor nations in the eurozone will get wider and the single currency will collapse. European economic and monetary union cannot survive if its member states seek to make huge profits from another's misery.

The reality is that, while the Fianna Fail government allowed an unsustainable housing boom and reckless investments by its financial sector, Ireland is not solely to blame for the mess it finds itself in. A right-wing "Franco-German" alliance may be dictating austerity cuts and claiming that the crisis must lead to radical pension and wage reform, but it needs to learn a few home truths.

For example, were Spain to go bust, the French and German governments would have to make huge bailouts of their banks. Besides, by keeping wage levels artificially low to stifle domestic consumption, Germany has helped preserve its already vast trade surplus while also preventing other EU countries from exporting their way out of difficulty.

So Ireland, embattled as it may be, has a stronger hand than you might think. So might Portugal and others. If its demand for a loan at reasonable rates is rejected, Ireland could turn around and allow Anglo-Irish, which the new government intends to liquidate anyway, to default.

That would be the move of last resort, but it would at last challenge the arrogance and complacency of the "Franco-German" alliance, which ignores the debt exposure of its own financial sector, and has the temerity to try to impose its will on the rest of Europe.

Ben Fox is political adviser to the Socialist and Democrat group in the European Parliament.

Getty
Show Hide image

The World Cup you’ve never heard of, where the teams have no state

At the Conifa world cup – this year hosted by the Autonomous Republic of Abkhazia – ethnic groups, diaspora communities and disputed territories will battle for footballing glory.

Football's European Championship and the Olympics are set to dominate the back pages over the next few months. How will Team GB fare in Rio? Will the zika virus stop the tournament even going ahead? Will the WAGS prove to be a distraction for the Three Lions? And can Roy Hodgson guide England to a long-awaited trophy?

But before the sprinters are in their blocks or a ball has been kicked, there's a world cup taking place.

Only this world cup is, well, a bit different. There's no Brazil, no damaged metatarsals to speak of, and no Germany to break hearts in a penalty shootout.  There’s been no sign of football’s rotten underbelly rearing its head at this world cup either. No murmurs of the ugly corruption which has plagued Fifa in recent years. Nor any suggestion that handbags have been exchanged for hosting rights.

This biennial, unsung world cup is not being overseen by Fifa however, but rather by Conifa (Confederation of Independent Football Associations), the governing body for those nations discredited by Fifa. Among its member nations are ethnic groups, diaspora communities or disputed territories with varying degrees of autonomy. Due to their contested status, many of the nations are unable to gain recognition from Fifa. As a consequence they cannot compete in tournaments sanctioned by the best-known footballing governing body, and that’s where Conifa provides a raison d’être.

“We give a voice to the unheard”, says Conifa’s General Secretary, Sascha Düerkop, whose world cup kicks off in the Autonomous Republic of Abkhazia at the end of this week.

“We are proud to give our members a forum where they can put themselves on the map.

“From that we hope to give back in the long run and invest in the football infrastructure in our member nations to help them grow.”

The two week footballing celebration starts with an opening ceremony before Kurdistan and Székely Land kick off the tournament. It follows on from 2014’s maiden competition which saw The County of Nice avenging a group stage defeat to Ellan Vannin from the Isle of Man, to take the spoils in the final via a penalty shoot-out.  There were some blowout scores of note however, with South Ossetia smashing Darfur 20-0 and Kurdistan beating the Tamils 9-0 at the event which took place in Östersund, Sweden. Neither of the finalists will be returning to the tournament – throwing down the gauntlet to another twelve teams. 

This, the second Conifa world cup, is testament to the ever-expanding global footprint of the tournament. Abkhazia will welcome sides from four continents – including Western Armenia, the Chagos Islands, United Koreans in Japan and Somaliland.

Despite the “minor” status of the countries taking part, a smattering of professional talent lends credibility to the event. Panjab can call on the experience of ex-Accrington Stanley man Rikki Bains at the heart of their defence, and the coaching savoir-faire of former Tranmere star Reuben Hazell from the dugout. Morten Gamst Pedersen, who turned out for Blackburn Rovers over 300 times and was once a Norwegian international, will lead the Sapmi people. The hosts complete the list of teams to aiming to get their hands on silverware along with Padania, Northern Cyprus, and Raetia.

A quick glance down said list, and it’s hard to ignore the fact that most of the nations competing have strong political associations – be that through war, genocide, displacement or discrimination. The Chagos Islands is one such example. An archipelago in the Indian Ocean, Chagos’ indigenous population was uprooted by the British government in the 1960s to make way for one of the United States' most strategically important military bases – Diego Garcia.

Ever since, they've been campaigning for the right to return. Their side, based in Crawley, has crowdfunded the trip to the tournament. Yet most of its members have never stepped foot on the islands they call home, and which they will now represent. Kurdistan’s efforts to establish an independent state have been well-highlighted, even more so given the last few years of conflict in the Middle East. The hosts too, broke away from Georgia in the 1990s and depend on the financial clout of Russia to prop up their government.

Despite that, Düerkop insists that the event is one which focuses on action on the pitch rather than off it. 

“Many of the nations are politically interested, but we are non-political,” he says. 

“Some of our members are less well-known in the modern world. They have been forgotten, excluded from the global community or simply are ‘unpopular’ for their political positions.

“We are humanitarians and the sides play football to show their existence – nothing more, nothing less.”

The unknown and almost novel status of the tournament flatters to deceive as Conifa’s world cup boasts a broadcast deal, two large stadiums and a plush opening ceremony. Its aim in the long run, however, is to develop into a global competition, and one which is content to sit below Fifa.

“We are happy to be the second biggest football organisation,” admits Düerkop.

“In the future we hope to have women’s and youth tournaments as well as futsal and beach soccer.”

“Our aim is to advertise the beauty and uniqueness of each nation.”

“But the most important purpose is to give those nations that are not members of the global football community a home.”

George Weah, the first African winner of Fifa World Player of the Year award remarked how “football gives a suffering people joy”.

And after speaking to Düerkop there’s certainly a feeling that for those on the game’s periphery, Conifa’s world cup has an allure which offers a shared sense of belonging.

It certainly seems light years away from the glitz and glamour of WAGs and corruption scandals. And that's because it is.

But maybe in a small way, this little-known tournament might restore some of beauty lost by the once “beautiful game”.