As European Union financial leaders meet today to discuss the ongoing Irish debt crisis, they are expected to renew their increasingly forceful calls for Ireland to accept EU-led bailouts. The EU is concerned that Ireland's debt crisis, if left unaddressed, could repeat the continent-wide economic damage of Greece's earlier crisis. But Irish officials, wary of the strings likely to come attached to an EU bailout, are resisting the pressure. Here's what both sides are thinking and what experts have to say about it.
- EU Fears Crisis Could Spread if Unfixed Foreign Policy's Joshua Keating explains, "Ireland has gone deeply into debt following Dublin's €45billion bailout of five banks earlier this year. Public debt is expected to balloon to as much as 32 percent of GDP this year, a record for postwar Europe. ... Fears are high that the crisis might spread as market turbulence it more expensive for other fragile economies like Spain and Portugal to borrow, raising the possibility of future crises requring intervention. EU President Herman Von Rompuy even suggested that the union's very future might be at stake. 'If we don't survive with the eurozone we will not survive with the European Union,' he said."
- Could Austerity Avoid Need for Bailouts? Time's Catherine Mayer writes, "Whereas many European countries flinch from the sting of austerity they have yet to feel, swaths of Irish high streets are already battered and boarded up; few families are untouched by a rapid contraction that has seen businesses close and workforces contract. ... Yet it's also obvious that change will have to come from somewhere if the country is to get back its mojo, its confidence and a smidgen of the positivity that got it into trouble in the first place. Without confidence, at home and abroad, recovery seems a distant prospect."
- Bailouts Could Come With Strings Attached The Guardian's Julia Kollewe reports, "Ireland fears the punitive terms of a bailout as it would have to give up partial sovereignty over its finances and could be forced to raise corporation tax. Ireland's opposition finance spokesman, Michael Noonan, said yesterday that a bailout could lead to Ireland being suspended from the bond markets for three or four years."
- Ireland Doubts Long-Term EU Strength Libertarian EconoBlogger Tyler Cowen notes, "Casting your financial lot with the EU is especially problematic if you don't expect the EU to be so influential five or ten years down the road. Obviously the Irish are betting against the idea of a major step toward EU fiscal union and correctly so."
- Ireland Hoping to Wait Out Debt Crisis 24/7 Wall Street's Douglas McIntyre writes, "Ireland could decide not to succumb to the pressure to take aid because it believes it has already bought itself time. Irish officials have said the country can be self-supporting at least until the middle of next year. It may gamble that the fury over European sovereign debt may die down by then. A similar uproar died in the middle of this year as the credit situation in Greece was solved and Spain and Portugal did not have to turn to their neighbors’ financial support."