Ireland Poised To Receive Bailout
MELISSA BLOCK, host:
Ireland finally appears to be edging toward accepting a bailout. A team of international officials gathered today in the capital, Dublin, to talk with the government about terms. They're eager to calm the financial markets and stop Ireland's troubles from infecting other European countries that also use the euro.
NPR's Philip Reeves has been following the day's events in Dublin.
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PHILIP REEVES: It's mid afternoon and in a betting shop in downtown Dublin some men are having a flutter on the horses. The Irish have always has a big taste for gambling, even in recessions. These days, though, it's Ireland's government, not its people, which is seen as the high-rolling gambler around here.
The officials who flew into Ireland today are from the International Monetary Fund, the European Commission and the European Central Bank. They have a tough mission. For days, the Irish government's resisted a bailout. Ireland sees assistance from outside as a loss of sovereignty because it would come with tough budgetary conditions. The government's critics say it's playing a dangerous kind of poker, taking a hard line on a bailout in the hope of keeping as much sovereignty intact as possible in whatever deal emerges.
Cliff Taylor's editor of the Sunday Business Post.
Mr. CLIFF TAYLOR (Editor, Sunday Business Post): Well, it's a game of poker. We don't have many cards, I don't think. If it is a game of poker.
REEVES: Taylor believes the Irish government was caught off guard by the crisis. It's got a massive budget deficit, but it has cash to last well into next year. Taylor says it wasn't expecting to need a bailout any time soon.
Mr. TAYLOR: But what changed was that the European Central Bank decided that it was fed up with putting money into the Irish banking system. The Irish banking system has been in trouble now for a couple of years. It's suffering from huge losses from the property boom. It lent a lot of money out to people.
REEVES: Today, Ireland's official position softened slightly. The governor of its central bank now says he expects Ireland will get a loan facility with the EU and IMF worth tens of billions of euros. He spoke of it as a buffer for Irish banks that would reassure the markets.
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REEVES: In Ireland's parliament, there was anger over the Irish government's handling of the crisis. Reporters later confronted the Irish prime minister, Brian Cowen, and accused him of failing to come clean about a bailout.
Prime Minister BRIAN COWEN (Ireland): Sorry I am not talking in riddles. Excuse me. I think there is no word that I have mentioned to you that you don't understand. I have said to you clearly what my responsibility is. My responsibility is to ensure that we get the best possible outcome for the country, while dealing with a problem which is not limited to our jurisdiction but throughout the euro area itself.
REEVES: The effect the crisis is having on the eurozone is a key issue. Fears of an Irish default have helped create turmoil on the bond markets. That's driven up the cost of borrowing for others in the zone with bloated deficits -notably, Spain and Portugal.
Michael Clauss is based in Munich, Germany, with the consultancy firm Eurozone Advisors. Clauss says even if an aid deal's eventually agreed for Ireland, it may not make much difference to the others. He says Portugal, for example, has its own chronic underlying problems.
Mr. MICHAEL CLAUSS (Eurozone Advisors): The Portuguese problems might be regarded even more severe than those of the Irish. The Irish economy has proven its capacity to have stellar growth rates. Portugal in contrast to Ireland had growth rates of around 2 percent.
REEVES: There are even bigger issues at stake here. Cliff Taylor says Ireland's crisis has highlighted a need for the eurozone to find automatic mechanisms to transfer funds from poorer to richer parts. The kind of mechanisms, he says, that actually keep a currency area together.
Mr. TAYLOR: And that really is, you know, is a fundamental issue for Europe. So people are now saying Europe either has to come closer together in future years and talk about common budgetary arrangements, common supports, making more decisions together, or the pressures will come on to push it apart because of national interests.
REEVES: Philip Reeves, NPR News, Dublin.
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