The deal brokered by the euro zone nations to save Greece from default has opened a window of opportunity for Ireland in which Dublin may seek relief for its own wounded economy.
Irish leaders are calling for measures that will relieve the Irish economy of crippling interest rates and perhaps even bring in European money to replace taxpayer funds in bank bailouts, Bloomberg reported Thursday.
While Irish Prime Minister Enda Kenny pointed out that Ireland’s situation is very different from that of Greece and that it is in no danger of default on its bonds, he said he is pushing European leaders to find other ways to lessen the load of Ireland’s “crushing” debt burden. He told Parliament on Wednesday, “What is being done for Greece, including the steps that will need to be taken to make its debt sustainable, reflect a uniquely difficult situation. I cannot say it often enough or strongly enough; we will not be going down the same road.”
An unnamed source in the Bloomberg story said that measures to assist Ireland could include new structural funds, longer repayment schedules for bailout money, the replacement of taxpayer funds in bailouts with European funds and lower interest rates. And indeed, pressure is building in that direction.
Gerry Adams, leader of Sinn Fein, asked in Parliament on Tuesday, “Why is it acceptable to write down Greek debt, when the Irish pay private bankers’ debts?” Kenny has replied that he is seeking redress on a “number of fronts.”
Alan Ahearne, economics professor at Galway University, who acted as adviser to former Finance Minister Brian Lenihan, was quoted saying, “Had a European bank resolution fund been in place, some of the resolution of Irish banks would have been part of that. The Irish government has a legitimate claim that there should be some sort of burden-sharing on a European level.”
The dispute is not likely to go away without some sort of concessions from Europe. Gavin Blessing, a bond analyst at Collins Stewart Plc in Dublin, was quoted in the report saying, “There’s a political problem for the government. The Greeks, who are seen to be behaving badly, get rewarded, whereas the Irish, the top boys in the class, get nothing.” He added, “The Irish Government needs something to reassure the general public that we aren’t being treated unfairly. Haircuts on Ireland’s sovereign debt may be ruled out given the negative consequences. But there may be other, less dramatic ways of achieving debt reduction by less visible, less damaging means.”