Ireland has still not officially applied for European loans. But it is becoming apparent that the heavily indebted country will accept help. Talks with the EU, IMF and ECB are ongoing. The people of Ireland have long since lost confidence in their government.
By Torsten Huhn, NDR radio studio in London
After days of hesitation, it is now becoming apparent that Ireland will accept international financial aid – and recognize that there will be conditions attached to it. Irish central bank chief Honohan said he expected Ireland to receive large loans from EU countries and the International Monetary Fund (IMF) to support its troubled banking system. The aid package will not be a rescue operation like the one for Greece, but a high double-digit billion loan. At the moment there are no concrete decisions on this matter.
"No more trust in the government"
Even if the government in Dublin continues to stress that it has not officially asked the EU or the IMF for help, there will be a support action. "It is clear that there is no longer any international trust in the government of this country to solve the problems in the banking system," says Dan O’Brien, editor of the Irish Times. It is clear to everyone that action must be taken because the situation is so serious and the government is obviously unable to get the problem under control. The editor is convinced: "The whole thing has great effects on the euro, on the other euro countries and the international financial system."
Save and Pay
Economist Megan Greene also sees Ireland on the way to international aid. Because the small country has already pumped 50 billion euros into its banking system, and that still seems too little. "I think Ireland has to accept the conditions attached to credit. The government has already decided on a lot of austerity measures and wants to save another six billion next year." However, the conditions would probably require even more savings.
"People are fed up"
The Irish government continues to take the view that aid for the Irish national budget is not necessary despite the considerable mountain of debt, as the country has sufficient funds until mid-2011. But behind this is the fear of the anger of the population, who are already angry with the government. "People are pretty upset with the government. They feel like the crisis is being badly managed. They believe the government was wrong in giving the banks guarantees on their liabilities. People are fed up," says Ireland expert Greene.
Wave of emigration feared
But the fear of losing political freedom of choice also plays a major role, explains Greene. "People fear that Ireland will lose some of its sovereignty to the International Monetary Fund. They worry that there will be another wave of emigration, as in the 1980s, and that they will have to send their children abroad to find work."
In Dublin, representatives of the International Monetary Fund, the European Central Bank and the European Commission began talks with the Irish government. The main issue here is how the banking sector can be stabilized. Quick decisions are not expected, however.