AN EDITORIAL TO appear in this weekend’s edition of The Economist calls for Europe’s leaders to give Ireland the “helping hand” it deserves.
“An Irish recovery would provide a boost for European and its de facto leader, Angela Merkel, the German chancellor, as much as for Ireland and its prime minister, Enda Kenny, ” the piece claims.
It, basically, would show that austerity works.
According to the article, Ireland still has a “good story” to tell: last year it dodged recession, labour costs came down and foreign companies kept coming.
However, the author noted that a “happy ending” is not guaranteed because of this reliance on multinationals and exports, as well as the significant debt burden.
The Irish government, of course, is largely to blame for that one but the editorial also points to European leaders decision to protect Ireland’s banks’ senior bondholders.
“There are a couple of ways in which Mrs Merkel could help Ireland,” it reads.
The terms on the promissory notes—IOUs—which the Irish government used in 2010 to prop up its banks could be eased. A more effective measure would be to allow the European Stability Mechanism (ESM), the euro area’s permanent rescue fund, to take stakes in the Irish banks that remain operational. That would help Ireland both by removing some of its sovereign debt and by insulating the government from any further calls on public funds as a result of more mishaps to Irish banks.
As well as deserving the break “for good behaviour…complying so well with all the conditions that it is on course to leave the bail-out programme altogether”, the writer says the most compelling reason for a concession is because Germany (and the rest of Europe) would benefit because investors may see a chink of light at the end of what has been a very long rescue.
“And with the euro zone still mired in recession, it could do with all the light it can get.”
Also in The Economist: Fitter yet Fragile – the Irish Economy