Ireland 'in preliminary talks with EU on bailout'

[Treffie]

The Republic of Ireland is in preliminary talks with EU officials for financial support, the BBC has learned.

It is now no longer a matter of whether but when the Irish government formally approaches the European Financial Stability Fund (EFSF) for a bailout.

The provisional estimate for EFSF loans is believed to lie between 60bn and 80bn euros ($82-110bn; £51-68bn).

Irish officials have not denied they are in talks about accessing the EFSF but instead say "it makes no sense".

The European Commission would not formally comment on the matter.

Eurozone officials told the Reuters news agency on Friday that discussions were under way, with one saying that it was "very likely" Ireland would receive financial assistance.

The head of the International Monetary Fund (IMF), Dominique Strauss-Kahn, said on Saturday that it had not been asked for aid.

Unlike Greece last May, Ireland doesn't need to ask the markets for money until next year. But bond traders are not convinced it can cut its deficit by enough by then and have pushed the cost of borrowing to unsustainable levels (8.3%).

Dublin had hoped that by slashing spending and raising taxes in the forthcoming budget on 7 December, it would show resolve and in doing so drive down the cost of borrowing on the bond markets. That hope is now dashed.

Now that talks have begun with Eurogroup officials, Ireland has the embarrassment of pressing ahead with day-to-day management of a country still officially Europe's third richest - knowing that it will have to join an exclusive but not illustrious group of nations needing to go cap in hand to their fellow eurozone countries for a loan.

"So far I have not had a request, and I think Ireland can manage well," he told reporters at the Apec summit in Yokohama.

The IMF and EU had to step in with a 110bn-euro bailout package for Greece in May, sparking a Europe-wide sovereign debt crisis.

BBC business correspondent Joe Lynam says any bailout would not be agreed this weekend, but might though come as early as next month.

A meeting of the Eurogroup, composed of the EU member states whose currency is the euro, is scheduled for 6 December.

The Economic and Financial Affairs Council (Ecofin) - comprising the economics and finance ministers of eurozone countries - will gather the following day.

Lastly, the full European Council is to meet on 16 and 17 December.
By-election

Since 2008, Ireland has suffered the worst property collapse of all developed economies, with house values falling between 50% and 60%.

Our correspondent says the Irish government has also all but nationalised the country's banking system, which had lent recklessly at an estimated cost of 40bn to 50bn euros.
A homeless man sits on O'Connell Bridge in the centre of Dublin Ireland has faced one of the deepest recessions in the eurozone

The country has promised the EU it will bring its underlying deficit down from 12% of economic output to 3% by 2014. Its current deficit is an unprecedented 32% of gross domestic product, if the one-off cost of bad debts in the Irish banking system is included.

The Irish government, which has a flimsy majority in parliament, is set to publish another draconian budget on 7 December, which will make spending cuts or tax rises totalling 6bn euros, and aims to bring the deficit down to between 9.5-9.75% next year, he adds.

That parliamentary majority is likely to be cut to only two on 25 November, when a by-election will be held that the governing Fianna Fail party is likely to lose.

The government had left the Donegal South West seat empty for 17 months but the Republic's second-highest court recently ruled that the delay was unreasonable. Three other by-elections are also required.

Investors fear the budget cuts are likely to worsen the country's already deep recession, leading to further losses to the government via falling tax revenues and higher benefit payments.

Source (http://www.bbc.co.uk/news/business-11750676)

[Oinakos Growion]

Well, it looks like it shall happen. So The Irish Times publishes this editorial (http://www.irishtimes.com/newspaper/opinion/2010/1118/1224283626246.html?via=rel) today:

<<Was it for this?

IT MAY seem strange to some that The Irish Times would ask whether this is what the men of 1916 died for: a bailout from the German chancellor with a few shillings of sympathy from the British chancellor on the side. There is the shame of it all. Having obtained our political independence from Britain to be the masters of our own affairs, we have now surrendered our sovereignty to the European Commission, the European Central Bank, and the International Monetary Fund. Their representatives ride into Merrion Street today.

Fianna Fáil has sometimes served Ireland very well, sometimes very badly. Even in its worst times, however, it retained some respect for its underlying commitment that the Irish should control their own destinies. It lists among its primary aims the commitment “to maintain the status of Ireland as a sovereign State”. Its founder, Eamon de Valera, in his inaugural address to his new party in 1926, spoke of “the inalienability of national sovereignty” as being fundamental to its beliefs. The Republican Party’s ideals are in tatters now.

The Irish people do not need to be told that, especially for small nations, there is no such thing as absolute sovereignty. We know very well that we have made our independence more meaningful by sharing it with our European neighbours. We are not naive enough to think that this State ever can, or ever could, take large decisions in isolation from the rest of the world. What we do expect, however, is that those decisions will still be our own. A nation’s independence is defined by the choices it can make for itself.

Irish history makes the loss of that sense of choice all the more shameful. The desire to be a sovereign people runs like a seam through all the struggles of the last 200 years. “Self-determination” is a phrase that echoes from the United Irishmen to the Belfast Agreement. It continues to have a genuine resonance for most Irish people today.

The true ignominy of our current situation is not that our sovereignty has been taken away from us, it is that we ourselves have squandered it. Let us not seek to assuage our sense of shame in the comforting illusion that powerful nations in Europe are conspiring to become our masters. We are, after all, no great prize for any would-be overlord now. No rational European would willingly take on the task of cleaning up the mess we have made. It is the incompetence of the governments we ourselves elected that has so deeply compromised our capacity to make our own decisions.

They did so, let us recall, from a period when Irish sovereignty had never been stronger. Our national debt was negligible. The mass emigration that had mocked our claims to be a people in control of our own destiny was reversed. A genuine act of national self-determination had occurred in 1998 when both parts of the island voted to accept the Belfast Agreement. The sense of failure and inferiority had been banished, we thought, for good.

To drag this State down from those heights and make it again subject to the decisions of others is an achievement that will not soon be forgiven. It must mark, surely, the ignominious end of a failed administration.>>

[antonio]

Fianna Fáil has sometimes served Ireland very well, sometimes very badly. Even in its worst times, however, it retained some respect for its underlying commitment that the Irish should control their own destinies.

As long as it proves finally false, should we retired it our respect? :D

Just same way Id retired my respect from Spanish parties long time ago.

Anycase, I could not refrain myself from thinking a similar bubble on an independent Galicia of Zara, Zeltia and (glups) Jove. Or Catalonia, or Euzkadi. My point is if we're so badly ruled on a larger peninsular state, how things will go on downsized little ones? I.e. Catalonia needs Andalucia to keep away the bubble, on its own it would be no more that a culturized corrupted nest (in addition heavily boicotted from Spanish nacionalists)...thinking simply on tributary balance term is plain childish. Just think on Portugal, things are not running specially well after they lost then colonies: they're too small and too excentric to grow.

[Oinakos Growion]

Size and location (and large population) don't really have much relevance these days. Central locations, plenty of natural resources and big size don't necessarily guarantee anything. Examples abound.
Ireland was doing well, very well actually, and it was using its size and position as an advantage. Hence why it was labelled "a model to follow". The issue was a human problem on what they did with the surplus (bad investments and decisions). At the end of the day it is about what people are made of, not size or location. Ask the Estonians.