The Governor of the Irish Central Bank, Professor Patrick Honohan, gave a lecture on the need to restore certainty regarding the Irish budget and on the banks to the IIEA.
It's well worth watching. Apart from some interesting insights into uncertainty, there seemed to be key messages which pose key questions for Irish and European politics:
1. The bail-out is just a stop-gap meeasure. It is a more secure, and cheaper, source of lending, but it doesn't solve any of the underlying problems of the Irish economy, nor the uncertainty that caused the Irish crisis. (Interesting to note is Honohan's thoughts on Europe insuring against the tail risk, which isn't part of the current bail-out. Should it be part of future Eurozone governance in these kinds of crises? Would an insurance element be enough?).
2. The Programme is drawn mainly from the 4 year plan already set out by the Irish government, and the next government would be in a position to change how the Programme is implemented after 2011 (since the next year's budget is set in more detail). This is not to downplay the fact that the IMF-EU bail-out limits Ireland's room for maneuver, but, as Honohan highlights, Irish policy making will be key.
It will be interesting to see how this will influence the policy and election debate.
Showing posts with label IMF. Show all posts
Showing posts with label IMF. Show all posts
Monday, 10 January 2011
Wednesday, 17 November 2010
Ireland the Symbol and Sovereignty the Ideal
For a small country, Ireland has been a very symbollic country in the world. As an oppressed nation under an empire, as a rebellious and feircely independent people, as an example of the terrible consequences of famine, as one of the "angelic states" (very supportive of the UN & UN missions), as what a small country could achieve in the EU, and as a model for how to deal with the economic crisis. It seems we've been good at promoting our own version of history, but Ireland the symbol has become internationalised, and - especially now - Ireland is an example to be held up in argument.
To the left in the UK, Ireland is an example of the dangers of austerity; to Eurosceptics the example of a loss of sovereignty.
I think both are crude uses of the Irish situation. Though I oppose severe austerity measures, and feel the UK government is going too far, the Irish case cannot be compared so easily with the British: in Ireland we've continued borrowing because of the banks, so the deficit is still growing. Similarly, I think any IMF-EU bail-out would be incredibly tough and would entail the loss of some decision-making powers. Ideally it will never happen, but it appears more and more certain with each passing day. However, Ireland is in this mess because of the choices Ireland made.
Sovereignty is...
Increasingly it appears to me that sovereignty is touted as a panacea that ignores the globalised world, as if countries can act like the characters in spagetti Westerns. Van Rompuy's attack on Eurosceptism and nationalism (which I felt was directed more at the increasing popularity of Geert Wilders-like figures and parties when I read it), may have struck people as an out-of-touch thing to say about nationalism, and some have described it as defeatist, but we do live in a globalised world. Sovereignty cannot mean freedom from responsibility. Whether you've signed treaties, joined the EU or just have a bad banking system with international links, you have taken on duties and your room for manuever is limited. In a global villiage with a global market place, we can't all be cowboys.
Countries have to deal with the circumstances they find themselves in, and, particularly for small countries, pooling sovereignty can mean gaining the ability to really influence outcomes, rather than merely being the subject of them. As was said of the Dutch central bank before the Euro: the job's easy; just do what the Bundesbank does.
Now, most people do not have the narrow, populist view of sovereignty, but it is important to note how arguments are being made on the basis of what are essentially buzzwords. Sovereignty, democracy, etc. These words are invoked in political debate increasingly to tar actions and events as illegitimate. But legitimacy, like justice, is a complex concept that depends on several factors. The buzzword arguments are not really how most people see the world, but as simplistic arguments they seem to spread very easily and quickly.
And Ireland? Irish traditions and threads of identity are not a simple as the stories that we tell ourselves, never mind the stories we tell others about ourselves. We may be famous for being rebels, but our rebellions were small and largely ill-prepared and unpopular: constitutional nationalism dominates the span of Irish history. We did not protest like the Greeks nor cheer like Tory backbenchers when austerity came. The "ourselves alone" movement - Sinn Féin - is one aspect of the story. [Interestingly the old Sinn Féin party (not to be confused with the current one) was based on German ideas of autarky and Hungarian ideas of parliamentary absention (which resulted in the Ausgleich)]. Other threads include a certain idea of neutrality (inspired by WWII experience and the US refusing a post-war bilateral alliance), and an internationalist thread, which admires the ideals and goals of international co-operation and community. It's a complex mix of admiration of autonomy and of a true, working, international community in which Ireland should be embedded. (And, of course, that's simplistically put as well).
Given the economic dependence on Britain in the period after independence, and the freedom of movement and empowerment European integration has brought Ireland, there is something distasteful about British politicians and commentators holding up Irish struggle against British rule as a rallying image for rejecting the EU.
So beware of simple answers and symbols. In my opinion - and, judging from the papers and letters to the editor, this seems to be broadly in line with the current mood - the vast majority of the fault lies with the Irish government. (Though for the boom we all share blame for taking part). The Irish place the blame for our current crisis at the door of, well, Ireland. And the blame will be with the Irish government, not Europe, if the bail-out takes place. Accepting and needing any bail-out, after all, would be a consequence of the decisions we made in the running of our economy.
If the IMF-EU fund steps in, then we'll blame them for the mistakes they make.
UPDATE: See today's [Thursday, 18/11/2010] Irish Times editorial here. Emotive over the loss of sovereignty, yet clear that it was ours to squander.
To the left in the UK, Ireland is an example of the dangers of austerity; to Eurosceptics the example of a loss of sovereignty.
I think both are crude uses of the Irish situation. Though I oppose severe austerity measures, and feel the UK government is going too far, the Irish case cannot be compared so easily with the British: in Ireland we've continued borrowing because of the banks, so the deficit is still growing. Similarly, I think any IMF-EU bail-out would be incredibly tough and would entail the loss of some decision-making powers. Ideally it will never happen, but it appears more and more certain with each passing day. However, Ireland is in this mess because of the choices Ireland made.
Sovereignty is...
Increasingly it appears to me that sovereignty is touted as a panacea that ignores the globalised world, as if countries can act like the characters in spagetti Westerns. Van Rompuy's attack on Eurosceptism and nationalism (which I felt was directed more at the increasing popularity of Geert Wilders-like figures and parties when I read it), may have struck people as an out-of-touch thing to say about nationalism, and some have described it as defeatist, but we do live in a globalised world. Sovereignty cannot mean freedom from responsibility. Whether you've signed treaties, joined the EU or just have a bad banking system with international links, you have taken on duties and your room for manuever is limited. In a global villiage with a global market place, we can't all be cowboys.
Countries have to deal with the circumstances they find themselves in, and, particularly for small countries, pooling sovereignty can mean gaining the ability to really influence outcomes, rather than merely being the subject of them. As was said of the Dutch central bank before the Euro: the job's easy; just do what the Bundesbank does.
Now, most people do not have the narrow, populist view of sovereignty, but it is important to note how arguments are being made on the basis of what are essentially buzzwords. Sovereignty, democracy, etc. These words are invoked in political debate increasingly to tar actions and events as illegitimate. But legitimacy, like justice, is a complex concept that depends on several factors. The buzzword arguments are not really how most people see the world, but as simplistic arguments they seem to spread very easily and quickly.
And Ireland? Irish traditions and threads of identity are not a simple as the stories that we tell ourselves, never mind the stories we tell others about ourselves. We may be famous for being rebels, but our rebellions were small and largely ill-prepared and unpopular: constitutional nationalism dominates the span of Irish history. We did not protest like the Greeks nor cheer like Tory backbenchers when austerity came. The "ourselves alone" movement - Sinn Féin - is one aspect of the story. [Interestingly the old Sinn Féin party (not to be confused with the current one) was based on German ideas of autarky and Hungarian ideas of parliamentary absention (which resulted in the Ausgleich)]. Other threads include a certain idea of neutrality (inspired by WWII experience and the US refusing a post-war bilateral alliance), and an internationalist thread, which admires the ideals and goals of international co-operation and community. It's a complex mix of admiration of autonomy and of a true, working, international community in which Ireland should be embedded. (And, of course, that's simplistically put as well).
Given the economic dependence on Britain in the period after independence, and the freedom of movement and empowerment European integration has brought Ireland, there is something distasteful about British politicians and commentators holding up Irish struggle against British rule as a rallying image for rejecting the EU.
So beware of simple answers and symbols. In my opinion - and, judging from the papers and letters to the editor, this seems to be broadly in line with the current mood - the vast majority of the fault lies with the Irish government. (Though for the boom we all share blame for taking part). The Irish place the blame for our current crisis at the door of, well, Ireland. And the blame will be with the Irish government, not Europe, if the bail-out takes place. Accepting and needing any bail-out, after all, would be a consequence of the decisions we made in the running of our economy.
If the IMF-EU fund steps in, then we'll blame them for the mistakes they make.
UPDATE: See today's [Thursday, 18/11/2010] Irish Times editorial here. Emotive over the loss of sovereignty, yet clear that it was ours to squander.
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