Thursday 23 March 2017

We must fight back to renegotiate bailout

Dithering on the ECB's incompetent deal will only lead to further financial heartbreak, writes Colm McCarthy

If international economic diplomacy was as straightforward as a schoolyard fight, the kid who shouts loudest and plays toughest will often win. But the likelihood is that, in the grown-up dilemma that confronts it, no unilateral course of action is available to the Irish Government that will work.

There is no 'get out of jail' card, and those who demand that the Government should burn the bondholders, leave the Eurozone, tell the IMF/EU to take a hike, have simply failed to come up with a policy programme that has a decent probability of working to Ireland's advantage. There are things that can be done unilaterally, but they can only usefully be done in the context of a continuing engagement with the official lenders, the EU Commission, the European Central Bank and the International Monetary Fund. This is frustrating but the loss of sovereignty is real and one consequence is that go-it-alone policy prescriptions need to be treated with scepticism.

The 'troika' of EU, ECB and IMF, who are jointly funding both the State and the banking system, are no longer in agreement that Ireland should 'stick to the programme'. The IMF regard the programme as unrealistic and in need of fundamental re-design and it is pretty clear that this has been their view from the beginning of their involvement with Ireland last November.

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