Ireland between debt abyss and anathema

Ireland between debt abyss and anathema. 45311.jpegIreland is yet another European country that has found itself in the huge debt pit. The European Union and the International Monetary Fund are trying to do something to help the country. In the meantime, the Irish authorities got tangled up in the scandal with The Vatican.

Ireland has been quite a news maker during the recent months. The first piece of news is about the economic situation in the country. On  September 2, the EU Council approved the bailout loan of 19 billion euros for the country. Ireland was supposed to receive 5.5 billion from the EU and then 1.5 billion from the IMF during the upcoming couple of months. Ireland's neighbor, Great Britain, also offered its help - 500 million euros. The IMF has already reached out its helping hand to the country and assigned over 2 billion for the Irish.

How is it possible that such large amounts are allocated for the country the population of which does not exceed 4 million people? Only three years ago, the Irish economy was growing by nine percent a year. That was a very impressive number  - the highest in Europe. Ireland, the Emerald Isle, was experiencing the mortgage and investment boom. The level of the population income in the country was comparable to that in Germany and Sweden. Hundreds of residents of the former Soviet countries, especially Lithuania and Latvia, were moving to Ireland for earnings.

The economic miracle turned out to be nothing but a bubble. The government was pumping investments in the country and failed to notice that a big part of those investments fell into the hands of foreigners, presumably financial profiteers.

The high-tech production has not appeared in the country. Many people continued to associate Ireland with beer, whiskey and St. Patrick's Day parades. Foreign investments left the country as soon as the financial crisis occurred.

The debts of the Irish on mortgage loans exceeded the national GDP 11 times. Real estate prices went 37 percent down. Banks would go bankrupt one after another. The state tried to buy out the bank loans of 90 billion euros, but the budget deficit in 2009 made up 9.5 percent - a record number for Western Europe. The government raised income taxes, excises on tobacco and petrol. The number of ministers was cut four times. Nothing helped.

Ireland: Ending the troubles

By 2010, Ireland had become one of the hardest patients of the Eurozone. Greece later became patient No.1, but the position of the Emerald Isle remained just as lamentable. The budget deficit exceeded the level of 14 percent, and the country took its place in the group of the PIGS countries along with Greece, Spain and Portugal. Prime Minister Brian Cowen, who no longer serves as such, used to say that he would not follow the example of Greece that had to ask for help. However, he had to change his mind.

When the state of affairs in Ireland became catastrophic, the country addressed to the EU and the IMF for money. Ireland received the bailout of 85 billion euros, albeit on tough conditions. The budget deficit had to be cut by 15 billion euros; taxes had to be raised. Ireland is now supposed to reach the desired level of three percent of the budget deficit by 2014. The country will have to cut its spending considerably and conduct a profound reform of the banking sector for it. It seems that the Irish are moving forward according to the plan, for they would not receive new loans otherwise.

The Irish authorities are looking for new sources of income fitfully. It appears that Prime Minister Enda Kenny has found something. He decided to impose restrictions upon the property of the Catholic Church. It was not an easy task to find a purely economic motive to get hold of the property, so Kenny attacked both local church officers and The Vatican.

In August of this year, the head of the Irish government spoke at the parliamentary hearings devoted to the investigation of cases of pedophilia in church. Kenny accused The Vatican of the attempt to conceal information about violence committed against Irish children.

The Vatican recalled the nuncio from Dublin to Rome soon afterwards. Officials of the Holy See said that Kenny was only trying to distract the public attention from the economic problems. Irish priest Thomas Daly preferred not to mince his words and compared the Irish prime minister to Adolf Hitler.

The conflict subsided only on September 4, when The Vatican sent a letter to Dublin and apologized for the actions of pedophile clerics in Cloyne. Official spokespeople for the Irish Foreign Ministry welcomed the dialogue, but the "Celtic" leaders have not refused from their plans to withdraw property from the church yet.

Prime Minister Kenny is playing with Fire. Ireland is one of the most religious countries of Europe. The right for an abortion is still restricted there. If a woman wants to have an abortion, she would be allowed to do it only if she proves that she has medical prerequisites for it. Catholicism in Ireland is like a continuation of the national identity. The Irish may not forgive the prime minister for withdrawing the lands from the church even for the sake of the struggle against pedophilia.

The Emerald Isle has fallen into the deep debt pit, and the government is trying to find an exotic solution for the economic problems. Will the "Celts" agree to win the economic battle by fighting against the church?

Vadim Trukhachev


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Author`s name Dmitry Sudakov