In the middle of a crisis, there is a strong disincentive to strike out on one’s own. For Ireland, the Greek debt crisis has provided an excellent opportunity to hew as closely as possible to the German position. While media speculation in Ireland and abroad has grown about a Greek exit from the Euro, the Irish government has been keen to downplay any similarities between Greece and itself. If Greece has come to this point by playing political hardball, Ireland is happier to play nice. Just last night Enda Kenny, Ireland’s Taoiseach, has called on Greece to come back to the talks, reinforcing other European leaders’ call for a negotiated end to the standoff. Finance Minister Michael Noonan repeated the same disappointment shown by his Eurogroup peers at the prospect of a Greek referendum.
Ireland has been here itself, with its own bailout in 2010. Kenny made the point that Ireland itself came close to putting up capital controls of its own during the banking crisis. But every party in Ireland is eager to distance itself from the worsening Greek tragedy. Any whiff of contagion would increase Irish borrowing costs, lower incoming foreign direct investment, and see Irish businesses delay new investments. Confidence in the Irish economy is key, across the spectrum of Irish politics.
After basking in the warm glow generated by the Gay marriage referendum and making headlines around the world for progress and inclusivity, “Brand Ireland” and, indeed the Industrial Development Agency IDA, are at their highest point since the crisis. The Irish narrative has been about recovery, increasing competitiveness and exports. The Greeks will not be allowed to spoil that hard fought reputation and the remarkable gains that reputation has bought in the last few years. Ireland’s economy has almost bounced back even as Greece has floundered.
Irish creditworthiness has largely been borne out so far in Ireland’s debt costs. While rising slightly during the recent round of the Greek crisis, it is still far below the other “PIGS” with whom they’ve so recently shared the market spotlight. In fact, Ireland’s own negotiating strategy with the Eurogroup and the ECB have been to show they are the star pupil and then ask for special treatment only after they’ve reformed.
Ireland did just that when asking to improve the terms of the promissory notes given to AIB during the 2008 crisis and asking for early repayment of loans in 2014. Dublin did not get everything that it wanted, but it did get a better deal. Expect Enda Kenny and his team to try and stick as close as possible to Merkel and the ECB, but they will likely ask for every benefit that Greece gets if a final deal is struck.
While the Irish media may play up a sense that this is Greece’s reward for years of deception, forging budget statistics, and reckless profligacy, there is a great deal of sympathy for Greece. Irish people are well traveled and many have found a love for holidaying there. For those most opposed to the Troika, they will see this moment as Europe crushing a sovereign country. For the budget hawks, it will be the price of gross negligence. But most Irish people will be looking at their TV screens and newspapers and remember those bad days following the banking crash. They will look at the queues around the banks, shake their heads, and think, “That was almost us.”
John O'Donnell is a freelance Journalist living in Berlin. He has lived and worked throughout the EU, US, and Brazil
Picture Credits:2. http://www.irishtimes.com/business/economy/irish-bond-yields-hold-up-well-as-greek-crisis-deepens-1.2266703