Irish Mourn Loss of Sovereignty as Cowen Scorned Before `German Bailout'
Ireland's Prime Minister Brian Cowen
Daniel Acker/Bloomberg
Brian Cowen, prime minister of Ireland.
Brian Cowen, prime minister of Ireland. Photographer: Daniel Acker/Bloomberg
Nov. 19 (Bloomberg) -- Raghavan Seetharaman, chief executive officer of Doha Bank QSC, talks about the outlook for European economies and the Federal Reserve's quantitative easing program. He speaks with Francine Lacqua on Bloomberg Television's "On The Move." (Source: Bloomberg)
Nov. 18 (Bloomberg) -- Former U.K. Chancellor of the Exchequer Alistair Darling talks about the prospects for a proposed bailout to shore up Ireland's finances and banks. Irish Finance Minister Brian Lenihan said in Dublin today that he would welcome the creation of “substantial contingency capital funding” for Irish banks, as officials from the European Union, International Monetary Fund and European Central Bank started to study the books of Irish banks battered by the country’s property slump. Darling speaks with Margaret Brennan on Bloomberg Television's "InBusiness." (Source: Bloomberg)
Nov. 19 (Bloomberg) -- Ralph Silva, strategist at Silva Research Network, talks about the outlook for the Irish banking system. He speaks with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Irish rebels fought for independence during World War I, boasting they served “neither King nor Kaiser.” Ireland may now have to do exactly that to qualify for a bailout partly funded by both Britain and Germany.
Prime Minister Brian Cowen is edging toward accepting a rescue package that may threaten the country’s low-tax policies and put voters on the hook to repay loans the central bank says may be worth “tens of billions” of euros. For critics of Cowen’s Fianna Fail party, which governed Ireland through its decade-long boom, national pride is at stake.
Cowen has “squandered” independence for a “German bailout with a few shillings of sympathy from the British chancellor,” the Irish Times newspaper said yesterday. The government should be “ashamed that Fianna Fail should be the ones to surrender sovereignty,” said Michael Noonan, finance spokesman for Fine Gael, the largest opposition party.
Officials from the European Union and the International Monetary Fund are in Dublin to assess the books of the country’s banks, whose downfall was hand in hand with the collapse of the property market. The Irish government estimated rescuing the financial services industry alone might cost as much as 50 billion euros ($68 billion).
‘Painful’
“As an Irishman who has lived all his life in the Irish Free State, it is painful to think that we’ll be handing over our sovereignty,” said Bill Phelan, 77, who worked for the state-owned Electricity Supply Board before his retirement. “I regret that all I have worked and saved for may be crumbling under my feet. I worry for my children.”
Opposition Labour lawmaker Pat Rabbitte berated government minister Pat Carey on live television last night, telling him “you ought to be ashamed to show your face in this studio after you brought our country to penury.”
Ireland would draw on a 750 billion-euro pool funded by Germany and other euro members should it ask for aid. While Britain is not part of the currency bloc, Chancellor of the Exchequer George Osborne says he’s willing to contribute to any package to be a “good neighbor.”
Cowen said Ireland has no reason to feel “ashamed or humiliated.” “There is no question of loss of sovereignty for Ireland,” he told reporters in Dublin yesterday.
The government has said it may take aid in order to protect the euro. Ireland may be the “zone of attack,” Finance Minister Brian Lenihan told reporters in Brussels on Nov. 16 after a meeting of his counterparts in the euro region.
Uprisings
A request for outside help is acutely felt in a country that gained independence in 1922 after a series of failed uprisings against the British Empire. The most famous came in 1916 at the height of World War I, when republicans hung a banner from Dublin’s Liberty Hall reading: “We serve neither King nor Kaiser but Ireland.”
The slogan was a riposte to critics who argued that the separatist movement undermined Britain’s war effort against Kaiser Wilhelm II. While the 1916 revolt was suppressed, the surviving leaders then mounted another armed campaign that led to a 1921 treaty with Britain granting partial independence.
The country then descended into civil war, with the predecessors of Fianna Fail arguing that settlement was a sellout. More than eight decades later, some people in the party under Cowen are echoing the idea of selling out.
“This is our worst day and lowest day,” Ned O’Keeffe, a Fianna Fail lawmaker, said in an interview with broadcaster RTE. “We are sovereign people and blood has been lost over it. It’s sad that the U.K. Chancellor is now offering us money. I never believed I’d see that.”
Keep Fighting
Cowen’s government may nevertheless keep fighting to show it has some control over its economic policies.
Talks may turn to Ireland’s 12.5 percent corporate tax rate, which lured companies such as Google Inc. and Microsoft Corp. to Ireland in the 1990s and helped transform the country into a destination for foreign investment.
Austrian Finance Minister Josef Proell said Nov. 17 that he will want to discuss Irish company tax as part of any rescue package. A day earlier, he warned Greece it might withhold Austria’s part of the country’s bailout agreed in May if the government in Athens doesn’t comply with financial targets.
EU Economic and Monetary Affairs Commissioner Olli Rehn said on a Nov. 11 visit to Dublin that Ireland won’t continue as a “low-tax” country. Ireland’s Trade Minister Batt O’Keeffe said yesterday the country’s commitment to keeping the corporation tax rate isn’t “up for negotiation.”
“It would be the final battle but I expect Ireland to stick to its guns and defend corporate taxes,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. “They’d have to be dragged kicking and screaming.”
To contact the reporters on this story: Dara Doyle in Dublin at ddoyle1@bloomberg.net John Fraher in London at jfraher@bloomberg.net
To contact the editor responsible for this story: Rodney Jefferson at r.jefferson@bloomberg.net
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