Fintan O’Toole writes: Irish 10-year bond interest rates were trading at under 1.1 per cent at the beginning of this week, while Greek 10-year bond interest rates are close to 9 per cent. There’s a strong financial incentive for Ireland to place as much distance between itself and Greece as it possibly can, all the more so because it is hoping to replace some of its expensive IMF loans with cheaper money raised on those international markets.
But beyond this, there is a deeper terror — the fear that Syriza might actually succeed. The strategy adopted by both the governments that have been in office since 2008 has been one of strict obedience to the demands of its lenders. Everything has been sacrificed — up to and including national sovereignty during the so-called bailout by the Troika — in order to place Ireland as the Eurozone’s exemplary pupil.
There has been a mutual interest at work here. Angela Merkel and the Eurozone leadership need a success story in order to prove that the dual policy of socialising private debt and imposing austerity is both legitimate and effective. The Irish government needs to be able to show its own electorate and international lenders that it is indeed a great success, that the imposition of so much private debt on citizens has made both moral and economic sense.
Hence, Ireland does what it is told and gets in return the gold star for diligence, effort and perseverance. Just last week, the IMF’s Christine Lagarde told The Irish Times that Ireland has “set standards” for other indebted nations to follow — Greece was hardly far from her mind.
If Syriza succeeds in getting major concessions on debt, this whole strategy will be exposed as folly. The Irish political and technocratic elite is deeply invested in an essentially religious narrative: Ireland sinned, Ireland confessed, Ireland did penance, Ireland has been forgiven, Ireland will be rewarded. But if Greece stops doing penance and is nonetheless rewarded, this begins to look like what it almost certainly is — a rather childish view of how power works in the world. [Continue reading…]
