Nice piece from Brian Feeney in the Irish News yesterday… It’s worth quoting at some length, not least for those who imagine that default is likely to be a pain free option… Not least because of the political cost…
Here’s the position. Over the next three months or so, the nuts and bolts of the Merkel/Sarkozy pact to stablise the Euro will be screwed together and what in effect will be a new treaty will emerge. The Republic will have to hold a referendum the government believes it will lose.
That’s why Irish officials struggled in vain at the EU Summit to avoid changes to the treaty. Faced with the combined might of Germany and France they were bound to be steam rollered. At present they are hoping that they’re desperately hoping the wording of the deal will avoid the need for a referendum. It won’t.
Here’s the rub, and what you don’t hear much of in the southern commentary on the crisis (though there is little ambiguity on this amongst those parties anywhere near the realities of power in this tiny European country):
Michael Noonan has been getting in a bit of pre-emptive scare-mongering by warning that a no vote is saying the republic wants to leae the eurozone. What would happen then? Return to the Punt? You/re kidding.
Economic catastrophe is what would happen. The Republic can only borrow on the international bond market this year if it meets the terms agreed by the EU-IMF bail out. It they don’t have the euro behind them they will have to default on their debts.
That means no money to pay for teachers, nurses, medicines, you name it. It’s back to the 1930’s.
And for those who think this is just a problem for that ‘foreign country to the south of the border, here’s the First Minister back in November on what the crisis in the south means for Northern Ireland:
The economic difficulties which you have been experiencing in the Republic of Ireland have also impacted the Northern Ireland economy. The Republic is one of our key markets for exports and tourism, and it is in our interests, as neighbours and trading partners, to strengthen those economies, recognising what works and taking a pragmatic approach to guide us through these difficult economic times.