From Celtic Tiger to EU/IMF Bailout: Ireland and the Euro Crisis Prof. Gary Murphy Dublin City University Visiting Fulbright Scholar, Center for European Studies, UNC, Chapel Hill

Ireland - Europe

Ireland and Europe l Ireland, a poor agricultural state on the European Periphery with protected industry applies to join EEC in 1961 – Eventually gains membership in 1973 l Entry to Europe in 1973 key date in opening up Ireland politically, economically, socially

Ireland and Europe l Economic Crisis in the 1980s – mass emigration and unemployment l Celtic Tiger Phenomenon – , based on EU membership, FDI, well educated population, cheap credit – result property boom l Shuddering bust in 2008 – state guarantees obligations of banks

Modern Ireland: August 1939

Lemass: The Moderniser

Foreign Direct Investment

The Politics of Modern Ireland l Ireland dominated politically by Fianna Fáil l In power for 60 of its 84 year existence. The most successful political party in western Europe l Collapsed in 2011 election – vote reduced by a quarter to 17 per cent. Lost 58 seats in a parliament of 166 falling to an all time low of 20: Why? Let’s Look:

Monthly Poll Averages

Government Satisfaction Rating

Economic Growth

The Housing Bubble

Bank Lending to Households % of GDP

Spectre of Unemployment

Ireland: November 2010

Protest: Not a new phenomenon

But the results are! l November 2010 – state accepts loan guarantee from IMF, EU, ECB. Known popularly as “the bailout”. Access to a loan of up to €85 billion l Ireland could not sustainably borrow on bond markets hence bailout l Result: Irish state must deliver targets agreed with “Troika” – an effective loss of sovereignty that seemed to be copperfastened by entry to EEC in 1973

New Government: Back to the Future l Fine Gael and Labour with massive majority are now basically implementing programme agreed by Fianna Fáil l The politics of austerity. Massive cuts in welfare programmes, public service pay and numbers l Full payment of bank bondholders

Ireland: the best boys in the class l The Troika

Ireland: The Future l Survival of the Euro: very much in Ireland’s interests and to its benefit l While there is much public unrest at bailout, there is very little alternative l Ireland: “a country in receivership” as minister for education notes l But the politics of austerity itself could hinder recovery as people afraid to spend

Ireland: The Balance Sheet On the debit side l Crippling bank debt has become public debt – total Irish debt close to $250 billion l Mass unemployment and significant emigration l A people with little hope?

Ireland: The Balance Sheet On the credit side l At least has a a credit supply from the Troika so services can continue l Protected to some extent by EU membership and the Euro l Low corporate tax rate and significant US investment l A well educated people with natural optimism?

Thank you