海角大神

Despite a week of firm denials, Ireland is now in negotiations with the European Union about a joint European Central Bank (ECB) and International Monetary Fund (IMF) aid package worth as much as $100 billion for its stricken economy.

IMF and ECB officials led by Ajai Chopra arrived in Dublin today to meet with the government and are pouring over the nation鈥檚 account books. Mr. Chopra is deputy director of the IMF鈥檚 European operations.

Minister for Finance Brian Lenihan said the Irish government could accept an aid package for the banks, after preliminary talks in Dublin with officials.

Others, however, have gone further. Speaking on Irish radio this morning, Patrick Honahan, the governor of the country鈥檚 own central bank, said he expects the Irish government to accept a 鈥渧ery substantial鈥� loan.

鈥淎 loan will be made available and drawn down, as necessary,鈥� he said.

鈥淚t will be a large loan because the purpose of the amount to be advanced or to be made available to be borrowed is to show Ireland has sufficient firepower to deal with any concerns of the market. We鈥檙e talking about a very substantial loan, for sure,鈥� he told national broadcaster RT脡.

Irish Prime Minister Brian Cowen, who has for a week been denying Ireland is negotiating for outside help, was last night still denying that negotiations were ongoing.Today the government dismissed critics who claimed the bailout amounts to a surrender of Ireland鈥檚 hard-won sovereign independence.

"There is no question of loss of sovereignty for Ireland,鈥� said Mr. Cowen. "It will be the sovereign decision of the Irish government on behalf of the Irish people that will decide what shape any package would be where we can decide that鈥檚 in our best interests," he said.

Opposition politicians welcomed Dr. Honahan鈥檚 words but continued to slam the government.

Enda Kenny, who leads the main opposition party Fine Gael, said government policy had been a "catastrophic failure."

Mr. Kenny later demanded the government leave office: 鈥淵ou should resign. You should go to the country, they will go back to Europe, and we鈥檒l buy time and credibility and belief and sort this out,鈥� he said.

Labour party leader Eamon Gilmore said to Cowen there was no point in pretending that today鈥檚 discussions were "fact finding missions by PhD students" and the IMF 鈥渨ere not coming to do their Christmas 蝉丑辞辫辫颈苍驳.鈥�

Loan or bailout. What's the difference?

Speaking to the Monitor, Labour party lawmaker Joan Burton, the party鈥檚 spokesperson on finance, said the government鈥檚 denial that the loan negotiations amounted to a bailout was a mater of semantics.

鈥淚t very much is a bailout,鈥� she says. 鈥淭he government, judging by their ashen faces, feel quite humiliated and disgraced by it.鈥�

Ms. Burton placed the blame squarely at the feet of the governing Fianna F谩il and Green party coalition.

鈥淚 don鈥檛 think we should have ever got to this place,鈥� she says. 鈥淲e shouldn鈥檛 have guaranteed the banks or started Nama [a state-run 鈥榖ad bank鈥� that purchased failing assets from commercial lenders in an attempt to stem losses].

鈥淭he final nail in the coffin was the [issuing of] 鈧�31 billion in promissory notes for Anglo and Irish Nationwide,鈥� she says.

Anglo-Irish bank is widely blamed for precipitating the crisis by engaging in risky lending in to property developers. It was nationalized in January 2009 after being revealed to be on the brink of collapse and has received $47 billion in taxpayers鈥� money since then.

Other banks, Irish Nationwide and Allied Irish Banks were also later taken into state ownership and Bank of Ireland is now 36 percent owned by the state.

Battle over Ireland's corporate tax

Many are concerned that Ireland鈥檚 12.5 percent rate of corporate tax, a key plank in attracting foreign investment, will be a target for the EU. Ireland鈥檚 tax rate is the third lowest in Europe after Bulgaria and Cyprus.

The rumblings have already started in Brussels: Ministers from France, Italy, and Austria spoke about the tax rate yesterday. Austria's finance minister Josef Proll took a particularly strong stance, saying the EU must demand it rises as a condition of any aid.

An Irish EU spokesperson told the Monitor this afternoon that any discussion that any discussion of conditions attached to a bailout would be 鈥渉ypothetical at this point.鈥�

EU sources told journalists in an off-the-record briefing today that the bailout was now just a formality and that negotiations on such matters are started long before anything is made public.

Impact of Ireland's crisis

The state of Ireland鈥檚 national finances has been at the centre of press speculation for over a week. It鈥檚 not just the macroeconomy that is suffering, though. Ireland鈥檚 decline has had tangible consequences on Main Street.

Unemployment is up, wages are down, and emigration has returned. A budget due December is expected to raise taxes significantly and make deep cuts to public services.

For many it feels like two decades of rising living standards have come undone in just three short years. According to official statistics, unemployment has hit 13.7 percent 27,700 people left the country in the first four months of this year, more than any time since 1989. An estimated 5,000 Irish people leave every month, an increase of 81 percent on figures from 2009.

Economist Morgan Kelly struck terror in to the heart of the nation when he wrote that worse was to come.

鈥淚f you thought the bank bailout was bad, wait until the mortgage defaults hit home,鈥� he wrote in the Irish Times.

Michael Culloty, a spokesperson for Irish charity, the Money Advice and Budgeting Service (Mabs), which provides independent advice to people with financial problems, says that people are seeking advice but that widespread foreclosures have not yet begun.

鈥淲e鈥檙e currently experiencing an increase in the volume of people we see,鈥� he says. 鈥淧eople are getting into difficulty with consumer debt in particular.鈥�

Mabs鈥� clients include people of all socioeconomic classes, from right across Irish society. 鈥淥ne in three people coming to us has a mortgage,鈥� he says.

A report published Wednesday by the government-appointed Expert Group on Mortgage Arrears and Personal Debt said that one in 10 mortgage holders was in arrears in making payments.

The report dashed any hopes of a bailout for families, however. While the "expert group" is recommending a major overhaul of Ireland鈥檚 punitive bankruptcy laws and the deferment of interest payments on distressed mortgages, it did not recommend banks institute a formal debt forgiveness scheme.