Greek vote stokes anti-austerity mood in Ireland
Ireland`s economy is speeding ahead and unemployment is dropping, but the coming to power of a radical new government in fellow eurozone member Greece has revived debate about the pain of austerity.
Athens: Ireland`s economy is speeding ahead and unemployment is dropping, but the coming to power of a radical new government in fellow eurozone member Greece has revived debate about the pain of austerity.
Support for opposition parties -- including for the radical left-wing Sinn Fein party -- has been surging for months on the back of their anti-austerity stance, and Syriza`s win in Greece is an extra boost.
Sinn Fein leader Gerry Adams spoke to Prime Minister Alexis Tsipras this week, backing the new Greek leader`s campaign for a European Debt conference like the one that wrote off German debt after World War II.
"Austerity has heaped severe hardship on citizens in Greece, Ireland and across Europe," Adams said, according to a statement on Sinn Fein`s website.
The Greek vote "has given renewed hope to working people across Europe, including Ireland, that there is a fairer and more just way to deal with the economic challenges that we face," he said.
Ireland estimates its 2014 growth at 4.7 percent and forecasts 3.9 percent for 2015, while unemployment is predicted to fall to 9.8 percent this year.
The country is no longer taking on new EU/IMF bailout loans but is still stuck with repayment and Sinn Fein wants a renegotiation, in particular of the EUR 64 billion pumped into the banks since 2008.Despite some similarities, the Irish government has stressed that it is not Greece, and points to the positive macroeconomic data.
"There`s a situation here where media speculation and political speculation is ahead of where the Greek government is," said Simon Harris, junior minister at the department of finance.
"We don`t know exactly what the Greek government is going to ask for," he said.
Harris also pointed out that Ireland had already restructured its bailout debts four times by striking deals to repay the IMF loans early, cut interest rates, extend maturities and restructure loans.
This week the IMF said Ireland`s recovery is off to a "good start" but efforts were needed to put "the public debt on a firmly downward path."
"Ireland`s medium-term prospects are positive, yet euro area stagnation poses downsides," the Fund said in its latest post-bailout review.
The introduction of new water charges from January 1 this year, as well as a string of political mishaps in 2014, has seen support for the governing parties fall to an all-time low in recent months, although it rebounded slightly in a poll last weekend.
The water tax was the final piece of almost EUR 30 billion in tax hikes and spending cuts since 2008 which has hit all citizens, in a country where unemployment surged to 15.1 percent in 2012.
This month, however, there were modest tax cuts from Ireland`s first expansionary budget in seven years and cabinet ministers sold the message of economic recovery at every opportunity.
But the outcome of the Greek vote proves results deemed incredible "even five years ago are now a possibility", according to Nat O`Connor from Tasc, an independent think tank.
"We now have the potential for a similar electoral upheaval here in Ireland but also in Portugal and Spain," he said.
Ireland is facing the possibility that neither of the two historically dominant parties, Fine Gael or Fianna Fail, will be in power after an election for the first time since the foundation of the state.With a general election due in 2016, the Greek negotiations on debt re-restructuring will be watched closely in Ireland.
"If the Greeks get some kind of better deal because of the government that they voted in, then the Irish will follow suit and say this is the real answer to our problems," political commentator Johnny Fallon told a news agency.
But chief economist with KBC Bank Austin Hughes, while acknowledging some similarities between Greece and Ireland, says there are also striking differences.
"The critical lesson is that you need to have an economy that produces at least the promise of rising incomes and employment and Ireland is probably at that stage now," he said.
He pointed to the flexibility of the Irish economy and its export-driven recovery as well as the extensive structural reforms already undertaken by Dublin.
"The challenge facing government is striking a balance that makes people confident that they are on the right road but that their expectations do not become detached from what the economy can reasonably deliver," Hughes said.