Tuesday, January 25, 2011

One month to go for Ireland

The government of Ireland has collapsed. Green Party members withdrew from the coalition on the weekend, leaving the Fianna Fail to effectively govern alone as a caretaker government. March 11 elections have been moved up to February 25. Greens woke up to the prospect of losing core voters angry at their party supporting the bailout of bankers whilst cutbacks are imposed on the general population.

Ireland must pass a budget to receive funding from the IMF, and IMF funding is part of the financial package that Europe put together to save countries like Ireland: the European Financial Stability Fund. Fianna Fail may succeed in garnering support form the opposition, particularly its main rival, Fianna Gail.

Fianna Fail, a big-L Liberal party (which in Europe means pro-market), and Fianna Gail, a centre-right Christian party are not that far apart and could succeed in pulling together for a gesture of national unity. Fianna Fail was in power when the financial crisis started and bears the stigma of letting the Irish economy collapse, (albeit under a different Tioseach (head of government)). The infighting within the party has already started. A grand coalition or a minority government would stabilise the country, but at the cost of failing to address needed reforms and a rethinking of how extensively Ireland subsidises its banks.

At stake is Ireland's understanding of what it holds to be right, especially what the state's role in the modern Irish economy is, and why the bankers are so (un)deserving of state aid. What is to be done? Who should benefit and who should pay? Will Ireland regain some of its independence from the banks, as it once regained from England, or will it chose to uphold subsidies for the country's richest institutions?

It will likely come down to a visceral, gut decision on the part of the Irish electorate--on how they see the relationship between banks, the state, and the people.

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