The International Politics of Ireland's EU/IMF Bailout

Abstract

In 2010, Ireland's financial crisis threatened the stability of the global financial system, precipitating an international rescue package of 85 billion euro. This article analyses the bailout from an international relations perspective in order to gain a deeper insight into the nature of the political pressures that forced the negotiators to compromise over the design and content of Ireland's programme of financial support. It does so by drawing on recent academic research on the politics of IMF decision-making. The lessons from this literature can help to shed light on one of the most important events in post-Independence Ireland.

Differentiated integration as symbolic politics? Constitutional differentiation and policy reintegration in core state powers

“…Bilateral loans: on top of their EFSM contributions, the three outs offered bilateral loans to Ireland (Breen, 2012). The Loans to Ireland Act of 2010 authorized a British contribution of €3.8 billion to the bail-out scheme (Parliament UK, 2010).…”

“…While the solvency issues of peripheral Eurozone member states were formally irrelevant to them, factually they were highly concerning because of strong functional interdependence. The United Kingdom wanted a swift bailout of Ireland and was prepared to pay for it (Breen, 2012). As George Osborne, the chancellor of the exchequer, explained: ‘We are not part of the euro, but Ireland is our very closest economic neighbour’ (quoted in Kollewe, 2010).…”

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“…The mechanism was then utilised as part of wider multilateral international assistance programmes to Greece and Portugal (Alcidi et al, 2017). The EFSM provided 22.5 billion € of the 85 billion € international bailout package to Ireland (Breen, 2012). As the EFSM was guaranteed through the EU budget, non-Eurozone countries automatically faced a liability equivalent to their share in the EU Budget (Thompson, 2011).…”

“…However, the agreement on the EFSM was struck by qualified majority, and the UK could not have unilaterally opted-out of the mechanism (N. de Boer & Koedooder, 2015;Thompson, 2011). Moreover, the UK had an interest in securing a swift bailout for Ireland (Breen, 2012), as well as Denmark and Sweden. In fact, the three countries even took the initiative to arrange, on top of EFSM contributions, a set of extra bilateral loans towards Ireland (Breen, 2012).…”

“…Moreover, the UK had an interest in securing a swift bailout for Ireland (Breen, 2012), as well as Denmark and Sweden. In fact, the three countries even took the initiative to arrange, on top of EFSM contributions, a set of extra bilateral loans towards Ireland (Breen, 2012). The UK's participation in the Irish rescue scheme was established in the Loans to Ireland Act of 2010 (Parliament UK, 2010).…”