The European union is facing another financial crisis with the Ireland's national budget approval on the not so distant horizon. The country is teetering on the verge of bankruptcy and to save the collective the European Union is planning on giving roughly 85 billion euros to aid the country. Now here's the catch, many officials in Ireland a fighting against receiving the bailout because it would damage it's sovereignty, and impose a large debt to be paid to the International Monetary Fund. The policy tools in use here are making Ireland hesitant, a lot of the money will be loaned in a direct government fashion which undermines national sovereignty. At the same time Ireland is actively trying to balance its budget without receiving a bailout. As an outsider one has to note that this is the exact reason that so many people were against forming the EU in the first place, beacuse of the risk of individual countries endangering the collective.
http://www.nytimes.com/2010/11/16/business/global/16euro.html?pagewanted=2&_r=1&ref=business
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This was going to be a problem for some of the smaller countries who are apart of the European Union. However, they understood this going in because the overall benefits of it outweigh the small negatives from certain countries. The bailouts have to stop eventually though as these countries should be held a little responsible for their current economy. How do you expect Ireland to ever repay this debt to the International Monetary Fund when they just got themselves in debt so badly.
ReplyDeleteThe idea behind the EU is one for the greater good. This is an ideal situation for countries who are not doing so well to partner up with countries that have well surpassed the point of a developing country to one that has solid ground. In the case of Irelands sovereignty, it can be understandable that the country does not want to be in debt of 85 billion euros. This will takes many years to be under others wings, as Irelands ideas are not identical to those who will be lending a helping hand. This could possibly influence the country in a certain way that is no expected or wanted by the present leaders. In the end, it may be smarter for the country to take out loans in smaller portions over so many years then receive a large lump-sum to eventually fear in repayment
ReplyDeleteAjay Bohra