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Ireland, the Euro and economic governance

Ireland has brought Europe back into the financial crisis.

Of course the Union has the means to save this "bad boy" of Europe from bankruptcy - since the Irish problems are not just due to its banks but also because of its government's economic and fiscal policy.

Here we have a country which until recently was qualified as "the Celtic Tiger" - building its growth over the last few years, alone, on the  sidelines of the Union, as the gateway to the European internal market. A fiscal regime worthy of an exotic tax haven (12.5% company tax),  a total lack of any serious banking regulations and an irresponsible economic policy initially succeeded in attracting a flood of companies thanks to an investment code that might be assimilated rather to dumping than to a European norm. But this artificial growth did not generate the expected revenues.

The consequences of this laxism were inevitable: a real estate bubble, overheating and an artificial improvement in living standards. Then came the hour of truth during the crisis with the collapse of housing prices, household debt, a 14% unemployment rate, and banks in a stranglehold fed on an intravenous drip provided by the European Central Bank (up to 130 billion euros have already been put up).

The Irish government has guaranteed the entire banking system ie a commitment of 480 billion euros, ie three times its GDP (164 billion) which leads it to a public deficit of 32%! Today it is begging for European solidarity which it has never really participated in itself.

Every time the Member States have wanted to bring their fiscal system closer to one another - a vital condition for a better governance of the euro area - Ireland was against it. Often blocking the decisions of its peers it has been an obstacle to greater integration of European economies, budgetary policies, fiscality, governance, security and its institutions, in brief just as many strong signs could have been sent out to the outside world in order to increase confidence in the euro of which however it has taken great advantage.

Today it wants its cake and eat it.

The European Union must not accept to help it at any price and order must be brought back, whether the prickly national Irish sentiment likes it or not. Ireland should have to show that its rescue is necessary for the euro and for Europe. It should have to accept alignment with European practice and renew its commitment to continuing greater political, economic and budgetary integration together.

The Union can no longer afford not to have a common, enhanced banking regulation, fiscal control, national economic policies and budget ie true governance of the euro.

We hope that the major money lenders will insist on reminding it of this demand that must now be an incisive obligation for Ireland and for us all.