Analysis: Agendas clash in Irish rescue ballet

In the murky ballet over a financial rescue for Ireland, the agendas of the key players in Europe are often at odds, clouding the message to markets and deepening the sense of crisis in the euro zone.

The latest country in the currency bloc to come under bond market pressure over its finances, Ireland is resisting a push from some European officials to apply for assistance out of an avowed determination to preserve its sovereignty, but probably also due to electoral considerations.

The European Commission and the European Central Bank have an interest in an early resolution to prevent contagion causing a wider euro area meltdown, as it threatened to do at the height of Greece’s debt crisis in April.

Ireland’s position is different because it is fully funded to mid-2011 and does not need to tap the markets immediately. But its state-guaranteed banks, weighed down by bad loans granted during a property boom, are largely shut out of inter-bank lending and heavily reliant on ECB funds.

Dublin’s European partners have mixed motives, with fears of contagion balanced by domestic resistance in Germany to another bailout, and a tactical interest among weaker euro zone states in keeping market and EU attention focused on Ireland rather than on their own problems.

Here is a look at some of the avowed and unavowable motives of the players in Europe’s Irish stew.

The government says it is defending the independence of the Irish Republic, which celebrates 88 years of freedom from British rule on December 6, a day before a crucial austerity budget.

“It’s been a very hard-won sovereignty for this country and this government is not going to give over that sovereignty to anyone”, Batt O’Keefe, minister of enterprise, trade and innovation, told national broadcaster RTE on Sunday.

Prime Minister Brian Cowen’s battered cabinet is especially keen to avoid the humiliation of having to go cap-in-hand to the European Union and the International Monetary Fund before a crucial by-election on November 25, Irish politicians say.

Finance Minister Brian Lenihan is putting the finishing touches to a four-year 15-billion-euro deficit cutting plan to be announced later this month. While EU officials are involved in those discussions, they would have more power to set the terms if Ireland were under an EU-IMF program now.

Like other countries on the brink, Ireland may be able to obtain easier rescue conditions by playing for time and using the contagion risk if aid is delayed to wring concessions.

The government may also want to pin the blame on Brussels or Berlin for unpopular spending cuts or humiliating tax rises such as any increase in Dublin’s iconic ultra-low 12.5 percent corporate tax rate.

Ireland’s opposition parties want Cowen’s administration to take the blame for the most unpopular austerity measures before they force a general election which opinion polls suggest they should win by a large majority. (Reuters)

Exercise 2. Make a summary of the news issue below and translate it into Ukrainian.

WikiLeaks: Libya ‘thuggish’ over Lockerbie bomber

Leaked U.S. diplomatic cables showed growing anxiety in the British government over threats from the Libyan leader, Moammar Gadhafi, should the convicted Lockerbie bomber Abdelbeset al-Megrahi die in a Scottish prison. By late 2008, al-Megrahi’s health was declining. Diagnosed with prostate cancer, he had been given months to live. And it had become a badge of pride for the Libyans to bring him home. A cable from the U.S. embassy in Tripoli, the Libyan capital, in January 2009 says: “The UK Embassy expects a sharply negative GOL [Libyan] reaction if al-Megrahi dies in prison or if the Scottish Executive and/or FCO oppose his transfer”, referring to Scotland’s government and the British Foreign Office in London. Al-Megrahi is the only person ever convicted in connection with the bombing of Pan Am flight 103 over Scotland in 1988, which killed 270 people. The diplomat’s message is one of several cables obtained by WikiLeaks on the al-Megrahi case. Quoting the British ambassador, the cable goes on: “Threats included commercial sanctions, severing of political ties and suggestions that the welfare of British diplomats and citizens would be at risk”.

And the US ambassador, Gene A. Kretz, noted that American interests might face similar retribution. Scottish authorities declassified a huge trove of documents related to the case in September 2009, shortly after al-Megrahi was released. They paint a similar picture of Libyan threats, often not very thinly veiled, to secure the Libyan’s freedom.

The British government was negotiating a Prisoner Transfer Agreement (PTA) with Libya at the time of the American cables, but was concerned it would not be completed in time for al-Megrahi to be sent home to Libya before he died.

The January 2009 cable warned that the Libyan “regime remains essentially thuggish in its approach”. It continues: “The over-reaction of Muammar al-Qadhafi to what amounted to a matter of pride involving a verbal spat with then-Crown Prince Abdullah at the 2003 Arab League Summit, together with the more recent deterioration of Swiss-Libyan ties, are illustrative of what may happen should al-Megrahi die in prison”.

The pressure on Britain mounted through 2009. In August, another cable from the U.S. embassy in Tripoli said the Libyan foreign minister had promised there would be no celebrations should al-Megrahi return, as he was “too ill for anything but a quiet return to his family”.

The U.S. mission quoted the British ambassador as saying that a refusal to repatriate al-Megrahi could have disastrous implications for British interests in Libya. “They could have cut us off at the knees, just like the Swiss”, he is quoted as saying. The Libyans were also infuriated by the U.S. government’s position, that al-Megrahi should not be released and should finish his life sentence in jail in Scotland.

One senior Libyan official described “the U.S. justice system as infamous for making mistakes and jailing innocent people”, according to one cable. The same official would offer no guarantees that al-Megrahi’s return would be subdued. “No one can object to Libyans expressing their feelings if Megrahi comes back”, he said. “This is democracy”.

Just a few days later, on August 20 2009, al-Megrahi was freed on compassionate grounds. At the time, Scottish officials said the medical advice was that al-Megrahi would live about three months. Another of Gaddafi’s sons, Saif al-Islam Gadhafi, flew in a private jet to Scotland to bring him home. Libyan television broadcast celebrations from Tripoli airport when the plane arrived.

Al-Megrahi is still alive more than a year after his release, and the story has continued to overshadow relations between Britain and Libya.

A leaked American cable from February this year covered a conversation between a U.S. diplomat and the North Africa Director at the British Foreign Office, who “explained that fear over how Tripoli will handle Megrahi’s eventual funeral remains a major concern and one that [the British government] continues to raise regularly”.

“Summing up the relationship, she described it as being ‘in limbo’ and ‘lacking clarity’ on several fronts”, the cable concluded. (CNN)

Exercise 3. Make a summary of the news issue below and translate it into Ukrainian.

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