Ireland agrees to a bailout
A person withdrawals money from a AIB Bank Automated Teller Machine in Dublin, Ireland November 21, 2010. Allied Irish Banks was rocked Friday as it revealed customer deposits have plunged 13 billion euros (17.8 billion dollars) since January and said ongoing EU/IMF bailout talks could affect its future. European Union finance ministers will address Sunday night an imminent bailout request from Ireland after the government in Dublin began discussing a recommendation to call for aid, diplomats told AFP.
TEXT OF INTERVIEW
JEREMY HOBSON: The Irish government has formally requested help from its European partners. As you may remember the country had been saying it didn't need a bailout package. So what changed?
Let's bring in our Europe Correspondent Stephen Beard. He's with us live from London. Good morning, Stephen.
STEPHEN BEARD: Hello Jeremy.
HOBSON: We've been watching this story unfold for weeks now. Now we have a deal, bring us up to date. What's going on there?
BEARD: Ireland is getting a package of loans worth well over $100 billion from Ireland's European partners and from the IMF. This is a kind of war chest to prevent the country's heavily indebted banks from going bust. We don't know the exact amount or the terms because they still haven't been agreed upon. I mean this is extraordinary. They rushed out this announcement of a deal in principle last night, for fear of mayhem in the financial markets this morning if there'd been no agreement at all.
HOBSON: Always like to put those big deal out on the weekends so the markets don't react right away. Now, Stephen, Ireland generates about as much economic output as the state of Maryland -- we checked and that's what it is. How did this become a story of concern to the entire world?
BEARD: It's fear of contagion. All 16 countries that use the Euro are joined at the hip -- a massive loss of confidence in one can quickly spread to some of the others especially if they've got similar problems like Portugal and Spain for example. Turmoil in four or five of these countries obviously endangers the whole currency, which is a major force in the global economy. Professor Dominic Swords, at the Henley Business Center says if the Euro fell apart it could have a big impact on the fragile recovery in the global economy.
DOMINIC SWORDS: An event like that, the European currency running into problems, could completely destabilize that return to growth that we're beginning to see.
And it's worth remembering that with this Irish bailout we're certainly not out of the woods. They said that after Greece and look, they didn't stop the rot in bailing out the Greeks.
HOBSON: Absolutely. Marketplace's Stephen Beard in London. Thanks so much Stephen.
BEARD: OK Jeremy.