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European Debt Crisis

No riots, but Ireland feels the pain of austerity

Christopher Werth Mar 15, 2012

Tess Vigeland: Saturday is St. Patrick’s Day — traditionally a day of fun and levity. Lots of levity. But many on the Emerald Isle itself are in no mood to celebrate. Ireland is deep in debt. A year ago, the European Union and the International Monetary Fund agreed on a bailout plan. In return, Ireland had to impose severe austerity measures — including tax hikes and spending cuts.

And as Christopher Werth reports from Dublin, they’re paying the price.

Christopher Werth: Ask almost anyone in Ireland about how the austerity program is affecting the country’s economy, and they’re likely to use some rather gruesome metaphors.

John Corcoran: If a guy’s lying there half dead, you can’t come up with a stick and start beating him until he gets better. It’s not going to work.

John Corcoran owns this small shoe store on one of Dublin’s busiest shopping streets. He says many shops like his are either well behind on rent, or have closed altogether.

Corcoran: Austerity means our customers, first of all, have less money to spend. You know, the local economy is in a tailspin.

Ireland may be beaten up and bruised, but unlike some troubled eurozone countries, it hasn’t just promised to cut its budget deficit, it’s actually doing that with a tough program of lower spending and higher taxes.

Alan Barrett is an economist at Trinity College Dublin.

Alan Barrett: When international lenders will simply not lend you any money, you don’t have a choice.

Barrett says there hasn’t been much protest because the Irish people felt like the measures were helping the country get out of its present mess. But the latest figures show Ireland’s economy is barely growing, if it all. And unemployment is now at 14.5 percent, the highest level in 20 years.

Barrett: If people are enduring all this, but aren’t seeing any positive results, you could end up with, let me call it “austerity fatigue” — whereby people stop accepting this. And that’s a huge concern.

“Austerity fatigue” can certainly be felt at this rally against the measures in Dublin.

Joe Flood: I’m just barely holding out at the moment you know.

Joe Flood says he’s struggled to find work over the last few years. And he refuses to pay the latest round of new taxes.

Flood: We were told maybe a couple of years ago, take our medicine and it will be okay. People, they live in hope that things are going to change around. But we just keep piling on the medicine, piling on the medicine, and we don’t seem to be getting nothing in return.

And speaking of return, let’s go back to those gruesome metaphors so popular in Ireland right now. Economist David McWilliams says the best way to think about Ireland’s predicament is to picture a man with his hands around his own throat.

David McWilliams: The man is being strangled. But he’s being strangled by himself. So the minute you take your hands away from your neck, you begin to recover. You breathe again.

He says if Ireland want to stop choking off its own recovery, it needs to work out a deal similar to the one Greece has negotiated to lower the amount of debt it owes. After all, he says, Ireland’s overall debt — made up mostly of loans to now defunct Irish banks — is far larger than what Greece is on the hook for.

McWilliams: We’re never paying that back. Do you know why? Because it’s impossible to pay that back. But politically, the European Union needs a success, and we happen to be that model.

McWilliams says the thinking among EU leaders is that if austerity isn’t seen to work in Ireland, it can’t work in the rest of Europe.

That could mean more budget cuts and tax increases for years to come, no matter how fatigued the country gets.

In Dublin, I’m Christopher Werth for Marketplace.

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