Former IMF chief says Irish authorities were not helpless over EU policy
Economist feels Irish could have pressed for a better deal from Europe
“Ireland had the basis for showing some leadership in Europe and that basis for that leadership would have been to say, ‘look, there’s more than one way of doing this and for our sake and for Europe’s sake, let us show you that way to do it’,” he said.
The economics professor says he has never fully understood the response of the Irish authorities when they question how they could have pressed a harder case with the European authorities.
Mody believes the Irish authorities weren’t helpless to accept Europe’s austerity approach and he keeps coming back to the idea that the Irish government “bought into some of that suffering”.
“If Ireland said, ‘you know we really need to do this because we think it is an economically sensible thing to do,’ what exactly was the alternate position of the European authorities?
“Would they have said, ‘in that case we are going to let you sink’?” he asked.
“I think Ireland held a very good position and that position became stronger over time as Ireland did the first several rounds of what was essentially consistent with the European framework.”
As to whether he was pushy in challenging the strategy of his European troika partners if he believed it was wrong, Mody declines to comment citing the confidentiality rules guarding internal negotiations.
“How hard the IMF should have, could have or did push is something the IMF should speak about,” he said.
Mody is not hopeful for Ireland’s future economic growth.
“It is unreasonable to expect Ireland to grow at more than 2 per cent a year, he said, and the fact that the “bounce-back” from a deep recession is taking so long to occur “implies that the long-term growth prospects have weakened”.
“It is not clear how Ireland is going to bounce back into any reasonable growth for a period of time,” he said.
Ireland may be emerging from the bailout programme this weekend but the legacy of the crisis remains, he says.
Public debt and unemployment, particularly among the youth are still high.
To be hopeful about the future would require a much more ambitious policy direction from Europe beyond austerity.
“This is a crisis in as much as because there are no clear answers and . . . no system within which to think of more ambitious and more radical ways of altering that trajectory, that dynamic,” he said.
“There is a crisis because it will come to be accepted as the norm and therefore something that the country has to live with, and that will be the tragedy.”