Ireland confronts political mutiny in wake of bailout

Ireland has been plunged into disarray as the Green Party said it intended to pull out of the coalition government. The announcement was rapidly followed by statements from two independent members of parliament suggesting they too were unlikely to support the government of Prime Minister Brian Cowen.

A general election is expected in January at the latest, but opposition parties are calling for a vote now.

A spokesman for Mr. Cowen said today that the government was focused on crafting a new fiscal budget and completing economic recovery efforts, but the prime minister was meeting this evening with colleagues from his Fianna Fáil party to discuss the deepening political crisis. At least one of his colleagues, Dublin lawmaker Chris Andrews, has called for Mr. Cowen to resign as both prime minister and party leader.

The mutiny comes at a difficult time for Fianna Fáil, the senior partner in a coalition government with the Green Party. The government is negotiating the details of a joint European Central Bank-International Monetary Fund aid package and plans to announce its four-year economic recovery plan Wednesday. While the Green Party's pullout is not expected to jeopardize the ECB-IMF package, it has caused jitters across financial markets and fears that instability could spread elsewhere.

Fianna Fáil's poor leadership during the bailout crisis has caused the current political crisis, according to a Green Party source who did not wish to be identified. “I suppose it’s just a case of realizing what a mess things are and the way this ECB-IMF situation has been handled,” says the source.

Green Party calls for January election

The leader of the Green Party and Minister for the Environment John Gormley this morning announced his party’s intention to push for an election in the second half of January.

“We have now reached a point where the Irish people need political certainty to take them beyond the coming two months. So, we believe it is time to fix a date for a general election in the second half of January 2011,” he said.

A statement issued by the party said it intended to remain in government until January to contribute to the recovery plan, deliver the 2011 budget (due in December), and finalize the details of funding support from the EU and IMF.

A move for self-preservation

Kevin Bean, professor of Irish Studies at the University of Liverpool, told the Monitor that the Green Party's decision was driven by self-preservation. “Going into government was difficult for them and they’re [now] trying to salvage something [by walking out]," he says.

But he adds that the Green Party will not emerge unscathed from the current financial and political crisis. “They’re trying to ensure they’re not tarred as irresponsible. It won’t work. However, if they did walk out right now it would cause an absolutely tremendous crisis,” says Professor Bean.

Just two hours after the Green Party announcement, things got much tougher for the government when the two independent parliamentarians, Jackie Healy-Rae and Michael Lowry, announced they were unlikely to continue supporting the government, including a budget that made cuts to old-age pensions.

Until this morning, the government had a slim majority of just three votes in the Dáil, Ireland’s parliament. If Mr. Lowry and and Mr. Healy-Rae move to the opposition benches, it would precipitate an immediate general election.

Fine Gael and Labour call for snap election

Opposition parties seized on the defections to attack Fianna Fáil's credibility and call for a snap election to avoid further political uncertainty.

“What is needed now is an immediate general election so that a new government, with a clear parliamentary majority, can prepare the four-year economic plan, complete negotiations with the EU and IMF, and frame a budget for 2011,” Enda Kenny, leader of the main opposition party Fine Gael, said in a statement.

Eamon Gilmore, leader of the center-left Labour Party, also said an election was needed now. “After thirteen years of bad government and weeks of lying to the Irish people, the unprecedented decision taken on Sunday effectively represents the handing over of the deeds of the country to the EU and the IMF," he said.

The prospect of EU-IMF aid being used to plug the gap in the country’s stricken finances has proved controversial – as have the figures, generally estimated to be around €90 billion ($123 billion).

But the true figure will come closer to €250 billion ($341 billion), says Trinity College Dublin finance Professor Brian Lucey, who is not alone in this bleak prognosis. Economist Constantin Gurdgiev of Trinity College also says the reported bailout figure of €90 billion is low, estimating it will come closer to €160 billion.

Anger bubbles over

Anger has not been confined to the parliament or halls of Irish universities. Left-leaning republican party Sinn Féin demonstrated outside Dáil Éireann, Ireland’s parliament, this afternoon to protest at austerity measures and the EU-IMF bailout.

BBC news footage shows Sinn Féin lawmaker Aengus Ó Snodaigh, who represents a predominantly working-class district of Dublin, being attacked by a police officer as the protesters pushed their way past the gates of the parliament.

European stock prices and the euro currency fell on international markets at the news of Ireland’s political crisis. Both had risen yesterday in response to apparent stabilization of the Irish situation.