FT highlights plight of ‘dire land’

IRELAND’S economic woes were highlighted abroad yesterday when the influential Financial Times ran a special report on the country’s plight entitled Dire land.

Noting that Ireland faced the industrialised world’s deepest recession, the paper listed three key tasks facing the Government: establishing NAMA to deal with the banking crisis, framing the budget and passing Lisbon.

While the NAMA plan had been “well received” by the financial markets, the public remained unconvinced, the paper noted.

This could complicate the Government’s efforts toinflict painful spending cuts in the December budget and secure a yes vote in the second Lisbon referendum in October, it continued.

“The Government hasdevised a bold, untried and deeply unpopular plan to rescue its ailing banks, taking over billions of euro of property loans that have gone sour with the collapse of land and house prices,” the paper said.

“Evidence that Ireland is addressing the crisis has been well received in financial markets. Irish bank shares have rallied and the risk premium on Ireland’s sovereign debt has reduced. Back in February, thereappeared to be a real possibility that Ireland might default on its foreign debt.

“But if international markets look on more approvingly, the opposition at home to Mr Cowen’s plans has intensified. Many Irish are deeply cynical about the Government’s motivation in helping the banks, pointing out that their developer clients were main donors backing Mr Cowen’s populist Fianna Fáil party, as emerged in evidence in recent tribunals investigating alleged planning corruption in Dublin.”

The paper quoted an unnamed Government official as stating: “Until people believe that the pain is being shared more equally, and perhaps one of these bankers or developers has to be put behind bars first, the Government will always struggle to win popular backing.”