Mitchell Scholar Blogs

It is eight months since I first arrived in Ireland, and each evening, I am reminded of my first few days here. The reminder comes by way of sunlight that lingers well into the night.

It was one of the first things I noticed when I arrived last August. Even on an overcast or rainy day, even at the tail end of summer, the sun would make its presence felt late into the night.

The flipside of this latitudinal phenomenon were the fleetingly short days of winter. From December through February, the sun never seemed to fully rise. And by 4:30 in the afternoon, I would leave lectures to find all but the last traces of light extinguished from the sky.

As with any cycle, re-encountering the familiar solicits a moment for reflection. In this case, I am realizing how much my year in Ireland has been marked by two disparate themes: one of business and economics and the other of Ireland’s natural beauty.

The first of these themes absorbed my weekdays, as I went to class and did work for my MBA program. The second theme was evidenced during weekend sailing, biking, and hiking trips.

The first theme was an exploration of what we, as humans, have created and built – institutions that reach across the globe, employing millions, transforming resources, and changing patterns of everyday life. The second is an exploration of what we haven’t yet touched – miles of Irish landscape that evidence years of carving by wind and water and seem untouched by human intervention.

Ireland is an amazing place to explore the intersection of these two realms. One can travel from Dublin’s ‘silicon dock’ – the name of a commercial district of Dublin, home to the European headquarters of many multinational tech companies – to the Wicklow Mountains well inside an hour.

As humanity grows in size and affluence, we face no greater challenge than that of managing how our expanding footprint affects our planet. For me, this year has been an excellent opportunity to both explore the management of that footprint and, occasionally, attempt to escape it all together.

On February 6, just before midnight, a plane carrying Ireland’s president landed at Dublin airport. It was a hastily arranged voyage, interrupting a state visit to Italy so that President Higgins could sign a piece of legislation into law. The particular bill in question had been in the works for months. However, until just hours before his plane touched down, its existence had not been reported outside the government.

Word of the bill had leaked to the press in the late afternoon. Members of parliament received their copies just before 11pm that night. They were given one hour to read the bill before debate commenced. It was a blur of events – even for those involved. At two in the morning, just before the final vote began, Ireland’s finance minister told members of parliament, “Don’t concentrate so much on the detail, look at the purpose.”

At 3am on February 7th, the Dáil (Ireland’s parliament), passed the Irish Bank Resolution Corporation Act. At 7:25am the next morning, President Higgins signed it into law. Although he was now free to return to Italy, the law was just one part of the day’s flurry of activity. For the Prime Minister and the Minister of Finance, the next several hours would see a series of swift negotiations with the European Central Bank who had closely watched the vote early that morning.

The end result of all this was the liquidation of a rather peculiar institution, a new set of agreements with the European Central Bank (ECB), and, to hear it from Ireland’s political leadership, a new lease on life for the country’s economy.

The peculiar institution that was liquidated was the Irish Bank Resolution Corporation (IBRC). The IBRC is the vestige of Anglo-Irish Bank, a bank that had helped push Ireland into financial crisis and towards a 65 Billion Euro bailout from Europe in order to guarantee the solvency of Anglo and other banks. The late-night parliamentary maneuvering had prevented IBRC’s creditors from trying to block the liquidation before it occurred.

After liquidating the bank, the ECB agreed to swap Ireland’s current commitments to its defunct banks, which required the country to shell out roughly 3 Billion Euros per annum (a payment which was set to come due on March 31st) with a set of long-term bonds that would not mature until thirty years later. (OK, it’s a bit more complicated than that, but this simple story will suffice for now).

Ultimately, the maneuver is a bet on two things: (1) that reduced austerity will lead to more economic growth and (2) that inflation will occur and that the Euros that Ireland will repay in thirty years will be worth less than Euros that would have had to be paid now. For now, Ireland has dodged its upcoming payments and, it appears, refinanced its obligations on terms that will likely prove to be much more favorable.

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As a business school student in Europe, watching the continent negotiate its currency union has been one of the most fascinating storylines to this year. As Cyprus enters its own bailout saga, Spain and Italy teeter on the brink, and Greece tries to live up to its commitments, Ireland’s apparent navigation towards a smooth landing from its fiscal crisis appears a bright spot.

The merits of the move are being hotly debated, and the true benefits will only be revealed in time, but I can sense those around me breathing a bit easier.