Th e Irish Bailout:When resolve breaks down
Th e Irish Bailout:When resolve breaks down

Summary/Abstract: Much has been said about EU-wide implications of sovereign debt crises, but less attention has been paid to external pressure on the countries experiencing fi nancial shortage. Th is paper examines the impacts of EU level pressure and investors’ perceptions on the 2010 Irish bailout. Using cross-sectional economic comparison, process tracing and content analysis, I examine the conditions under which government resolve might collapse in the face of external pressure and adverse eff ects of interdependency. Process tracing illuminates the eff ects of EU level pressure and of investor perceptions on the timing of the bailout. Economic indicators and content analysis help capture perceptions. Unlike studies that have explained debt crises by domestic dynamics and economics, this multimethod research identifi es the causal role of external political dynamics. Absent a lender of last resort, Greece’s indebtedness decreased confi dence in the Eurozone, and instigated the fear of contagion. EU members pressed for an Irish bailout to signal investors that the Eurozone remained under control, and to secure their assets on Irish markets. Th e Irish case tells us about the limits of public policy, as well as signifi cance of trust and perceptions in fi nancial crises.

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