Bid to kickstart Celtic tiger

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By Mark Simpson BBC Ireland correspondent

Controversial proposals aimed at rescuing the Republic of Ireland's economy and reviving the country's banking sector are set to come under close scrutiny in the Irish Parliament.

Taoiseach Brian Cowen has come under fire over the bailout plan

The government wants to buy an estimated 90bn euro ($132bn; £80bn) worth of bad debts from the banks and transfer this to a state-run agency - National Management Agency (Nama) - to allow banks to resume lending.

But critics of the scheme say taxpayers will be saddled with huge debts to bail out the banks and property developers.

Depending on your perspective, the controversial plan will either save modern Ireland or wreck the country for generations to come.

The coalition Fianna Fail-Green Party government, which proposed the scheme, is facing fierce opposition from other parties.

Backing needed

As setting up the scheme requires legislation, the plans must be discussed by the Irish parliament - the Dail - and the debate is set to be a stormy one.

To ensure the bill is passed the government will need its smaller Green Party coalition partner to back it.

The collapse of the construction sector has left banks with bad debts

Currently the bill looks likely to get the Green's support, but it cannot be taken for granted. The stakes could not be higher as the government may stand or fall on this issue.

Critics say Nama is too big a gamble, and tax-payers' money should not be risked in a project which has no guarantee of success. The main opposition party, Fine Gael, says it is time for a change of policy - and a change of government.

However, supporters of Nama have gone on the offensive, trying to explain the merits of the scheme to the Irish people via TV, radio and online.

The agency's wesbite says its aims are to:

<ul class="bulletList" ><li>Provide the banks "with a clean bill of health"</li><li>Strengthen their balance sheets</li><li>Reduce uncertainty over bad debts</li><li>ensure the flow of credit to individuals and businesses </li></ul>

Nama has been labelled Ireland's "toxic bank".

It may be toxic, but strictly speaking it is not a bank as it will not be taking deposits from the public and will not have a banking licence.

Fighting

But why should tax-payers' money be used to help the banks, when many people blame them for the financial crisis in the first place?

Irish prime minister, Taoiseach Brian Cowen, says it is not a bank bailout but instead is a bail out for the Irish economy.

In spite of record-low approval ratings for his government and himself, Mr Cowen has come out fighting.

Opponents believe taxpayers should not pay for bankers' mistakes

"We're devising a mechanism to get more credit into the economy and we're seeking to protect the interests of the taxpayer," he told RTE's Prime Time programme.

"If we did nothing at all and all of this went belly up, and we had practically an economic crash, the impact on jobs and businesses in Ireland ... we can't even contemplate."

He was speaking in an interview with journalist Miriam O'Callaghan. At one stage, she suggested that there had been so much debate on Nama recently that the weary Irish people were now 'Nama-ed out'.

The word has now entered the Irish vocabulary, and is not just being used as a noun or an acronym but as a verb.

Nama, it seems, is here to stay.

Unless, of course, the legislation being debated by Irish parliamentarians is rejected. The coalition government's recovery plan would then be, well, banjaxed.