By George Anders

Columbia University economist Jeffrey Sachs stirred the European debt-crisis pot this weekend with a call for Ireland to renegotiate some of its debt.

Sachs chose an unusual forum for his remarks: the Kilkenomics festival in southern Ireland, where economists and comedians exchanged views about global financial difficulties and how to solve them. There wasn’t anything frivolous, though, about Sachs’s comments, made during an hour-long, onstage interview Saturday with Irish economist and broadcaster David McWilliams.

Sachs took issue with the Irish government’s 2009 decision to nationalize Anglo Irish Bank Corp., the troubled private-sector institution, and to guarantee its debts. “You shouldn’t feel like you’re bound by this,” Sachs declared. “You can get a better workout.” He drew scattered applause when he urged audience members to confront Ireland’s leaders about the obligations of Anglo Irish, renamed Irish Bank Resolution Corp. last month.

In recent years, Sachs has been active in sovereign-debt discussions, advising some of Africa’s poorest countries on behalf of the United Nations. “I’ve been to 128 countries,” Sachs reminded his Kilkenomics audience. In his 2006 book, “The End of Poverty,” Sachs advocated greater debt relief as a solution for some nations’ woes.

But Ireland isn’t Kenya, or even Greece. Ireland’s economy remains fundamentally strong, led by agricultural exports and tourism revenue, despite some turbulence in recent years. Ireland’s debt burden isn’t nearly as high as Greece’s. Investors know this; yields on Irish 10-year government bonds have retreated recently to about 8 percent, after briefly hitting a high of 14 percent during July’s debt anxieties. By contrast, Greece’s 10-year bonds yield about 26 percent, reflecting deep investor doubt that full interest payments will be made.

Ireland’s debt strategy will require a lot of careful attention in the next few years. At this moment, though, there’s no reason to press the “can’t pay” button.

For the record, Irish Finance Minister Michael Noonan told his country's parliament on Nov. 2 -- the day the government made a $1 billion payment on senior debt of the former Anglo Irish Bank -- that a renegotiation "is the way over the cliff."

(George Anders is a member of the Bloomberg View editorial board.)

-0- Nov/07/2011 17:28 GMT