Ireland 'Under Pressure To Accept Bailout'

The Dáil Government is today vehemently resisting intense pressure from Europe to accept a bailout package.

It has emerged that the European Central bank is suggesting that the Irish State accepts a bailout payment from Europe to stabilise its economy in order to avoid risking the recovery of other states such as Portugal and Spain.

Minister for Tourism, Culture and Sport Mary Hanafin flatly denied that the Government had engaged in discussions with the EU authorities on a possible bailout saying "there is no question of it" while Justice Minister Dermot Ahern called the speculation "fiction" despite conceding they will have to deal with events as they happen "day by day".

The rumours and uncertainty have been unnerving the international markets, which is pushing up the cost of Ireland's borrowing worsening Ireland's problems at every stroke. Ireland's leaders have been trying to quell the markets nervousness since last week, even going as far as eliciting the help from France, Germany, Italy, Spain and Britain at the Group of 20 summit ongoing in Seoul to issue a statement of confidence in the State.

However, despite the best efforts of European leaders and the Irish Government, it emerged this weekend Ireland may approach the European Financial Stability Facility (EFSF) for up to €80 billion. This has been denied by the Department of Finance.

EU finance ministers in Brussels will discuss Ireland's difficulties on Tuesday and it is believed high-level talks had already begun, involving European Commission President Jose Manuel Barroso and his economy commissioner Olli Rehn.

According to a report by Barclays Capital, the European Union and the International Monetary Fund would need to loan €80 billion to €85 billion to satisfy Ireland’s sovereign funding needs and to create an added buffer to help recapitalize its failed banks.

The EFSF will have the capacity to issue bonds guaranteed by euro area members for up to €440 billion for on-lending to euro area Member States in difficulty.

Despite improving Ireland's borrowing rates and shoring up its finances in the short term, accepting financial help could seriously damage Ireland's international economic reputation and lead to longterm financial penalties and heavy interest repayments that could hurt long-term growth.

(DW)