Tags: Ireland | Rejects | Call | Vote | Bailout

Ireland's Cowen Rejects Call for Vote on Bailout

Tuesday, 30 Nov 2010 02:52 PM

 

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Ireland's prime minister on Tuesday rejected calls to put the country's international bailout to a vote in parliament, despite criticism that the deal is too costly and unlikely to halt Europe's debt crisis.

Brian Cowen told lawmakers Ireland had no alternative but to accept the package agreed on Sunday for up to 67.5 billion euros ($89 billion) in loans from the International Monetary Fund, European Union and others.

"The funding needs of this state are now on a far firmer footing as a result of making this agreement than would have been the case without making this agreement," Cowen told parliament. "We have a prospect not only of recovery, but of future prosperity."

Cowen dismissed calls from opposition parties for a specific vote to approve the bailout — though they will need to vote on Ireland's 2011 budget, being presented to Parliament next week.

Many opponents are angered that the bailout demanded Ireland uses 17.5 billion euros of its own cash and pension reserves to shore up its ravaged finances, which have been overwhelmed by recession and the high costs of a bank-bailout effort.

"The family silver has been sold and the people's money has been raided," main opposition Fine Gael leader Enda Kenny said, demanding a chance for a vote.

Labor leader Eamon Gilmore said Cowen had taken "the country to the pawn shop" and failed to secure terms as favorable as Greece had negotiated during its bailout in May.

"Your weak, end of days government was in a position to negotiate a better deal for us," Gilmore said.

Commentators and the public have aired concerns that Ireland won't be able to afford the loans and that generations of taxpayers will face the bill for rescuing the country's banks.

"What happened here last Sunday was a demonstration of the art, and the craft, and the skill of national destruction," Kenny told Cowen, in a series of testy exchanges.

Cowen insisted the average interest rate of 5.8 percent on the international loans is far below the rate of more than 9 percent that Ireland would have to pay if it still had access to usual credit markets.

He also insisted Ireland's deal for loans over 7 1/2 years was better than the 5.2 percent interest rate over three years under Greece's deal.

Investors also remain deeply skeptical that Europe's debt crisis has been contained by Ireland's deal, selling off government bonds from Spain, Portugal and Italy on Tuesday.

However, the yields on Ireland's 10-year bonds eased to 9.219 percent, from an earlier rate of 9.40 percent — a record high since the 1999 launch of the euro common currency.

Before the exchanges, justice minister Dermot Ahern — who had dismissed as fiction reports Ireland was seeking a bailout — said he planned to quit politics on health grounds.

Ahern, a lawmaker since 1987, said he had been diagnosed with rheumatoid arthritis and explained he had told Cowen in Oct. 2009 that he would not fight the country's next election.

Cowen, who has only a two-vote majority in parliament, has resisted calls for a snap election, but pledged to dissolve parliament early next year once the 2011 budget is fully enacted.

Gerry Adams, leader of the Irish nationalist Sinn Fein party, will contest Ahern's parliament district, in County Louth, and on Tuesday repeated his call for an immediate contest.

Earlier this month, Ahern had said reports Ireland was seeking financial aid were incorrect and suggested European Central Bank officials had briefed the media in an attempt to pressure Cowen's government into accepting a bailout.

"Clearly there were people from outside this country who were trying to bounce us, as a sovereign state, into making an application, throwing in the towel before we had even considered it as a government," he said.

Ahern insisted that he had been right at the time to claim Ireland was not demanding a bailout. He said there was "quite incredible pressure on this country and, if you notice, they're doing the same with Portugal now."

Under the international bailout, Ireland will immediately inject 10 billion euros into its cash-strapped lenders.

Allied Irish Banks said Tuesday that Ireland's Central Bank had asked it to find 5.26 billion euros in new capital by the end of February. If it can't find the resources itself, the government will offer money from the bailout fund, virtually nationalizing the lender.

The Bank of Ireland has until the same date to find 2.2 billion euros, or it will also receive government bailout cash.

Allied Irish Bank saw shares fell by 2.82 percent, while shares in the Bank of Ireland rose 3.61 percent on the Irish Stock Exchange.

Shares in Irish Life & Permanent — which said Monday it doesn't require any state aid — were up 22.4 percent.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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