European Union Plans to Sign Off on Ireland's Bailout

Nov. 28: French Finance Minister Christine Lagarde, right, shares a word with British Chancellor of the Exchequer George Osborne during a round table of eurozone finance ministers at the EU Council building in Brussels. (AP)

BRUSSELS – Debt-crippled Ireland has completed negotiations for an EU-IMF bailout and a deal will be ratified and published by fellow European governments within hours, Prime Minister Brian Cowen said Sunday.

Cowen said in a statement that Dublin talks which began Nov. 18 with International Monetary Fund, European Commission and European Central Bank experts "are concluding today" in Brussels. He says the Irish Cabinet met late Saturday to approve the plans.

"It is expected that the program for assistance to Ireland will be adopted at this ministerial meeting. It is anticipated on that basis that details of the agreement will be published later this afternoon," Cowen said in a statement issued in Dublin.

European Union nations gathered to sign off on the proposed euro85 billion ($113 billion) emergency loan for Ireland.

As they entered the hastily arranged meeting, ministers stressed their hope that the aid package to Ireland would help to remove bailout pressure from fellow eurozone members Portugal and Spain.

"Today we will conclude about Ireland and we will organize the best solution for the eurozone," Belgian Finance Minister Didier Reynders said.

The finance ministers were poring over a series of documents spelling out proposed terms and conditions for loans from across the globe, but chiefly from Ireland's European partners.

With the euro weakening and the yields on Portuguese and Spanish bonds surging in recent weeks, finance ministers also were aiming to stabilize the wider 16-nation eurozone.

"It's not only about aid for Ireland, but together with Ireland about the stability of the common currency," said Austrian Finance Minister Josef Proell.

Britain's treasury chief, George Osborne, said his country could provide both a bilateral and an EU-organized loan to Ireland, and the EU's 27 financial chiefs wanted to sign off on "the details of the whole package."

"Obviously we've all come here on a Sunday in order to get some stability. It's absolutely in Britain's national interest that we sort out Ireland," George Osborne told reporters before entering the Brussels conference.

When asked about the total amount of a proposed bilateral loan and Britain's contribution to a wider bailout fund, Osborne said, "That's precisely what we're going to discuss today, the details of the Irish package."

The European Central Bank forced Ireland into accepting a bailout this month as it became clear that several state-backed banks in Dublin were struggling to raise funds and were instead relying on euro130 billion in short-term loans supplied or approved by the Frankfurt bank.

Sunday's conference was preceded by a flurry of telephone conversations involving senior EU officials, including EU President Herman Van Rompuy, president of the European Central Bank Jean-Claude Trichet, Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France.

French Finance Minister Christine Lagarde said she thought the deal for Ireland was almost complete, but discussions remained about the regimes of interest rates that the Irish would be expected to pay on different tiers of the loan package.

Irish officials have disputed reports that at least part of the bailout would come with an interest rate of 6.7 percent. They have said it will be nearer the 5.2 percent average being paid by Greece for its euro110 billion ($150 billion) EU-IMF bailout in May.

Ministers were under pressure to sign off an a deal before markets open Monday. In the mix were bilateral loan offers from Britain, Sweden and Denmark, which are not members of the euro currency but have major business interests in Ireland.

Irish Finance Minister Brian Lenihan arrived late at Sunday's meeting because of heavy snows in Dublin and entered without speaking to reporters.

"We're nearly there, we've made great progress in the talks in Dublin in recent weeks, but there can't be an agreement until it's signed off and approved at political level," said an Irish government official, speaking on condition of anonymity because he was not authorized to talk on the record about this month's Dublin negotiations.

Most Irish people and many economists say the emerging loan package should include requirements that foreign banks that loaned hundreds of billions to Irish banks should share the cost of the Irish bailout.

But until now, the Irish government and European Commission have been unanimous in ruling out any partial defaults on Irish bank debts, arguing this would cause unpredictable shockwaves in global banking. The major lenders to Ireland's debt-crippled banks are from Britain, Germany and the United States.

European chiefs have expressed hopes that an Irish financial rescue, regardless of its terms, will restore faith in the ability of the 16-nation eurozone to prevent defaults among its members. They face challenges from global investors, who have been dumping the bonds and bills of several eurozone members -- chiefly Greece, Ireland, Portugal and Spain -- in the belief that all are on course for eventual defaults or more bailouts.

"We are working toward a solution and I hope that as of tomorrow the financial markets will be reassured that the euro is a currency with a stable future," said German Finance Minister Wolfgang Schaeuble.

Ireland was long the EU's economic star, but the Celtic Tiger suffered a spectacular fall in 2008 when its construction-dependent growth amid a global credit crisis and burst property bubble. Unemployment has nearly tripled to 13.6 percent, second only to Spain in Europe, and tax revenues have plummeted.

Those offering bailout funds expect Ireland to take drastic action to reduce its Europe-leading deficit. The Irish government this year is spending more than euro50 billion but expected to collect just euro31 billion, while exceptional costs from a euro45 billion bank-bailout program have inflated the deficit to 32 percent of GDP, a post-war European record.

To combat this, Ireland has already imposed three emergency budgets and plans to unveil a fourth Dec. 7 that would cut euro4.5 billion in spending and raise euro1.5 billion in new taxes. Prime Minister Brian Cowen has only a two-vote majority in parliament and faces a series of tough votes that, if he loses one, could force the government to collapse.

On Saturday, more than 15,000 people marched in Dublin to denounce the imminent bailout as likely to give Ireland, a nation of 4.5 million, a bill it can never repay.