Finance ministers seek clarity on Irish position

A SUCCESSION of euro zone finance ministers have sought clarity from the Government on its plans to resolve the banking crisis as European Council president Herman Van Rompuy warned of an existential crisis in the euro zone.

Although Mr Van Rompuy's remarks met a stiff response from EU economics commissioner Olli Rehn, they were seen in some quarters as an attempt intensify pressure on the Government in the run-up to last night's Eurogroup meeting.

As euro zone ministers arrived in Brussels, the message that they were prepared to intervene if asked by Ireland was almost uniform. Diplomats said Ireland's stance was unclear in advance of the meeting, adding it was acknowledged that the Government could collapse if it sought to activate an EU/IMF bailout.

"There is some concern about the situation," said Belgian minister Dider Reynders, whose country holds the EU's rotating presidency. "First of all to listen to our colleagues from Ireland, like from Greece, like from Portugal, to know the exact situation and then we will see if it is necessary to do something."

Having sought to damp down speculation about possible assistance on Monday, euro group president Jean-Claude Juncker made clear the readiness of the European authorities to intervene if asked.

"It is up to the Irish authorities to put forward a request to the EU and the Eurogroup; if they do so we will be ready to support Ireland if needed," said Mr Juncker, who is Luxembourg's prime minister.

Despite pressure on the Government to accept aid, diplomats said it was still in question as to whether an expected communiqué would leave open that option or herald the beginning of formal talks on a support package.

"We're in a survival crisis," Mr Van Rompuy said in a speech in Brussels in the hours before the meeting began. "We all have to work together in order to survive with the euro zone, because if we don't survive with the euro zone, we will not survive with the European Union."

Mr Rehn, who said Ireland's banking problem was the "most pressing" issue for the single currency, said he was concerned at the "somewhat divisive tone" in the debate. "I want to call on every responsible European to resist existential alarmism and we now need to restore the sense of unity and determination, and work in order to ensure financial stability of the euro area."

The commissioner said Ireland's problems were not a matter of the euro's survival, but made it clear that talks on a resolution to the banking crisis were advancing.

He also drew a link between the banking crisis and the problems in the public finances, but called for a "cool head" in the efforts to calm the situation.

"The Irish sovereign is funded well until the middle of next year. The commission, together with the ECB and the IMF and the Irish authorities, are working in order to resolve the problems of the Irish banking sector," he said.

"I expect the Eurogroup to support this objective. The real problems are in the banking sector, but there are interconnections so we are discussing the overall situation with a strong focus on the banking sector."

[Source: By Arthur Beesley, European Correspondent, Irish Times, Dublin, 17Nov10]

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