Ireland Considers Huge EU Loan

Posted on November 18, 2010

The EU has offered Ireland the bailout it needs but does not want – at least right now.  It tells the EU that it will not need the money until next year.

Issues of saving face and sovereignty surround the EU’s action and Ireland’s inaction.

“It’ll be a large loan because the purpose of the amount to be advanced or to be made available to be borrowed is to show that Ireland has sufficient firepower to deal with any concerns of the market. That’s the purpose of it,” he told RTE.

An EU handout would be seen as a big loss of face for the Republic – essentially meaning that its survival and solvency was reliant on Brussels.

But BBC business editor Robert Peston said that in terms of Irish resistance to a bail-out, this was “game over”.

“The Irish government could not conceivably go against the advice of its [eurozone] partners and its central bank,” he said.

Were it to do so, commercial customers of Irish banks would accelerate withdrawals which would be devastating, he said.

BBC Ireland correspondent Mark Simpson added that it could be “a fortnight until we see what these loans look like”.

‘Matter of sovereignty’Meanwhile, French Finance Minister Christine Lagarde told the BBC it was for the Irish government to determine whether it needed a bail-out.

“It’s a matter of national sovereignty within a group that is clearly supportive, that has a joint common good which is our currency. I trust the Irish government to be extremely sensible,” she told Radio 4’s Today programme.

“The real issue is: will the economy stand on its feet? Will the euro stand under the current circumstances in Ireland? And that’s what the Irish government really has to focus its attention on.

Read the full story at  [BBC]