Britain joins E.U. in effort to help Ireland
Wednesday, November 17, 2010; 10:29 AM
British officials said Wednesday that they were ready to help prop up Ireland's ailing finances, adding a key European voice to discussion of a possible bailout for the debt-saddled nation.
While the United Kingdom does not use the euro, economic ties between the two nations are so close that it is important for Britian to assure Ireland's stability, Chancellor of the Exchequer George Osborne told reporters as he joined crisis talks with other European leaders in Brussels.
While the main financial support for Ireland would likely come from the other 15 countries that use the euro, as well as the International Monetary Fund, overnight reports from Europe indicated that the United Kingdom was considering its own line of financing to help its troubled neighbor.
"Ireland is our closest neighbor and it's in Britain's national interest that the Irish economy is successful and we have a stable banking system," Osborne said. "So Britain stands ready to support Ireland in the steps that it needs to take to bring about that stability."
The emergency talks in Brussels began Tuesday, with some European officials suggesting that an aid package for Ireland could be on a fast track in hopes of reassuring markets that Europe is prepared to stand behind the finances of its weakest members.
The purpose of the talks was to try to contain the Ireland's debt problems, as doubts surfaced about how an international fund established this year to help beleaguered European economies would work in practice.
Irish Prime Minister Brian Cowen acknowledged that his heavily indebted nation can no longer afford to borrow on world markets because it must pay such high interest rates, but he continued to insist that Ireland did not need a bailout. European officials, who were trying to hammer out a package of emergency assistance for Ireland, said they were fighting for the future of the European Union.
The latest turbulence highlights the apparent weakness of efforts taken in response to a similar debt crisis in Greece six months ago, which were aimed at reassuring investors that Europe's weakest economies would be protected from default. The $1 trillion fund set up in May by the Europeans and the International Monetary Fund was designed to calm fears that could unsettle world financial markets and undermine the global economic recovery.
European stocks mostly rose Wednesday as Britian pledged its support and investors expressed hope that EU officials would come up with a more definitive fix for the region's debt crisis. In the United States, markets were basically flat.
The 16-nation euro currency zone is beset by fissures between strong economies such as Germany and weaker ones such as Greece, Ireland and Portugal, which risk being engulfed by historic levels of government debt. European Union Council President Herman Van Rompuy warned of "a survival crisis" for the currency union and the E.U.'s broader experiment in economic and political integration.
E.U. economic affairs chief Olli Rehn confirmed that Ireland was in crisis talks with the European Central Bank, the European Commission and the IMF. The IMF said it was sending a team for a "short and focused consultation" at Ireland's invitation.