Britain offers help to Ireland as IMF, E.U. officials prepare for crisis talks
Wednesday, November 17, 2010; 12:40 PM
DUBLIN - A top British finance official said Wednesday that his country would help prop up Ireland's ailing finances - even as a team from the International Monetary Fund and European Union prepared to travel here to address the crisis and the Irish government signaled, for the first time, that it might be willing to accept a bailout.
Confronting a massive budget deficit and roiling banking crisis, Ireland has been resisting calls from leading E.U. nations to calm markets by accepting an international rescue, seeing a bailout as a national embarrassment.
But early Wednesday from Brussels, where European financial chiefs were holding talks, Irish Finance Minister Brian Lenihan appeared to concede the nation might need aid. He said the "short, focused consultation" with IMF and E.U. officials in Dublin this week might result in international support for the Irish banking system.
"Despite a large range of measures adopted by the government, Ireland is a small country, and if the banking problems in the country are too big for this small country to manage, Europe is making it clear that they will help and help in every possible way to secure the system because we are part of the euro system," Lenihan told Irish radio.
Also in Brussels, British Chancellor of the Exchequer George Osborne told reporters that the United Kingdom "stands ready" to assist its debt-saddled neighbor.
Although the United Kingdom does not use the euro, economic ties between the two nations are so close that it is important for Britain to assure Ireland's stability, Osbourne said as he joined the crisis talks.
Although the main financial support for Ireland probably would come from the other 15 countries that use the euro, as well as the IMF, overnight reports from Europe indicated that Britain was considering its own line of financing to help with a rescue plan.
"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."
However, Irish Prime Minister Brian Cowan continued to play down the possibility of a rescue as he faced his critics in parliament, who have accused him of misleading the nation by denying bailout talks were taking place.
Cowan has acknowledged that Ireland can no longer afford to borrow on world markets because it must pay such high interest rates. But he continues to insist that Ireland does not need a bailout. Instead, he portrayed the talks as a general consultations that might not yield a financial lifeline, saying "there has been no question, as has been stated all over the weekend, of a negotiation for a bailout."
In refusing to request a bailout, observers say, Cowan might be staking out a stronger bargaining position for negotiating terms of a rescue proposal that could range up to $100 billion or more.
But analysts say the already unpopular prime minister is risking what little political capital he has left, as well as already flagging public trust in the government, by appearing to deny that rescue talks are underway even as the IMF and E.U. team are headed here.