Euro 'at stake' in Ireland bailout: German minister

23rd November 2010, Comments 0 comments

Germany's finance minister said on Tuesday the fate of the shared European currency was on the line in the proposed bailout of debt-stricken Ireland.

Speaking in the German parliament, Wolfgang Schaeuble said: "It's our common currency that's at stake."

Germany, Europe's biggest economy, must take responsibility "otherwise there will be untold economic and social consequences for our country," the minister added.

Ireland applied for help on Sunday from the European Union and International Monetary Fund to help it cope with a gaping budget deficit and a deeply troubled banking system.

While the amount of the package has yet to be revealed, European diplomats have said it could come to around 90 billion euros (120 billion dollars).

Dublin has pumped some 50 billion euros into the country's stricken banks, pushing its public deficit to 32 percent of output -- more than 10 times the EU limit.

And Schaeuble said the crisis showed the importance of Berlin cutting its own budget deficit.

"It's extraordinarily important to show that it's possible in Germany to do what we've promoted so often abroad," the minister said, referring to Germany's plans to cut more than 80 billion euros from its budget over four years.

"We have every reason to continue decisively on this path," he said.

Germany has repeatedly insisted that private investors must contribute to the costs of any future bail-out after the current emergency fund expires in 2013.

And the German press on Tuesday stressed how important it was for Germany to step in, for its own interests.

"German investors have a good 100 billion euros lying in Ireland and an Irish bankruptcy would send shockwaves," the Sueddeutsche Zeitung said.

Meanwhile, the Berliner Zeitung wrote in an editorial: "The money of German savers and insurers is being saved in Ireland.

"Let's finally have a debate about common economic governance and economic and fiscal policy before it's too late."

The influential Spiegel magazine said Chancellor Angela Merkel would have a "tough sell" to the German people as she explains why they must stump up again for a struggling member state, so soon after the Greek bail-out.

"While the details of the rescue package for Ireland are not yet clear, one thing can be regarded as reasonably certain: As the strongest economy in Europe, Germany will once again be called upon to step up to the plate," Spiegel said on its website.

-- Dow Jones Newswires contributed to this story --

© 2010 AFP

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