Ireland in political chaos after bailout triggers election

23rd November 2010, Comments 0 comments

Irish Prime Minister Brian Cowen was fighting to keep his government together Tuesday after his call for an election early next year failed to stem the political crisis over an international bailout.

Cowen promised Monday to call an election but only when he had seen through a budget which he said was crucial to obtaining EU and IMF loans worth up to 90 billion euros (122.5 billion dollars).

The beleaguered prime minister was responding to calls by the junior partners in his governing coalition, the Green Party, for an election in January.

But opposition parties want an immediate vote and are impatient with Cowen's timetable, which would see an election take place in February or March.

Sinn Fein, which has four lawmakers in the parliament, or Dail, tabled a motion of no confidence in Cowen on Tuesday, saying that his government was a "charade which is an insult to the Irish people".

Cowen's own Fianna Fail party -- which has dominated Irish politics since the 1930s -- is also said to be restless, with several senior members reported to have urged Cowen to stand aside after two troubled years in charge.

The government was rocked after a week of negotiations in which it insisted Ireland did not need external help, only for it to cave in and request assistance.

Ireland follows Greece as the second eurozone country this year to need a bailout, as the EU moves to shore up the single European currency.

Ireland's request for aid was approved by EU officials who were desperate to quell fears that other heavily-indebted euro economies such as Portugal could be sucked into the crisis.

Cowen said the immediate priority must be to pass the budget on December 7, which is expected to outline six billion euros of tax hikes and spending cuts as part of a four-year drive to save 15 billion euros.

Details of the four-year roadmap were due to be approved by the cabinet Tuesday and published Wednesday.

However, two independent lawmakers the government depends on to pass legislation said they were likely to withhold their support from the budget, raising fears that it might not be passed at all.

"It is my intention at the conclusion of the budgetary process, with the enactment of the necessary legislation in the New Year, to then seek the dissolution of parliament," a stern-faced Cowen told reporters Monday.

He added: "It is imperative for this country that the budget is passed."

Cowen called the leaders of the opposition Fine Gael and Labour parties late Monday to urge them to back the budget, Transport Minister Noel Dempsey said.

The EU's economic affairs commissioner, Olli Rehn, has said the political upheaval in Dublin will not jeopardise the rescue deal offered by the European Union and the International Monetary Fund.

But he reiterated the government's four-year budget plan forms the cornerstone of the bailout negotiations.

"It is essential that Ireland will pass the budget in the timeline foreseen and certainly sooner rather than later because every day that is lost increases uncertainty," he told RTE.

The euro rebounded against the dollar on news of the bailout, but it has fallen back since.

Stocks in British banks also fell in London amid fears of their exposure to the Irish economy as traders anxiously watched the political fallout and its potential effects on the 16-nation eurozone.

"It's our common currency that's at stake," German Finance Minister Wolfgang Schaeuble said.

Mounting opposition to Cowen's government came to a head following its decision Sunday to accept a bailout for a country ravaged by the global financial crisis and the bursting of a property bubble.

In a shock move Monday, Green Party leader John Gormley, whose party has six lawmakers in the Dail, called for an election in January to provide "political certainty" for voters who felt "misled and betrayed".

Adding to Cowen's problems, the government faces a by-election Thursday in the northern constituency of Donegal South-West which it is likely to lose.

The EU has agreed in principle to dip into a 750-billion-euro fund, the European Financial Stability Facility, set up in May after a 110-billion-euro EU-IMF bailout of Greece.

Britain will make a separate loan of seven billion pounds.

© 2010 AFP

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