Ireland bailout agreement reached

European Union finance ministers held an emergency session in Brussels today to thrash out the final details of an of Ireland’s 85-billion-euro (Dh415 billion) international bailout. A diplomat said agreement on its adoption had been reached and a deal was ready to be signed in a meeting between ministers from the 16 Eurozone countries and non-euro nations Britain, Sweden and Denmark, which have offered direct bilateral loans to Dublin.

A full meeting by the 27-member bloc was set to seal the bailout later Sunday in an agreement timed to ease fears for the euro ahead of the opening of Asian financial markets in the early hours of Monday. “The plan is ready to be discussed and adopted today,” said the source ahead of the meeting, which was to begin at 1:00 pm (1200 GMT). An EU spokeswoman said a central figure in the negotiations, the Irish finance minister, Brian Lenihan, had been delayed leaving Dublin but was on his way to Brussels.

Agreement was reached among international negotiators in Dublin on a package, from which 35 billion euros would go to Ireland’s shattered banking sector, the diplomat close to the negotiations said. The deal comes a day after mass street protests in Dublin against the Irish government’s austerity cutbacks, and with a poll showing a majority of Irish people think the country should default on its debts.

It is Europe’s second bailout this year, after the 110-billion-euro aid granted to Greece in May, with experts predicting more to come in Portugal, Spain and elsewhere despite politicians’ denials. The emergency rescue is intended to try to prevent Ireland’s debt crisis from spreading to other eurozone countries, leading to the involvement of the International Monetary Fund as well as the bilateral loan input from London, Stockholm and Copenhagen.

Irish Prime Minister Brian Cowen has been fighting off calls from opposition lawmakers to quit over his handling of the economy, with the country’s deficit this year hitting 32 per cent of output. He has insisted he will see through the austerity package and the budget to secure the bailout.

A four-year austerity plan revealed last week, key to securing the international bailout, comprises 10 billion euros of spending cuts and five billion euros in tax hikes. The plan also involves cuts to 25,000 jobs, public sector pay, pensions and social welfare in a bid to slash a huge deficit and save 15 billion euros by 2014. Tens of thousands of people to the streets of Dublin yesterday in an angry protest at what many believe to be the government’s prioritising of the interest of the banks over the interests of ordinary taxpayers.

Ireland’s banks were left exposed by the global financial crisis and the collapse of a domestic property bubble. Some waved placards reading “Eire not for sale, not to the IMF” and “There is a better, fairer way”, denouncing the bailout and calling on Cowen to quit.

In a poll published Sunday, 57 per cent of the Irish backed a default on debts to bondholders in the country’s stricken banks, compared to 43 percent who opposed it. Today voters dealt Cowen’s Fianna Fail party a humiliating by-election defeat, cutting the FF/Green Party coalition’s parliamentary majority to just two. Weekend media reports suggested Ireland might be charged 6.7 per cent interest over nine years, significantly more than the 5.2 per cent rate charged to Greece on its three-year programme. “I think that figure was inaccurate and I think it was unfortunate it went out there because I’m sure it scared a hell of a lot of people,” said Irish Communications Minister Eamon Ryan.

Such figures would be “simply unacceptable in terms of a future for this country,” warned Irish Fine Gael opposition figure Brian Hayes.