The EU wants to help – whether Ireland wants it or not
What an extraordinary moment we have tonight in Europe’s economic history.
In the Brussels European Council building where I am right now, Ireland is under inordinate pressure to take tens of billions of euros – perhaps as much as €100 bn – in emergency support.
This is no ordinary rescue, you could call it ‘forced medicine’. It appears that the eurozone needs Ireland to be rescued more than Ireland wants to be rescued.
As we go to air tonight, Ireland has still not formally asked for a bail-out, and Brian Lenihan is holding out. Incredibly he was over an hour late for the meeting after fog in Brussels delayed his flight. But EU President Herman van Rompuy ratcheted up the pressure this morning, calling for everyone to work together to survive with the eurozone “because if we don’t survive with the eurozone then we will not survive with the European Union”.
“But I am very confident we will overcome this,” he added.
The French Finance Minister, Christine Lagarde, said: “If Ireland needs help, we will help Ireland, but Ireland has not yet asked for help. The good thing is that we have a mechanism in place. We have a process, we know how to operate, we’ve learnt from the previous crisis and it’s a mechanical problem”.
Two details that I think are being chewed over. Firstly my sense is that Ireland would prefer that any funding for its banks comes from the European Commission’s European Financial Stability Mechanism. This would mean less of a loss of sovereignty, and could be voted on under a majority – rather than the unanimous – decision required for the bigger, newer, joint IMF European Financial Stability Facility.
This is also the basis of why I don’t think we will get a giant announcement tonight. Senior EU Officials have told me that the real decision will have to wait until tomorrow and the arrival of the British, in the form of Chancellor George Osborne.
“There’ll be a declaration of support, but if anything happened in the case of Ireland, Britain would have to be involved because of its exposure to Ireland,” said one official from a major eurozone country.
Meanwhile, the Portuguese have been on the phone to say they’re fine. The Finnish think the Irish should post some collateral for any loans, the PIGs are angry with Germany for messing up the announcement on burden-sharing (see earlier post). And then to cap it off – comically, and gloriously – Austria’s Finance Minister chose today to criticise Greece’s efforts at deficit reduction as not up to scratch and said he won’t hand over Austria’s share of the long-agreed Greek bailout.
At 1853 GMT, this sounds an awful lot, like monetary disunion.