EU leaders strengthen text on bailout fund


EU leaders have tonight yielded to German and British demands to strengthen the agreed text of a decision to revise the Lisbon Treaty to create a permanent euro zone bailout fund.

The leaders agreed to explicitly reserve the fund for “last resort” interventions to prop up weakened members of the single currency.

Also on the table is the text of draft declaration by euro zone leaders in which they would declare themselves ready to “ensure the availability of adequate financial support” through the existing fund if required.

Earlier today, Taoiseach Brian Cowen said European Union governments would agree to a "modest" treaty change to set up a permanent crisis mechanism for the euro.

The heads of state and government were meeting to agree the wording of a treaty amendment to provide for a permanent mechanism to safeguard the financial stability of the euro area at a two-day meeting of the European Council in Brussels.

Mr Cowen told reporters he expected a "comprehensive" push for a "range of measures”.

A Government spokesman said last night Ireland will be seeking to ensure any amendment is fully compatible with the Irish Constitution.

Fine Gael leader Enda Kenny, who is also in Brussels to attend a meeting of the European People’s Party (EPP), said his party will campaign in the general election for a mandate to cut up to €17 billion from some €25 billion of unguaranteed senior bond debt in a number of Irish banks.

The IMF and the European Central Bank (ECB) have been calling on leaders to enlarge the €440 billion European Financial Stability Facility (EFSF) to show the force of their determination to defend weakened euro members. Expanding the EFSF’s remit to allow it buy sovereign bonds is also under discussion.

But German chancellor Angela Merkel and French president Nicolas Sarkozy have resisted pressure to step up the response to the crisis, arguing that only a tiny portion of the fund has been used in the rescue of Ireland.