MEETING WITH MEPs:TAOISEACH BRIAN Cowen came under pressure from Europe to settle the turmoil in his administration as the EU economics commissioner Olli Rehn called for the 2011 budget to be enacted on time.
Mr Rehn said every day lost in the battle to stabilise the economy increased uncertainty and the ultimate cost of the economic crisis.
“The budget needs to be adopted,” he said in Strasbourg as he met Irish MEPs. “Stability is important . . . We don’t have a position on the domestic democratic politics of Ireland, but it is essential that the budget will be adopted in time and we will be able to conclude the negotiations on the EU-IMF programme in time.”
The threat that the Government might fall before the budget is passed intensified concern around Europe that political disquiet in Dublin could spill over into pressure on the euro.
“Other member states are scared. They’re anxious,” said a diplomatic source.
The source said fears centred on the “currency impact” from the instability and exposure of EU states to Ireland’s bank sector.
With Irish institutions shut out of interbank lending markets and the borrowing costs of weakened euro states under pressure, the enactment of the €6 billion package of cuts and tax increases is seen as crucial to restore calm.
Mr Rehn’s spokesman said talks on the EU-IMF bailout package were still on track. “They are not disrupted by any element of the political debate. There is a very co-operative mood in all sides involved, and we hope to conclude them around the end of November.”
The spokesman said the bailout offer would not be withdrawn if the budget fell. “It is a fundamental element in the context of the current discussions which are proceeding smoothly, I must stress that.”
Mr Rehn insisted on confidentiality when he met Irish members of the European Parliament, but Opposition MEPs said he pledged Ireland’s 12.5 per cent corporation tax rate was not at issue in talks on the bailout.
The commissioner’s request for confidentiality led Socialist MEP Joe Higgins to immediately leave the meeting. “After a week in which the Irish people were persistently misled and lied to it was outrageous to suggest that elected representatives could not share with those who elected them what Commissioner Rehn had to say.”
The confidential aspects of the meeting are believed to have touched on the annual interest rate Ireland will pay for emergency loans – most likely in the region of 5 per cent – and efforts to stabilise the banks.
Each of 11 other MEPs stayed for the duration of the meeting, a little more than an hour, and Fine Gael MEP Gay Mitchell said the engagement was “open and frank”. He said Mr Rehn agreed that this was not the time to be raising the question of corporation tax.
Labour MEPs said after the meeting that they called for Ireland’s banks to undergo a new stress test “which is not subject to interference by member state governments as happened previously”.