What a $100 billion EU aid package means for Ireland

Despite a week of firm denials, Ireland is now in negotiations with the European Union about a joint European Central Bank (ECB) and International Monetary Fund (IMF) aid package worth as much as $100 billion for its stricken economy.

IMF and ECB officials led by Ajai Chopra arrived in Dublin today to meet with the government and are pouring over the nation’s account books. Mr. Chopra is deputy director of the IMF’s European operations.

Minister for Finance Brian Lenihan said the Irish government could accept an aid package for the banks, after preliminary talks in Dublin with officials.

Others, however, have gone further. Speaking on Irish radio this morning, Patrick Honahan, the governor of the country’s own central bank, said he expects the Irish government to accept a “very substantial” loan.

“A loan will be made available and drawn down, as necessary,” he said.

“It will be a large loan because the purpose of the amount to be advanced or to be made available to be borrowed is to show Ireland has sufficient firepower to deal with any concerns of the market. We’re talking about a very substantial loan, for sure,” he told national broadcaster RTÉ.

Irish Prime Minister Brian Cowen, who has for a week been denying Ireland is negotiating for outside help, was last night still denying that negotiations were ongoing.Today the government dismissed critics who claimed the bailout amounts to a surrender of Ireland’s hard-won sovereign independence.

"There is no question of loss of sovereignty for Ireland,” said Mr. Cowen. "It will be the sovereign decision of the Irish government on behalf of the Irish people that will decide what shape any package would be where we can decide that’s in our best interests," he said.

Opposition politicians welcomed Dr. Honahan’s words but continued to slam the government.

Enda Kenny, who leads the main opposition party Fine Gael, said government policy had been a "catastrophic failure."

Mr. Kenny later demanded the government leave office: “You should resign. You should go to the country, they will go back to Europe, and we’ll buy time and credibility and belief and sort this out,” he said.

Labour party leader Eamon Gilmore said to Cowen there was no point in pretending that today’s discussions were "fact finding missions by PhD students" and the IMF “were not coming to do their Christmas shopping.”

Loan or bailout. What's the difference?

Speaking to the Monitor, Labour party lawmaker Joan Burton, the party’s spokesperson on finance, said the government’s denial that the loan negotiations amounted to a bailout was a mater of semantics.

“It very much is a bailout,” she says. “The government, judging by their ashen faces, feel quite humiliated and disgraced by it.”

Ms. Burton placed the blame squarely at the feet of the governing Fianna Fáil and Green party coalition.

“I don’t think we should have ever got to this place,” she says. “We shouldn’t have guaranteed the banks or started Nama [a state-run ‘bad bank’ that purchased failing assets from commercial lenders in an attempt to stem losses].

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