Deal can be changed only by EU consent, says Cowen

ANY CHANGES in the interest rate on rescue loans could not be negotiated for Ireland in isolation, Taoiseach Brian Cowen told the Dáil. He said the rate charged to Ireland was determined some time ago by a common approach for any borrower.

“Arrangements can only be changed by agreement by all member states,” he said.

The Taoiseach was replying to Fine Gael leader Enda Kenny who accused Minister for Finance Brian Lenihan of contradictory statements on the matter.

He said that in an RTÉ interview Mr Lenihan had raised the possibility of renegotiating downwards the 5.8 per cent interest rate at which money was borrowed under the EU-IMF bailout.

However, Mr Kenny said the Minister had said the opposite last week, indicating that the reduction was not possible.

“This is very curious,” said Mr Kenny. “It is difficult to know whether to believe the Minister or not.” Mr Kenny said the Minister had further undermined the last shreds of the Government’s credibility by first denouncing those who called for a better bailout deal and then stating that this now was his personal mission.

Mr Cowen said it was important to recognise the developments taking place at a European level.

Mr Lenihan, he said, had met his euro zone counterparts on Monday to discuss the size and scope of the European assistance mechanisms. “This matter is still being considered by the euro group, which is at an early stage of its considerations. A number of options have been canvassed and one must ensure the European measures have credibility and stand behind all countries.”

Mr Cowen said the euro group was accelerating its work on a comprehensive package and had discussed different elements of the response at its meeting.

“I emphasise that the euro group is at the beginning of a broad discussion on the size, scope and details of the assistance measures,” the Taoiseach added.

“The interest rate charged to any country seeking assistance is only one element of the discussion.” Mr Cowen said he rejected any implication that the rates agreed under the EU-IMF programme were not manageable.

“At the same time, I, of course, would welcome any developments that had the effect of lowering the rates for Ireland,” he added.

Mr Lenihan, he said, had outlined on Monday that important legislation was to go before the Dáil that would lead to a small reduction in the interest rate charged on the IMF element of the loan. This was a separate matter from the political discussions that had taken place on Monday.

Mr Kenny said the Taoiseach should understand the truth was dawning on each worker that the increases in income tax, levies and other charges were the consequences of Government ineptitude and the disastrous deal struck.