BRUSSELS:EURO GROUP PRESIDENT Jean-Claude Juncker tried to damp down pressure on the Government ahead of a key finance ministers' meeting tonight, but the European Central Bank (ECB) pressed for a speedy resolution of Ireland's problems.
Euro Group is the meeting of finance ministers of the euro zone. After relative calm on markets yesterday, officials said the EU authorities hope to ride out the storm without an emergency intervention in Ireland. However, views are divided over the Government’s ability to prevail without an approach to the EU/IMF rescue fund.
Irish officials have been involved in technical discussions on the parameters of an aid deal but the European authorities are still insisting there is no move in that direction because there is no application for aid from Dublin.
In spite of significant efforts to stabilise market tensions yesterday, ECB vice-president Vitor Constancio said the Government would be able to use the emergency fund for euro governments to recapitalise banks.
While his remarks were taken to confirm that the prospect of some form of intervention in relation to the banks may be in the offing, senior Dublin sources played down expectation of any rapid step in that direction.
“The Irish State is financed until midway through next year, but it is also a problem of the banks that are at the centre of the problems in Ireland, and considerations have to be pondered,” Mr Constancio said in Vienna. “The problems of the Irish banking sector are not only problems of liquidity but also, in some cases, problems of capital.”
Even though the EU rescue fund can’t lend directly to banks, he said Dublin can “use the money for that purpose”.
Another ECB council member, Spanish central bank chief Miguel Ángel Fernández Ordonez, laid the blame for the recent market volatility on the Government. “The situation in the markets in recent weeks has been very negative due in some way to the lack of a final decision by Ireland,” he told reporters in Madrid.
“Its not me who should take a decision about Ireland, its Ireland that should take the right decision at the right moment.”
European sources said Fine Gael finance spokesman Michael Noonan’s suggestion that a European intervention was under way were very unhelpful to the effort to stabilise the situation.
Although great importance has been placed on the Euro Group meeting in Brussels, Mr Juncker and Belgium’s rotating presidency of the EU sought to ease expectation of any significant movement.
A source close to the Belgian presidency said the discussion on Ireland would relate only to the 2011 budget and the four-year recovery plan, and Mr Juncker said people should abstain from putting pressure on the Irish authorities.
“I don’t think we’re nearing an agreement because Ireland didn’t put forward a request,” said Mr Juncker, who is prime minister of Luxembourg. “The Irish think that they can keep the problems they’re facing under their control. They are not near the point where they would ask for external help.”
It was for Ireland alone to decide on any aid, he added. “If they consider the day has come, they want to ask for support, we’ll be ready . . . I do think that the Irish are quite aware that, if they misbehave, this could easily bring others into major difficulties.”
The European Commission said it would be an exaggeration to describe the commission’s close and regular contact with Dublin as negotiation on a bailout.
“There is no request by the Irish authorities. There is no imminence and need. On the contrary, until summer 2011, needs are covered. So why would I now open the speculation about any possible content of any possible package?” said a spokesman. “Ireland has a strong track record when it comes to fiscal adjustment.”
