Emergency talks

Europe edged closer to its second bailout of a eurozone state on Wednesday, as the bloc's finance ministers announced a joint mission with the IMF to Ireland directed at stepping up talks on its devastated banking sector.

"The situation is very pressing and very, very serious and we don't have any time to waste," EU economic affairs commissioner Olli Rehn told reporters after meetings in Brussels.

"It is essential that confidence in the Irish banking sector is restored for the sake of financial stability in Europe and for the sake of restoring confidence in the economy."

Irish Finance Minister Brian Lenihan confirmed that the emergency talks would begin in Dublin on Thursday but issued no details on what shape the bailout could take or its possible size.

"We have agreed to look at the structural problems in the Irish banks in the light of recent market pressures and assess what needs to be done because banking questions are technical and difficult," Lenihan told Irish state radio on Wednesday.

Dublin reluctant to become 'Europe's lackey'

According to an article published in the Wall Street Journal on Wednesday, the Irish banking sector is up to 50 billion euros ($68 billion) in debt, with financial experts in agreement that the banks are incapable of covering for themselves. Investors fear the final figure could be even higher given rising mortgage arrears, deposit outflows and higher funding costs.

Nevertheless, Irish leaders continue to refuse that neither the country nor its banks are in need of a bailout.

"What we want to concentrate on now is in a focused way, over coming days, to sit down and see in what way can assistance be provided to ensure that these issues can be dealt with properly and appropriately," Prime Minister Brian Cowen told parliament on Wednesday after news of Thursday's emergency talks had emerged.

"There has been no question of the government [being] in a negotiation for a bailout," he said, dismissing the term as pejorative and referring to the fact that the state of Ireland is pre-funded until the middle of next year.

Meanwhile, the Irish people share their prime minister's resistance to financial assistance from Brussels or anywhere else; in the streets of the Irish capital, a European bailout would be a downright "humiliation."

Sean, a 54-year-old, called it "the final insult to the good and decent people of this country, to go like a beggar in Brussels and ask that very seasonal question - Please Sir, can I have some more?" referring to the Charles Dickens character Oliver Twist.

Another Dubliner, Adam, 42, said it would be "the end of the independent Irish republic."

"I would rather be poor and free than a poor lackey of Europe. It's time to stand up and be Irish once again," he added.

More EU members to require assistance?

Also on Wednesday, EU finance ministers pledged to agree on stricter debt rules by mid-2011, as well as on a new rescue fund for dangerously indebted countries such as Greece - which received substantial EU funds earlier this year to avoid bankruptcy - and a number of other eurozone members.

Portugal and Spain, which are already unable to borrow money on open markets other than at prohibitive rates, have both alluded to budgetary difficulties. As with Ireland, however, there have been no requests for emergency funding as of yet.

But the ministers gave a clear signal that "determined and coordinated" action had to be taken to resolve the debt crisis that is threatening the future financial stability of Europe and the 16-member, single-currency eurozone.

"If we don't survive with the eurozone we will not survive with the European Union," European Council President Herman von Rompuy said.

Author: Gabriel Borrud (AFP, dpa)
Editor: Rob Turner