Global General

Ireland's parliament to vote on IMF/EU bailout

(Agencies)
Updated: 2010-12-10 10:46

DUBLIN - Ireland's government will seek parliamentary approval for a 85 billion euro ($113 billion) IMF/EU rescue package next week, in a surprise manoeuvre designed to embarrass its political rivals.

Dublin has previously said it did not need the lower chamber's agreement for the deal. But, emboldened by the passage of the first stage of a controversial budget this week, Prime Minister Brian Cowen is clearly confident the deal will get the thumbs up despite his razor-thin majority.

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"We will once again give the opposition the opportunity to either come clean, recognize that this deal is essential and in the best interests of the country, or spell out their alternative," Cowen said in a statement.

"Debating and supporting a motion in the Dail will also give certainty to the international community that the deal has been confirmed by the parliament, that the country is doing what needs to be done to repair its public finances and that Ireland is up to the challenge."

Two independent MPs on whom Cowen depends for his parliamentary majority said they would support the vote on the bailout, signalling its likely passage.

Analysts said the government was expected to have the numbers for a vote but the move still introduced an element of risk that investors would not appreciate.

"The markets will be nervous but not very nervous. It's negative but not extremely worrying," Eoin Fahy said.

European Commissioner for Economic and Monetary Affairs Olli Rehn declined to comment on Cowen's move but welcomed the passing of the first in a series of votes on the budget.

Parliament on Thursday passed the second of four votes on the budget. The social welfare bill passed with 80 votes for and 76 against. A third bill on public sector pension changes will be put to a vote on Friday and a final vote on taxation measures will be put to the chamber early next year.

Finance Minister Brian Lenihan said he would include a 90 percent charge on bankers' future bonuses in the budget bill. "As far as the future is concerned I do propose to introduce the amendment to the finance bill to put this matter beyond any doubt and provide a high rate, a 90 percent rate of charge on any ... bankers' bonuses," Lenihan told local radio.

Political grandstanding

The centre-right Fine Gael party and the centre-left Labour party have criticised Cowen for seeking external funds, slamming the deal as a humiliating loss of sovereignty.

But both parties will have to work within the targets set down in the deal when they form a new government, as expected, in the first quarter of next year.

A spokeswoman for the Labour Party said it would vote against the package, which covers the country's borrowing costs for up to three years and provides 35 billion euros in potential additional capital for Ireland's banks.

The Fine Gael party, which is likely to lead the next coalition government, said it would decide next week.

"This is a bit of grandstanding by the (prime minister) to quell a potential rebellion in his party," Michael Noonan, the party's finance spokesman, said in a statement.

"We will consider this matter at the Fine Gael front bench meeting next week."

Sinn Fein, the most vocal opponents of the bailout, said Cowen's move came after it had threatened legal action to put the controversial aid package to a vote. It added it would vote against the bailout on Wednesday.

The cutbacks and high taxes are a key plank of the IMF/EU deal and despite the political fallout, Cowen managed to forge consensus within his party and among coalition supporters that the measures were in the national interest.

Cowen has said he will call a parliamentary election when the legislation underpinning the budget is in place, likely in January or February.

Political lecturer Theresa Reidy said Cowen had little capital to gain with the electorate by calling a vote on the package and that the move may have been made to pre-empt a possible legal challenge on constitutional grounds.

"It's difficult to see how Fianna Fail think that they could make a gain from it, in a way it brings attention back to the fact that there is now international involvement in domestic affairs," said Reidy, of University College Cork.