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Irish government kicks off formal talks with EU/IMF

The Irish government officially entered negotiations with members of the EU, European Central Bank and the IMF on Friday as speculation mounted that they are to accept a bailout worth billions of euros.


AFP - International financial experts and Irish officials begin tough negotiations Friday on a possible bailout for a debt-ridden economy at the heart of fears about the future of the eurozone.

The mission from the European Union, the European Central Bank and the International Monetary Fund will subject Ireland's books to forensic analysis.

Reports said the focus of the talks would be on shoring up the crisis-hit banks.

Fears that the country would be shackled with a bailout that would lead to a loss of sovereignty loomed large in the morning newspapers.

The Irish Daily Mail said the country was about to be "humiliated", while the Irish Times said the country's destiny was no longer in its own hands.

The "potentially enormous decisions" to be taken in the days ahead would have effects that will be "felt far into the future", the newspaper said in an editorial.

Ireland is determined that any deal will not require compromise on its long-cherished 12.5-percent rate of corporation tax, which has helped it to encourage companies to re-locate in the republic.

Fellow EU members such as Germany claim the tax gives the country an unfair advantage in attracting business.

Enterprise Minister Batt O'Keeffe said the issue was "an aspect of taxation on which the government is not for turning".

Some analysts said the talks, which reportedly feature 30 international experts, could produce an agreement by Monday, but commentators agreed the medicine would have a bitter taste.

The Irish Times claimed that Ireland did not enter the negotiations with such a weak hand as its fellow eurozone member Greece, which required an emergency bailout earlier this year.

"Normally, governments receiving external aid in bailout situations face empty coffers and are desperate for funding sources of any kind," it said in an editorial.

"The Irish State is not in that position because 20 billion euros is on hand owing to earlier borrowings. This provides more leverage than rescued countries can usually deploy."

The enormous debt burden weighing on Ireland, as well as on Portugal, have raised fears in European financial circles that the future of the European single currency could be at stake.

IMF spokesman Caroline Atkinson said Thursday it believes Europe has "ample ability" to help Ireland cope with its debt crisis.

"We have worked with them," Atkinson said, referring to European Union officials.

"We have ample resources, the Europeans have ample ability to act, as and when needed," she said.

An analyst from Citi bank said the talks could be completed quicker than expected.

"Although the IMF spokesman highlighted yesterday that there would be no agreement before next week, we expect quick results of the talks, maybe as early as by Monday morning," Citi said in a statement.

The governor of the Irish Central Bank, Patrick Honohan, said Thursday a "very substantial" loan of "tens of billions" of euros was on the cards.




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