Irish parties begin talks but EU is wary of bailout rethink

City A.M. Reporter
IRISH opposition parties started coalition talks yesterday after a resounding election win gave them the mandate to renegotiate an EU-IMF rescue deal they fear will bankrupt the former “Celtic Tiger” economy.

Though a new government looks likely to get its way on a reduced interest rate on its European Union loans, its demands for bondholders in Irish banks to shoulder more losses have little support in Europe.

“We have a common goal for Ireland to revive its growth dynamic and succeed in ensuring debt sustainability,” EU economic and monetary affairs commissioner Olli Rehn said.

Rehn added: “Pricing policy, I am referring to the interest rates, is one key issue here which will be discussed in the context of the comprehensive strategy of the European Union.”

The centre-right Fine Gael party, led by Enda Kenny, was swept into power over the weekend in a parliamentary election dominated by anger at Ireland’s financial meltdown and the harsh cure prescribed by Europe.

Kenny, and Eamon Gilmore, leader of the centre-left Labour party, met for talks yesterday, Fine Gael said in a statement in which it named its negotiating team for talks. Fine Gael said both leaders would meet again early today. The new government will have to oversee cuts in public spending to cut debts.