TAOISEACH Brian Cowen was battling with Germany last night to avoid having to call a new referendum to change the rules of the euro.
A bailout package was being put together to rescue the Greeks if they fail to raise the €22 billion they need to keep their economy afloat over the next few months.
It would involve eurozone states, including Ireland, contributing loans to Greece. The sum from Ireland would be 1.65% of the money to come from the 15 euro states.
Before the annual spring summit began, the Taoiseach signalled Ireland’s willingness to contribute to a Greek loan. "If the question was to arise … Ireland will discharge its obligation," he said.
Mr Cowen made it quite clear that Ireland would charge a higher interest rate on the loan to Greece than Ireland would have to pay for the money.
But the real issue for the Taoiseach during the meeting was Germany’s insistence that the next step must be to strengthen the economic governance of the EU and to increase its role in its economic coordination.
German Chancellor Angela Merkel is making any EU loan to Greece conditional on member states making changes to the legal position of the union in relation to the euro.
The German constitutional court has placed strict limits on what the EU can do in relation to bailing out and lending to other eurozone states.
She warned during the week that she would demand changes to the EU treaty.
EU expert Peter Ludlow explained that she needs this if she is to avoid any agreement on a bailout ending up before the German Constitutional Court again.
"Merkel has to have the treaty change," said Mr Ludlow.
Mr Cowen was joined by the Dutch prime minister in trying to have any wording that would imply a treaty change removed from the proposed text last night.
Irish sources played down the issue however, saying that there was still a long way to go before that issue would have to be decided.
The leaders, working of an agreement largely put together by Ms Merkel and the French President Nicholas Sarkozy, were discussing setting up a task force to come up with the measures needed to strengthen the euro rules.
They were also making it clear that if Greece, or any other country were to avail of a euro bail out, they would first have to get whatever sum they could from the IMF and then look for the rest from the EU at a high rate of interest.
a d v e r t i s e m e n t
This appeared in the printed version of the Irish Examiner Friday, March 26, 2010
