Cowen denies EU held rescue talks

CLAIMS that eurozone finance ministers had discussed a rescue plan for failing euro-area member states have been strongly denied by Taoiseach Brian Cowen and senior leaders at the EU economic summit in Brussels.

Finance spokesperson for Chancellor Angela Merkel’s Christian Democratic Union, Otto Bernhardt, told Reuters that the European Central Bank would be ready to step in within 24 hours but that there would be a cost for such a rescue, and in Ireland’s case it would be an increase in corporate tax rates.

Mr Cowen insisted that EU leaders had not discussed the question of a eurozone bailout, while Foreign Minister Micheál Martin confirmed that the finance ministers had not discussed the issue either.

However, nobody denied that there was a plan somewhere to ensure that the currency, used by 16 countries in the EU, would not be damaged by a eurozone country failing.

When the story broke yesterday furious government civil servants were in immediate contact with Berlin and with Reuters to protest. With Ireland having the biggest budget deficit in the eurozone and laden with big bank guarantees, nervous markets can react quickly to any suggestion that there are concerns over the country’s finances.

The German Finance Minister, Peer Steinbruck, told journalists after yesterday’s meeting that no eurozone country had problems with payments or refinancing public debt.

Anxious not to question the credibility of any country, he added that, “In the definitely, not likely case, of a problem, the eurozone would be ready for action”.

Mr Bernhardt clarified his interview later saying that he had not referred to Ireland specifically.

He had told Reuters, “There is a plan. The finance ministers have agreed the procedures. The core point is: ‘We won’t let anyone go bust’, he said, adding that Ireland was in the “worst situation of all” followed by Greece”.

But he is also quoted as saying that the aid would come at a price. “We would look very closely at past sins. We will not tolerate there being low-tax countries like Ireland for example. We will insist on a minimum corporate taxation rate”, he is quoted as saying.

Many Germans have objected to Ireland having the lowest corporate tax rate in the region while at the same time taking subsidies from German taxpayers through the EU.