Cowen insists EU rate is fair as €85bn bailout passes Dail
Published 16/12/2010 | 05:00
Taoiseach Brian Cowen and the European Commission angrily denied last night the EU was making a €5bn profit from lending money to Ireland.
The Government passed a vote backing the acceptance of the €85bn bailout from the IMF and the EU by 81 votes to 75. The Fianna Fail and Green Party Coalition was able to call on the support of a number of independents.
But Fianna Fail TD Mattie McGrath voted against the Bill and former minister Willie O'Dea had permission to miss the vote.
The EU is charging an interest rate of 5.7pc on its €22.5bn section of the package -- the same as the IMF rate. But EU countries are able to borrow the money at 3pc lower than this rate, meaning there is a large margin.
Labour Party leader Eamon Gilmore said this margin would cost the taxpayer €5bn over the lifetime of the loan.
Taoiseach Brian Cowen said it was factually wrong to claim the rate was higher. He said that to continually talk about a penalty when the "lender of last resort mechanism" was available from the EU for the first time was a misnomer. "If we were to go to the international markets for that money, we would be paying far, far higher rates," he said.
And the European Commission also hit back at suggestions that it was making a mint on its €22.5bn loan.
"The average rate we see on EU funds is equivalent to IMF conditions," said a spokesman for economics chief Olli Rehn. He confirmed that any money made would be ploughed back into the bloc's budget and knocked off Ireland's future contributions.
Describing the deal as an obscenity for taxpayers, Fine Gael finance spokesman Michael Noonan said bank bondholders also had to take a hit. "There must be burden-sharing of bank debt -- transparent, open, negotiated burden-sharing. It must deal with both subordinate debt and non-guaranteed senior debt."
Mr Noonan said the direct cause of the banking crisis was the Government's banking policy, which had led directly to the IMF/EU bailout.
"The Government's negotiations have led to a very bad deal. The deal needs to be re-negotiated and Fine Gael will look for a mandate to do so," he said.
Mr Gilmore also said it was a bad deal for the country. "And because it is a bad deal for Ireland, we will vote against it here and in the forthcoming election we will seek a mandate to re-negotiate it," he said.
The €85bn worth of loans will see the IMF and EU pump in enough money to recapitalise the banks, provide enough money to run the country and ensure the Government does not have to return to the international money markets for at least a year.
The historic legislation was passed in the Dail shortly after 10pm. The Government had 78 votes to the opposition's 71.