THE PRESIDENT of the European Council last night backed Ireland's demands for key changes to the terms of the EU-IMF bailout deal. The EC President Herman van Rompuy threw his weight behind the Government's call for a 1pc interest rate cut on our European bailout loans.
He said he had raised the issue with French President Sarkozy at a recent meeting.
"I came away from Paris more positive then when I arrived on this issue," he said.
Mr Sarkozy has been the biggest opponent of the interest rate cut, unless Ireland agrees to raise its 12.5pc corporation tax rate. The Government here has ruled that offer out.
"I think we need a deal and there are perspectives," Mr Van Rompuy said. "I am fully aware this is a sensitive issue for Ireland. We continue to work with our partners to find a solution."
He also said the three counties in receipt of EU-IMF bailout packages -- Greece, Ireland and Portugal -- were in very different situations. Ireland was "well on track" to an economic recovery and in terms of meeting the conditions of the bailout.
He said he had "full support and deep admiration" for Irish efforts to "deal with the challenges the country is facing".
Mr Van Rompuy made the comments on his first official visit to Ireland since taking office in 2009.
He met Taoiseach Enda Kenny in Government Buildings and afterwards delivered a speech in Dublin Castle to the Institute for International and European Affairs.
Mr Van Rompuy commented on Finance Minister Michael Noonan's controversial plan to burn bondholders in Anglo-Irish Bank and Irish Nationwide Building Society (INBS).
He said he "took note" of Mr Noonan's comments that he did not want to repay €3.5bn of the safest type of debt owed by Anglo and Irish Nationwide.
"That kind of action has to be negotiated, has to be taken, not unilaterally but in negotiation, in consultation," Mr Van Rompuy said.
The Taoiseach said the Government had "always viewed the bondholders in Anglo Irish Bank as being in a different set of circumstances to bondholders in Allied Irish Bank or Bank of Ireland".
He continued: "We are conscious, of course, that you cannot take unilateral action here, that there has to be agreement in that regard. Those discussions will be undertaken in the autumn."
Mr Van Rompuy said the Greek government now had to implement harsh cuts in order to get more funding from the EU and IMF. "We need a new programme of fiscal consolidation. The ball is in the camp of the Greek government and the Greek political world."
He said there could be no "credit event" or Greek default.