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Treaty phoney war over, France to reject austerity

THE International Monetary Fund and Michael Noonan have both strongly rejected claims that Ireland could access another bailout if it votes 'no' in the treaty referendum.

The treaty debate officially started today but already the 'yes' and 'no' sides have clashed over alleged scaremongering.

The IMF today distanced itself from a Sunday newspaper article which suggested it would come to Ireland's aid in a future financial crisis -- even if the EU wouldn't.

The revelation was seen a serious blow to the 'yes' campaign -- which has constantly claimed that supporting the treaty is the only way Ireland will have access to an €800bn EU war chest.

The IMF has supplied about a third of the €67.5bn bailout funds provided to Ireland.

Government sources were alarmed by the claim that a 'yes' vote is not essential for future bailout funds -- with fears that the article could provide extra momentum to the growing 'no' campaign.

"There is a big risk that the treaty won't be passed. People are worried," said a senior Government source today.

The Sunday Times newspaper today stood by its report that the IMF would bail Ireland out if necessary.


But Finance Minister Michael Noonan has joined the row, dubbing the IMF's comments as "misinterpreted".

He added that the IMF was only willing to partake in bailouts "if Europe takes the lead".

"The ESM will be the only source of bailout funds when the Irish programme ends," Mr Noonan said.

And the IMF itself stated that the article "misinterprets remarks from an IMF spokesman which were a factual statement about fund-lending procedures in general and not about Ireland or any country specifically".

However, the Sunday Times today said it was standing by the story and challenged the international agency to dispute the 'accuracy' of what it reported.

The claim was also backed by leading economist Karl Whelan, who said we could continue to access funding from the IMF but on a smaller scale.

"We are already well beyond the (borrowing) level that the IMF are comfortable with in terms of the size of the Irish deal," he said.

The row comes as the frontrunner in the hotly competitive French presidential election vowed to bring Europe away from austerity.

Socialist contender François Hollande said three times that he would end the austerity that Angela Merkel, the German leader, believes is the only solution to Europe's debt crisis

Mr Hollande has repeatedly said that he will not ratify a European austerity deal agreed by Mr Sarkozy.

"The citizens of France are going to address a message of change to Europe, and that message is one of re-orientation towards growth. Our challenge is to refuse the austerity that cannot be our horizon," Mr Hollande said.