Last updated: November 23, 2010 2:44 pm

Cowen urges opposition to back budget

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An Irish policeman (L) is confronted by protestors as they break through the front gates of the Irish Prime Ministers office in Dublin, Ireland©AFP

Protesters confront a policeman as they break through the front gates of the Irish PM’s office

Ministers on Tuesday tacitly conceded that Ireland’s ruling Fianna Fáil-Green coalition may not have the numbers to pass the December 7 budget, and openly called on the opposition parties to ensure its passage through parliament.

Mary Hanafin, the arts minister and prime minister Brian Cowen’s would-be rival, said on Tuesday: “We will work with whoever we need to work with to get this through and if that also means working with the opposition to get the budget through then that’s what has to be done.”

She admitted that she was “annoyed” by the decision of the Green Party to threaten to pull out of government in the new year but added:”This is bigger than the Green Party, this is bigger than Fianna Fáil. Its bigger than the government. This is about Ireland,”

Speaking ahead of a Fianna Fáil parliamentary party meeting on Tuesday evening – which one backbench critic of Mr Cowen predicted would be a “bare knuckle affair” – Mrs Hanafin dismissed speculation that the party would seek to replace the prime minister.

“There is no indication there is going to be any change. There is no heave, there is no push and I will not be part of any push. But whenever in the future there is a vacancy, and that could be a long way down the road – if members of the parliamentary party felt they wanted me to throw my hat in the ring then I would…But I don’t’ see that happening in the near future because our target - our whole concentration at the moment - is on the economy.”

Officials on Tuesday confirmed that Mr Cowen had contacted Enda Kenny, the Fine Gael leader, and Eamon Gilmore, the Labour party leader, urging them to support the budget.

Speaking on Irish radio on Tuesday Noel Dempsey, minister for transport, said Mr Cowen wanted to emphasise to the opposition that the assistance offered by the European Union and International Monetary Fund was dependent on securing the passage of the budget and the four-year fiscal adjustment plan.

“We don’t have the luxury of time,” Mr Dempsey said. “We asked for assistance. We were given that assistance on the basis that we were going to produce this four-year plan, that we were going to produce a budget and that budget would pass. If we can’t do that, then the assistance isn’t there.”

But James Reilly deputy leader of Fine Gael, repeated the party’s call for an immediate general election. “What’s the point in people preparing a four-year plan that they’re not going to preside over. And they won’t be there to implement and they haven’t consulted the people on. If we have an election tomorrow, it can be all done and dusted within 18 days. We would all have an opportunity to put forward our plans – our respective plans for the country – and people can vote on that.”

On Monday Mr Cowen defied calls for a snap election , but said he would trigger a poll in the new year after passing an emergency budget designed to stave off further financial turmoil in Ireland.

The announcement ended a day of political threats and counter-threats, after his decision to seek a multibillion-euro rescue from the European Union and International Monetary Fund pushed his fragile Fianna Fáil-led coalition to breaking point.

“The greatest statement of confidence in this country should be passing the budget on December 7,” the prime minister said. “We have entered into discussions with European partners on the basis that we are going to implement a budget with a €6bn ($8.2bn) adjustment to it and that we will provide a four-year plan this week.

“The interests of the electorate . . . will not be served by delaying, or worse still casting into doubt, the steps which are necessary to secure our economy and financial stability.”

The Green party, Fianna Fáil’s coalition partner, precipitated Mr Cowen’s decision after announcing its intention to quit the coalition in January and force elections in order to appease voters angry with the government’s handling of the crisis. At the weekend, the Irish government formally requested a European and IMF-backed package expected to be €80bn-€90bn ($109bn- $122bn).

George Osborne, UK chancellor, confirmed Westminster’s intention to commit about £7bn ($11.1bn) to the rescue. Sweden could offer a loan of up to SKr10bn ($1.5bn), Anders Borg, its finance minister, said.

“The financial stability of Europe is at risk so it is very important to make a broader effort to try to stabilise the situation,” Mr Borg said.

Mr Gilmore had earlier called for a dissolution of the Dáil Eireann, the Irish lower house, and an immediate general election. John Gormley, Green party leader, said the events of the past week had been traumatic for the electorate and people felt “misled and betrayed”.

A sense of crisis was palpable on the streets of Dublin in the hours leading up to Mr Cowen’s announcement. Protesters, led by senior figures in the nationalist Sinn Féin party, clashed with police outside the Dáil. While Mr Cowen reiterated the determination of his government to secure next year’s budget on December 7, passage looked less certain after two independent MPs warned they would vote against it.

The political ructions in Dublin rippled across the continent. Bourses in the “peripheral” countries most affected by the crisis – which besides Ireland include Portugal, Greece and Spain – experienced the biggest falls, with bank stocks especially hard hit. Shares in Bank of Ireland and Allied Irish Banks, fell 19.13 per cent and 6.21 per cent, respectively.

Ireland’s incipient political crisis, and a warning by Moody’s that Ireland risked a “multi-notch” downgrade, combined to reverse a morning rally during which Irish bond yields fell.

Additional reporting by George Parker in London, Andrew Ward in Stockholm and Joshua Chaffin in Brussels

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