February 27, 2011 6:35 pm

Irish poll winner eyes bail-out ‘manoeuvre’

The winner of Ireland’s election said he saw “room for manoeuvre” to change the terms of Europe’s bail-out of the country’s banks.

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As the final votes were counted in a poll that saw the departing government suffer its worst eresult, the leader of Fine Gael, which emerged as the largest party, said he had “no time to lose” to form a new government that would address the financial crisis.

Enda Kenny said: “The country cannot borrow money, the banks cannot borrow money. We are up to our necks here and I do think people, genuinely, have to have explained to them the scale of the mess that’s here.”

Parties have a little over a week before parliament reconvenes on March 9. Two days later the new Irish prime minister will attend a meeting of eurozone leaders where Ireland’s perilous financial position and the wider eurozone debt crisis will top the agenda.

Mr Kenny’s centre-right Fine Gael campaigned on a promise to seek a renegotiation of the €85bn bail-out deal struck with the European Union and the International Monetary Fund.

He told RTE, the broadcaster, on Saturday: “I see room for manoeuvre here on the interest rate and in terms of the cost of the bail-out deal, with particular reference to the banking structures in there.”

The former schoolteacher suggested that other European governments might face similar difficulties to Ireland if the stress tests being conducted at their own national banks revealed large exposures to loan losses. “Other European countries, when the stress tests are completed, may have serious difficulties.”

Mr Kenny said he was “going to move on this” in talks with European leaders including Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, in Helsinki on Friday at a meeting of the European People’s party faction of the European parliament.

Asked if he would bring up the possibility of Ireland defaulting on its debt, Mr Kenny said he would prefer to discuss “co-operation and consent”.

His comments came as final counts continued in several constituencies on Sunday.

With a handful of seats still to be declared, Mr Kenny has a choice of either joining with Labour or forming a minority administration with the support of like-minded independents. Eamon Gilmore, the Labour party leader, said he was confident his party could negotiate a programme for government with Fine Gael, creating what “would be the closest we are going to get in this country to a national government”.

With 150 of the 166 Dáil seats decided, Fine Gael had 68 MPs, Labour 35 and the outgoing Fianna Fáil party 17. Sinn Féin, the leftwing party known for its links with the Irish Republican Army, was on 13 MPs while there were 17 independents.

Fine Gael is tipped to end up with about 78 seats. But Michael Noonan, a former party leader and the Fine Gael spokesman on finance, said he was not inclined to do business with independents “because they are high maintenance”.

However, Diarmaid Ferriter, modern Irish history professor at University College Dublin, suggested that some Labour party supporters would be worried that the party might be “swallowed up” by a coalition with Fine Gael. He said Mr Gilmore “has to look at the left of the party, that is biting at the heels of the leadership because they are regarded as selling out”.

He said Labour “has not done well historically coming out of coalitions so they may be worried about the degree to which they will get swallowed up and about the compromises they will have to make”.

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