WRAPUP 5-Europe set to approve bailout for Ireland

* EU ministers to meet Sunday in Brussels on Irish bailout

* Opposition warns on interest rate for EU/IMF loans

* European officials at pains to play down Portugal risk

(Recasts with Sunday minister meeting, adds Sarkozy calls)

By Peter Graff and Lorraine Turner

DUBLIN, Nov 27 (BestGrowthStock) – European ministers are set to
sign off an 85 billion euro ($113 billion) emergency loan
package for Ireland on Sunday that they hope will calm markets
and prevent contagion to other parts of the euro currency bloc.

The Belgian presidency of the European Union said finance
ministers from its 27 member states would meet in Brussels on
Sunday to discuss Ireland, which is poised to become the second
euro zone country after Greece to be bailed out.

A meeting of the so-called Eurogroup forum of euro zone
finance ministers is expected to start at roughly 1 p.m. (1200
GMT) and be followed by a meeting of ministers from the broader
EU to sign off on the rescue.

Negotiators from the Irish government, the EU and the IMF
met on Saturday at a Dublin luxury hotel to finalise the deal as
thousands marched through the Irish capital to protest against a
bailout that they fear will cede hard-won Irish sovereignty.
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Ireland needs the funds to stem mounting losses at its
battered banks, whose reckless lending during the “Celtic Tiger”
boom years turned bad when a property bubble burst. Due to
repeated bank bailouts, the country’s budget deficit is set to
swell to one third of its economic output this year.

After the Irish rescue, investors could turn their attention
to other high-deficit countries such as Portugal or Spain,
testing Europe’s readiness to put up more taxpayer money to
secure the future of its 12-year old single currency project.

Irish opposition parties that are expected to take control
of the government in the coming months warned on Saturday, as
the talks were being held, that a deal would be unacceptable if
the interest rate on loans from the EU and IMF was too high.

Irish media reports have said the package could cost Ireland
as much as 6.7 percent a year, although the government denied
the cost would be that high.

“If true, it would be an appalling capitulation by the Irish
government,” Labour Party leader Eamon Gilmore told a party
conference. “And it would be a betrayal of the founding
principles of the European Union.”

The government’s communications minister Eamon Ryan told a
radio talk show that the reported figure was “inaccurate” and
the final rate would be lower.

Fine Gael, the main opposition party, has said it would
consider any rate above 6 percent excessive.

Fine Gael and Labour are expected to rout unpopular prime
minister Brian Cowen’s Fianna Fail party in an election that is
likely to take place within months. They have said they would be
bound by any deal but may try to renegotiate details.


European officials have been at pains to play down the links
between Ireland and Portugal, widely seen as the next euro zone

Because of its close economic links with its much larger
neighbour Spain, they fear a market assault on Portugal could
set off a chain reaction engulfing the euro zone’s fourth
largest economy. This would stretch the capacity of the 750
billion euro aid facility that the EU and IMF set up after
Greece was pushed to the brink.

French President Nicolas Sarkozy held telephone calls with
the leaders of Germany, Italy, Spain and Portugal at the
weekend, his office said in a statement, underscoring the
seriousness of a crisis that some experts believe could threaten
the future of the euro zone.

Resistance to further bailouts runs particularly high in
Europe’s largest economy, Germany, where Chancellor Angela
Merkel has been accused of deepening the euro crisis by
insisting on a new rescue mechanism that would make private bond
holders shoulder part of the costs of future bailouts.

Berlin denied a magazine report on Saturday that it could
agree to the issuing of joint euro zone bonds to help ease the
debt crisis, an idea long pushed by Juncker. [ID:nLDE6AQ04P]

A survey by polling group Emnid for Focus magazine showed
Germans evenly divided on providing financial aid for countries
such as Greece and Ireland, with 48 percent in favour of
assistance and 47 percent against.

The Irish opposition parties Labour and Fine Gael want bond
investors who lent money to Irish banks to take on a bigger
share of their country’s bailout burden, rather than foisting it
all on Irish taxpayers.

The downside of the plan is that it risks damaging
confidence in other European banks and spreading the crisis.

Shares in European banks that hold Irish bank debt tumbled
on Friday, the euro fell (Read more about the trembling euro. ) to a two-month low against the dollar
and the borrowing costs of peripheral euro zone countries such
as Ireland, Portugal and Spain hovered near record highs.


The Irish public has stoically borne two years of recession,
a relentless surge in unemployment and a programme of tax rises
and spending cuts, but people say they are furious over the new
measures and the decision to seek aid.

Saturday’s demonstration was peaceful but boisterous, with
thousands braving overnight snow to come by bus to the capital,
some bringing their children.

It was the biggest protest since at least early 2009. Police
put turnout at 50,000. Unions said it was three times as big.

Marchers assembled at Dublin’s General Post Office building,
headquarters of a nationalist uprising against British rule in
1916. The prospect of handing sovereignty to Brussels has hit a
nerve in a country where political discourse is still defined by
the struggle for independence from Britain.

“We are trying to reclaim our sovereignty before it’s lost
and before the IMF sell our natural resources and assets to the
highest bidder,” said Feilim Wakely, from County Louth, north of
the capital, holding a sign that read “EIRE NOT FOR SALE”.
(Additional reporting by Carmel Crimmins; Writing by Noah
Barkin and Peter Graff; Editing by Kevin Liffey)

WRAPUP 5-Europe set to approve bailout for Ireland