Bailing out Ireland?

The EU says the offer to bailout Ireland still stands. So why is the Irish government still dragging its feet?

Ireland’s leaders have not committed to accepting an aid package, despite international pressure, because of concerns about how the attached conditions might affect domestic issues such as tax levels.

But for the EU’s Belgian presidency, it is a matter of when Ireland will give way, rather than if. “Now we have the answer – we are just waiting for the question,” said Didier Reynders, the Belgian finance minister who was chairing Wednesday’s talks among the 27 European Union governments.

Dublin has so far resisted going further than allowing experts from the European Commission, the European Central Bank and the International Monetary Fund into the country to look at how best to fix the banking system. 

Many believe some sort of bailout will be needed to prop up Ireland’s heavily indebted banks. Fears about their stability has led to a rise in the price the Irish government – which has pumped billions into its banks – pays to borrow money. Other Eurozone countries that are also perceived as weak are seeing their borrowing costs rise too.

The latest discussions follow a meeting in Brussels on Wednesday of European finance ministers.

Inside Story asks: who is responsible for the crisis, is the phenomenon spreading from one Eurozone country to another, and what can be done to rescue the Irish economy?

This episode of Inside Story aired from Wednesday, November 18, 2010.