European officials are working on a bailout for Ireland that could reach 100 billion euros, reported the Wall Street Journal. The aid package could include direct loans from the U.K. along with assistance from Europe and the International Monetary Fund (IMF).
Experts will travel later this week to Ireland to examine their troubled banks.
The Telegraph reported separately that the U.K. has pledged 7 billion sterling pounds to bail out Ireland. U.K. banks, like those of several other European countries, are heavily exposed to Irish sovereign debt.
Investors, and certain European officials, had hoped Ireland would accept a bailout package at the conclusion of yesterday's meeting of euro zone finance ministers and calm the markets. Last week, market conditions for Irish sovereign debt deteriorated significantly.
European politicians are worried about Ireland's troubles spreading around the continent and endangering the euro currency. Spain and Portugal are particularly afraid it could spread to their markets.These parties want Ireland, and are pressuring Ireland, to take the aid and stop the contagion.
However, Ireland remains defiant. Irish politicians said the country is fully funded until mid-2011 and that attacks from the market don't reflect the fundamentals.
Second, Ireland's sovereignty was very hard-won -- referring to its bloody independence war against the British from 1919 to 1921 -- and it wasn't about to give that away easily.
As Irish politicians saw from Greece's fate, or even those of Asian nations that received IMF aid in the late 1990s, receiving bailout from supranational organizations would result in the loss of some economic sovereignty.
Specifically, one thing Ireland does not want to be made to give up is its low corporate tax rate, which gives it a competitive advantage in attracting international corporations to do business there.
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