Ireland is open to talks with the European Union and the International Monetary Fund (IMF) over a bailout program for its failed banks, EU Economics and Monetary Affairs Commissioner Olli Rehn said after a Tuesday night meeting of eurozone finance ministers and officials in Brussels.

Rehn said the Brussels meeting led to an intensification of preparations of a potential programme in case it is requested and in case it is necessary, suggesting Dublin is far from being convinced about a need for bailout.

Ireland has taken pains to play down the crisis, saying the market turmoil was not entirely triggered by an Irish crisis and that the country can cope with its troubles.

Prime Minister Brian Cowen told the parliament the government has a plan to deal with the situation.

“The strategy being pursued by Government has addressed the difficulties facing the banking system, is bringing sustainability to the public finances and is resulting in ongoing improvements in competitiveness. Pursuing these policies is essential for a return to growth, the evidence of which we are already beginning to see.

The Irish Government has also said it's not looking for immediate outside assistance as its coffers will last until summer. However, the prime minister said the government is consulting the EU counterparts on measures to ensure banking and financial stability.

However, the EU and European Central Bank officials, who are fighting for the survival of the common currency, and by extension the union itself, don't think the situation is under control. They want Ireland to accept a bailout deal so that the crisis does not spread to other fragile members of the union and spiral out of control, leading to the collapse of the euro.

Herman Van Rompuy, President of the Union, has said the common currency and the union are in a survival crisis. “We all have to work together in order to survive with the euro zone because if we don't survive with the euro zone, we will not survive with the EU.”

Why doesn't Ireland want a bailout, which the EU sees as the safest bet to stem the union's slide to irrelevance and disintegration?

In truth, Ireland's debt problem is not one to be glossed over. A massive failure in the banking system means the Irish government will have to cover bank losses worth 175 percent of the gross domestic product. Besides, the country is in the cusp of a massive real state bust and a worsening of the situation will only drive bank losses upward.

If the Irish banks go down, the Irish government also goes down, says an analyst at the Peterson Institute for International Economics.

But the government is reluctant to accept a bailout, largely because a rescue package will force the country to impose tough austerity measures.

If Ireland is to be bailed out, whether by the ECB or the IMF, it will have to do what it is told, writes The Telegraph columnist Simon Heffer.

The Irish government is aware that stringent loan conditions and tough Greece-style austerity measures would compromise its social programs, friendly business climate and low corporate taxes.

The chances of Ireland agreeing to stringent loan conditions are slim, according to Ben May, economist at Capital Economics.

Whether or not such a deal takes place soon will probably depend on the conditions that are attached to the loans, May wrote in a note.

However, May says Dublin could strike a compromise deal with the EU which is pushing hard to prevent government bond yields elsewhere in the region from surging higher.

... there are growing signs that some kind of compromise may take place in which the Government borrows money from one of the European bailout facilities and uses it to boost the capital ratios of its shattered banks, May writes.

But the analyst disagrees with the view that such a formula will solve Ireland’s problems. Admittedly, it might initially lead to a drop in government bond yields. But injecting more money into the banks might be seen as a sign that the cost of recapitalizing the banks is likely to be even larger than the Government’s current estimate, he says.