Investors sold off Ireland’s bank shares and the government struggled to survive after conceding it will need a massive bailout, a measure meant to contain Europe’s debt crisis but which experts say will fail to protect other vulnerable countries, particularly Portugal.
Ireland’s rescue, which follows Greece’s in May, is the EU’s latest attempt to win back market confidence and keep its euro currency union from unravelling. But the cost -— both monetary and political — is rising and likely to swell further.
Prime Minister Brian Cowen’s government faced an immediate threat to its survival as coalition allies in the Green Party — stung by Ireland’s surprise weekend decision to seek a bailout that could approach $140 billion US — threatened to withdraw unless he announces a January national election.
Analysts agreed that Cowen faces almost certain ouster from office within weeks, possibly by lawmakers within his own Fianna Fail party. If not, the Greens’ demand means he will lose his majority anyway by the new year and parliament will be dissolved for a winter election.