The Government faces demands from the troika to accept tough fiscal policy conditions in return for an emergency credit line to guard against any loss of market confidence in the wake of the bailout.
With only seven weeks to go before Ireland's official exit from the EU-International Monetary Fund bailout, there is no consensus in the troika or among European leaders as to whether the Coalition should seek a precautionary loan programme. However, European sources said Dublin would be expected to comply with a new swathe of tough conditions even if it never used the credit line.
This is at odds with the stance of the Government, which is trying to minimise the scope of any conditions. Taoiseach Enda Kenny said at the end of the EU summit in Brussels other leaders had expressed a “range of views” to him on the merits of a credit line.
The summit was overshadowed by an escalating transatlantic row over American spying in Europe.
Both the European Central Bank and the IMF are keen for Ireland to take on a precautionary programme, but the European Commission sees no "obvious" need at this point.
'Success story'
With Ireland seen as the only demonstration the response to the debt emergency is working, the commission is wary the "success story" could be undermined if approval is sought in other countries for a credit line.
However, the ECB remains concerned there are still risks in the Irish banking system and believes there should be a credit line to confront any return of market turmoil. After talks this week with the ECB and the commission, Minister for Finance Michael Noonan is due in Washington on Monday for discussions at the IMF.
Although Dublin argues behind the scenes that any conditions should go no further than existing commitments under EU budget rules, European sources doubt that would satisfy the European Stability Mechanism fund or the IMF.
Even though the prospect of tough conditions would present difficulties for the Government, the argument is made within the troika that Ireland is already obliged to run “very tight” budgets for years to come. Mr Kenny said the Government expects to decide before the bailout ends on December 15th.
