Buckling to pressure from its euro zone partners, heavily indebted Ireland has toned down its opposition to a financial aid package from the European Union and given consent for the EU and International Monetary Fund to work out a roadmap to help the country avoid bankruptcy.
Ireland Finance Minister Brian Lenihan said after a meeting of EU finance ministers in Brussels on Wednesday that his country welcomed the decision of his colleagues to send a team of experts from the EU, the IMF and the European Central Bank to Dublin on Thursday.
But he made it clear that his country is still far away from giving its nod to the EU offer to assist his country, even though it has not rejected it outright, as before.
"The EU-IMF mission begins its work this week. Let's wait for the facts, then we will decide," he said.
In Dublin, Irish Prime Minister Brian Cowen also softened his position on the EU proposal to assist his country, but insisted that the term "bailout" will not be used because it is "disparaging".
Ireland came under pressure from its EU partners to accept a bailout package at the meeting of the 27 finance ministers on Wednesday, as well as at a meeting of euro zone nations the day before.
They expressed concern that the debt crisis in Ireland has the potential to threaten the stability of the common currency, as happened six months ago when Greece was on the verge of bankruptcy.
Greece was bailed out with a 110 billion euro rescue package put together by the euro zone nations and the IMF.
Subsequently, the EU and IMF spread a temporary 750 billion euro (nearly $1 trillion) financial safety net for euro zone nations facing a similar crisis in the future.
EU diplomats said in Brussels that the visit of the EU-IMF expert team to Dublin is the first step towards rescuing the "Celtic tiger", which has a staggering budgetary deficit of 32 per cent of the GDP this year, ten times more than the limit stipulated in the EU's growth and stability pact.
Ireland's deficit was driven up by the 45 billion euros spent by the government to rescue the country's banks from bankruptcy following the collapse of the property market and more bailouts are expected in coming months.
After the negotiations with the Irish government get underway, it is only a matter of time before a formal application for assistance from the Financial Stability Facility will be made, the diplomats said.
It is estimated that Ireland needs up to 80 billion euros to service its debt and to stabilise the banking sector.
EU Commissioner for Economic and Monetary Affairs Olli Rehn said after Wednesday's meeting that discussions are underway to involve Britain in the financial rescue of Ireland, even though it is not a member of the 16-nation euro zone.
The banking and finance sectors of the two countries are closely inter-linked and with around USD 150 billion, British banks are the largest holders of Irish government bonds.
Germany also has a considerable interest in Ireland's financial stability, as German banks have an exposure of around USD 138 billion to Irish government bonds.
British Finance Minister George Osborne recently expressed his government's support of efforts to shore up the euro and pledged to restore stability to Ireland.
He said it is Britain's national interest that the Irish economy is successful and it has a stable banking system.
"So we are ready to help," he told journalists.
The European Commission is preparing a rescue package of between 80 and 100 billion euros and it will be made available as soon as the government in Dublin makes a formal request for aid, media reports said.
