Irish parties squabble over election date

DUBLIN (Reuters) - Ireland's opposition pressed the government Monday to bring forward the date of a parliamentary election, which will see Brian Cowen's coalition the first to be felled by the euro zone debt crisis.

The main opposition parties, in pole position to form the next government, have threatened to bring down Cowen's administration this week unless he agrees to fast-track a key financial law, allowing the election to be held by February 25 at the latest instead of his chosen date of March 11.

Cowen's coalition partners quit Sunday, capping a calamitous week that saw eight ministers resign, a thwarted cabinet reshuffle and his own resignation as leader of the Fianna Fail party.

"As a minority government, Fianna Fail cannot dictate the order of business," the Labour party finance spokeswoman Joan Burton told national broadcaster RTE.

The Fianna Fail party, scrambling to elect a leader to replace Cowen and facing possible annihilation in the poll, is playing for time.

At the centre of their squabble is the last piece of legislation underpinning the 2011 austerity budget and an important condition of an EU/IMF bailout package.

If both sides don't agree an accelerated timetable for passing the finance bill in a meeting at 11:00 a.m. Monday, then opposition parties will try to topple the government through parliamentary votes of confidence this week.

Analysts expect them to agree a deal.

An immediate election would shelve the finance bill until a new government is formed. While it would not necessarily derail Ireland's fiscal goals -- the tax measures outlined in the bill are already being implemented -- it might mean Dublin misses an end of March deadline to have the budget passed.

Such a delay would send the wrong message to investors, already sceptical that Ireland can meet its fiscal and debt goals in the face of spluttering growth.

"If they didn't pass the finance bill, bond yields would rise. The market would think that our commitment to the bailout package was weakening," said Alan McQuaid, chief economist with Bloxham Stockbrokers.

The premium investors demand to hold Irish 10 year paper over German bunds was little changed at 575 basis points and the main stock index rose by 1 percent as investors expected the politicians to come to agreement.

DESPAIR AT POLITICAL THEATRE

Taxpayers and business leaders, struggling to survive in an unprecedented economic crisis, despaired at the political theatre.

"It's actually quite embarrassing, to be representing Ireland when you are trying to sell a story of certainty," said Danny McCoy, head of Ireland's main employer's group, IBEC.

"Ireland depends upon foreign direct investment, we have to be seen as people who are credible and trustworthy and sensible."

Faced with ever worsening cutbacks and tax hikes, stubbornly high unemployment and the return of mass emigration, Irish people are itching to boot Cowen and Fianna Fail out of office.

The government's failure to rein in the reckless activities of bankers and property developers, who often socialised with politicians at race meetings and on golf courses, is at the root of the current crisis, which reached its nadir with an 85 billion euros external rescue package in November.

Under the terms of the bailout, Dublin has to drastically shrink its budget deficit, one of the worst in Europe, and overhaul its banks.

An early poll means that Fine Gael and Labour will be on the hook if Dublin misses its initial quarterly targets, possibly requiring them to implement additional austerity measures.

Both parties have signed up to the bailout's fiscal goals and analysts said if forced to they would apply more harsh medicine, conscious of Dublin's dependence on external support.

"Fine Gael plus Labour divided by two equals Fianna Fail, you'll get much the same," said Micheal Marsh, professor of politics at Trinity College Dublin. "Labour is no more leftwing than probably half the Fianna Fail party."

To avoid an unstable administration both parties should steer clear of populist pledges that they will break when in government.

"They shouldn't promise very much and then maybe they can do more than they promised," said Marsh.

(Editing by Diana Abdallah)