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Noonan in tough talks over our debt burden

FINANCE Minister Michael Noonan was set for tough talks with Jean-Claude Trichet and Olli Rehn today in an effort to ease Ireland's debt burden.

Mr Noonan was having discussions with Mr Trichet, the European Central Bank (ECB) president, on the fringes of a meeting of eurozone finance ministers.

He was also expected to have talks with Mr Rehn, the EU Commissioner for Economic and Monetary Affairs.

The discussions were to focus on the banking sector, as speculation grows that new stress tests could reveal the need for greater than anticipated capital injections into our stricken lenders.

It is understood Mr Noonan will press the case for an EU working group to be set up to examine how eurozone governments might take on a further burden from Ireland's bank bailout.

Mr Noonan also wants the eurozone bailout fund to be given power to provide insurance cover to bond investors in Irish banks.

It is thought the move would allow the likes of AIB and Bank of Ireland to borrow from the financial markets again.

It is the latest attempt by the new Government to renegotiate the terms of the IMF-EU bailout.

At a summit of EU leaders on Friday, Taoiseach Enda Kenny clashed with French President Nicolas Sarkozy over Ireland's corporation tax rate.

Mr Sarkozy demanded an increase in the rate in exchange for any concessions on the bailout. However, Mr Kenny has said he regards any harmonisation of the corporate tax base as an increase in tax rates through the back door.

After the meeting, the Taoiseach described the clash as "not quite a Gallic spat".

He said he hoped to be in a better position to forge a deal when he had more information on the true state of the banks and economy.

Mr Kenny is adamant he will not agree to harmonise tax rates, though it is expected he will have to come up with some concession. German Chancellor Angela Merkel and Mr Sarkozy made clear their dissatisfaction with Mr Kenny's stance on company tax.

European Council president Herman Van Rompuy said euro-zone leaders asked for "constructive engagement" from Ireland on tax co-ordination.

Up for grabs is a 1pc reduction in the 3pc 'surcharge' Ireland pays on the loans, but only if concessions are forthcoming.

comurphy@herald.ie