* Cowen says national interest requires him to pass budget
* Austerity budget required for EU/IMF aid package
* Opposition Fine Gael and Labour both want snap poll
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By Jodie Ginsberg and Carmel Crimmins
DUBLIN, Nov 22 (Reuters) - Irish Prime Minister Brian Cowen defied calls to resign on Monday, vowing to stay in power long enough to pass an austerity budget needed for an EU/IMF bailout package, and then call an early election.
Cowen had come under acute pressure after the Green Party said it would quit the coalition after the budget if an election was not called in January, and opposition parties demanded a snap election be held even before the budget.
Cowen’s move effectively dared the opposition to block the budget and thus hold up the bailout and the promised election.
The former finance minister told a news conference that he would tough it out for the sake of an aid package expected to be worth over 80 billion euros. [nLDE6AL26T] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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“There are occasions when the imperative of serving the national interest transcends other concerns including party political and personal concerns, and this is one such occasion,” Cowen said.
“These (EU/IMF) negotiations in turn are taking place in the context of the budgetary arrangements coming into effect.
“It is a matter then of highest importance that Dail Eireann (parliament) should continue to consider and enact the relevant measures and that the government should continue to discharge its obligation to bring forward the necessary proposals.”
The 2011 budget is due to be unveiled on Dec. 7.
Ireland requested the bailout on Sunday to shore up its banks and state finances against the ravages of the global credit crunch. But early last week, Cowen had said the government was not in talks about a bailout.
The news only fuelled a sense of national outrage at the handling of the economic crisis and the prospect of a draconian austerity programme set to last for another four years.
“The people of the country do not trust him ... I believe his credibility is in tatters now and the honourable thing for Cowen to do now is to stand down,” said Noel O’Flynn, a member of Cowen’s own Fianna Fail party.
The government is expected to announce on Wednesday that it will cut the minimum wage, slash social welfare spending, reduce the number of public employees and add a new property tax and higher income taxes in a package intended to slash $15 billion euros off the annual budget by 2014.
Unions have warned this could spark civil unrest: a student demonstration over planned fee increases turned violent earlier this month, and unions have organised a march to protest at the planned austerity measures on Nov. 27 in Dublin.
Cowen’s junior coalition partners, the Greens, said on Monday they would support the government only until the budget was passed and the EU/IMF bailout was in place. [ID:nLDE6AL00M]
But the defection of two independents on whom the government depends for its majority threatened to scupper its passage.
Independent member of parliament Michael Lowry said he would support the 2011 budget only if the main opposition parties, Fine Gael and Labour, helped write it, which is highly unlikely. But Cowen appeared to be inviting them at least to abstain.
“The decision today by the Greens means that the budget is unlikely to go through unless there is some sort of involvment by the opposition parties,” said Theresa Reidy, politics lecturer at University College Cork.
“What we will see in the next fortnight is growing pressure on the opposition parties for the sake of political stability to abstain on the major votes.”
David Farrell, professor of politics at University College Dublin, also said Cowen was hoping Fine Gael would abstain from the budget vote, and defying public opinion by staying on:
“From an Irish perspective, the majority of opinion now would be: ‘We have gone too far, we need an election, we need a new government even if that is not necessarily in the best interests of the markets internationally, that’s certainly in the better interests of the Irish’.”
Doreen Campbell, a 73-year-old retired teacher, said an election was desirable “because the country is in a hopeless mess at the moment and it is affecting an awful lot of people.”
But she was doubtful whether a new government would be much better: “It will just be the same circus with different clowns.” (Writing by Kevin Liffey; Editing by Jodie Ginsberg)