The package is described as a bail-out of Ireland, but it is important that we recognise that Ireland has not asked for the bail-out and that it is not the package that the Irish would have wished. Ireland and the IMF proposed to write down bank senior debt-that is, default on an element of that debt-because they recognised that it would be very difficult, although not impossible, for Ireland to pay back its vast amount of debt. It is not clear to me that adding another €67.5 billion to those debts and subordinating the previous debts to that will help Ireland out of this crisis.
Let us consider why Ireland was pushed into the crisis. The European Central Bank threatened to withdraw finance for the Irish banks. The ECB had extended €130 billion at a 1% interest rate in temporary liquidity support to the Irish banking sector-a courageous and rather risky thing for it to have done. It would prefer that credit to be refinanced on a longer term basis and at a higher interest rate. If the eurozone wishes to do that, that is a matter for it to agree.
What is not clear is what interest we, or indeed Ireland, have in refinancing that eurozone debt into an EU-wide debt. We must consider the funding costs. My right hon. Friend the Chancellor has the proud achievement, for which he deserves significant credit, of reducing the long-term costs of borrowing in the UK. Unfortunately, that has gone into reverse over the last three weeks or so. When he came in, we did not give money to the Greek bail-out. We had a rescue package with €440 billion loans and only €60 billion of the dubious EU facility. Unfortunately, that is now being confused.
My hon. Friend Mr Carswell recognised back in May that this was the beginning of a European debt union, but it was only when I saw how the package was denominated that I began to share that view. Unfortunately, it is rebounding on our credit. The EU puts in €22.5 billion, the eurozone puts in €17 billion and we put in €3.5 billion or so. Rather than this appearing to be a bilateral arrangement that we have properly agreed, because it is in the interests of these islands, and that has been negotiated between the UK and the Republic, we give the markets the impression that we are being sucked into a wider EU package and those markets worry that we will do the same for Portugal or Spain. We have seen the back-up in interest rates in the past few weeks, but I ask the Treasury Front-Bench team to make it as clear as they can that this is a one-off involving Ireland. By doing that, we could at least potentially protect our credit from some of the assumptions that the market has built up in the past few weeks.
On Europe, I commissioned an opinion poll last month of 1,000 representative people in the Republic, and more than a third of that sample said that they would like to leave the euro and return to sterling. The Chancellor says that "I told you so" is not a policy and of course he is right, but he needs to recognise that there is a policy implication that we should not make the same mistake again. I shared with my right hon. Friends the Chancellor and the Foreign Secretary, back in 1998, analysis of what had been happening in Ireland-how bank lending was out of control and how there was going to be a most extraordinary boom and bust that would serve as a vivid lesson to this country. I also shared that analysis with Bertie Ahern, prior to his becoming Taoiseach. Like the Chancellor, he said he understood the analysis and that we might be right, but he wanted to join the euro for political reasons. We saw the impact of that decision in Donegal three weeks ago, where the successor seat of my grandfather, who was the Fianna Fail Member for that area, has now been taken by Sinn Fein.
This is Ireland's decision, but I hope, in its interests and ours, that we will work together much more closely than we have been. There have been improvements in relations since the Prime Minister's comments about the Bloody Sunday inquiry and, given what Mr Dodds has said and given his very positive and supportive attitude, I believe we should work with Ireland on a bilateral basis to try to put things right and get a long-term sustainable solution for it and us that is better than the Carolingian settlement that is being imposed by the eurozone and the European Union on an Ireland that deserves better.