Irish PM wins party leadership vote

Prime Minister Brian Cowen won a confidence vote yesterday in his leadership of Ireland's Fianna Fail Party, putting him on course to lead his long-dominant party to a widely expected election defeat within weeks.

Cowen prevailed in a secret, unrecorded ballot versus his only challenger, Foreign Minister Micheal Martin, who had warned beforehand the electoral survival of Fianna Fail required a new leader immediately.

Cowen, 51, has faced harsh criticism over the past year for allegedly misleading his own Cabinet about Ireland's negotiation of an emergency international bailout; concealing the extent of his contacts with bankers at the heart of Ireland's economic downfall; and even sounding hung over on a live radio interview following a night of heavy partying.

Cowen said after his victory that Fianna Fail's 71 MPs were now united and focused on campaigning for re-election.

Martin immediately resigned from Cowen's Cabinet but declared renewed loyalty and said he would campaign alongside him during the campaign expected in March.

Martin, who has represented the southwest city of Cork since 1989, said Cowen "continues to have my full support as head of government. I look forward to welcoming him to Cork South Central in the weeks ahead".

Fianna Fail has won the most seats in Parliament in every general election since 1932 and has formed governments following the last six elections dating back to 1987.

But its status as the perennial front-runner appears all but certain to be lost in the as-yet-unscheduled election. Fianna Fail has fallen to record-low ratings in recent polls and into fourth place behind three opposition parties.

Cowen, whose government term does not expire until mid-2012, was forced to concede the need for an early election last November when the smaller party propping up Fianna Fail in government, the environmentalist Green Party, announced its intention to quit the Coalition.

Cowen has been buying time, delaying the election date in part by promising to pass environmental laws desired by the Greens - but only after a full package of brutal austerity measures are passed first.

Cowen, who was Finance Minister before gaining the top job in 2008, is widely blamed for overseeing unsustainable construction growth fuelled by tax breaks and rampant property speculation.

Irish tax revenues have plummeted since 2008 in line with a collapse in the property market, which in turn has bankrupted many of the country's construction barons who borrowed tens of billions from Dublin banks.

Cowen insured those six banks against loan defaults, a bitterly debated decision that has resulted in the nationalisation of four banks and a bailout bill to Irish taxpayers likely to exceed €50 billion ($86.77 billion).

Ireland stopped trying to borrow from the bond market in September because the interest rates being demanded were too high.

Two months later the European Central Bank - which had been loaning Dublin banks tens of billions in short-term cash to keep them solvent - insisted that Ireland negotiate terms for an international rescue.

Cowen faced withering criticism for insisting - even as European and International Monetary Fund experts arrived in Dublin to negotiate a loan package - that Ireland didn't need any aid and wasn't asking for it.

Within a week Ireland accepted a seven-year deal involving €67.5 billion in loans charging an average rate of 5.8 per cent interest.

To try to balance the books, Cowen since 2008 has overseen tax rises and spending cuts of €15 billion. He has published plans to impose €15 billion more in the coming four years, a goal that opposition leaders say they also support.

- AP