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UPDATE 2-Speculators bent on toppling euro -Irish minister

Published 05/24/2010, 04:12 PM

* Minister: Anglo-American financiers hostile to euro

* Traits of conspiracy detected in market attack -minister (Adds quote from second minister, background)

By Andras Gergely

DUBLIN, May 24 (Reuters) - Europe is engaged in a battle with speculators who aim to break up the euro currency area, a junior minister in Ireland's Finance Ministry said on Monday, while noting overtones of a conspiracy in the speculation.

European Union leaders agreed a roughly $1 trillion safety net for the euro currency earlier this month to prevent the debt crisis that began in Greece from spreading to other euro zone countries with big budget deficits and debt loads, such as Spain or Ireland.

Authorities are still experimenting with regulatory and intervention measures to calm markets, some of which have backfired as investors see the underlying problems of the crisis as unresolved.

"There is a real battle going on against speculative forces who want to upend the euro," said Martin Mansergh, minister of state for finance.

"There are people there who don't necessarily want the situation to settle down," Mansergh told Today FM radio in answer to a question about newspaper articles in the past week on Ireland's debt and banking problems.

Morgan Kelly, an economics professor at University College Dublin, in an opinion piece published on Saturday, said Ireland's banking liabilities could cause its debt problems to eclipse Greece, despite Dublin's efforts to cut spending in other areas.

Government officials have repeatedly denied Kelly's claims, and many other analysts maintain Ireland's fiscal reforms have put it in a different league from Greece.

Eamon Ryan, a senior minister in charge of communications and energy, acknowledged when speaking separately to reporters that big mistakes had been made in banking policy and that the spending cuts were unpopular. But he said the risks were manageable.

"While it's difficult, while it's very tight particularly on the government budget side, we have still the ability to get out of it even if there's a difficult economic situation internationally," Ryan said.

Ministers were also asked about a New York Times blog by a former chief economist at the International Monetary Fund last week which also pointed to the burden of Ireland's bank rescues.

There are "commentators from the Anglo-American financial community who are deeply sceptical of and hostile to the euro and the whole project," Mansergh said.

Praised by investors for its determination to cut spending, Ireland still had the biggest budget deficit in the European Union last year compared with the size of its economy due to the cost of its bank bailouts.

The government says it is on track to cut its deficit to be in line with the European Union's limit of 3 percent of GDP by 2014, from over 14 percent in 2009, and that the Irish economy does not have the same structural problems as southern European peers.

"Of course if you had lots of separate currencies that would be more profits for the financial sector," Mansergh said.

Asked if there was an international conspiracy against Ireland or the euro, Mansergh said: "Against the euro there is that tendency in it." (Reporting by Andras Gergely; Editing by Toby Chopra and Leslie Adler)

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