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Ireland PM-in-waiting starts to hammer out coalition

By Peter Taggart, For CNN
Enda Kenny's Fine Gael party will have to form a coalition in order to govern in Ireland.
Enda Kenny's Fine Gael party will have to form a coalition in order to govern in Ireland.
  • NEW: Fine Gael leader Enda Kenny meets with the head of the Labour Party
  • He wants to renegotiate a multibillion-dollar bailout package
  • The loan was negotiated by Fianna Fail, which was punished at the polls
  • Fine Gael will be the largest party after elections Friday, but it cannot govern alone
  • Enda Kenny
  • Irish Politics
  • Ireland

(CNN) -- The man poised to become the next prime minister of Ireland opened talks Monday to form a coalition government.

Enda Kenny's Fine Gael party is set to be the largest party in parliament after last week's elections, but will fall just short of an overall majority.

Kenny met Monday with Eamon Gilmore, leader of the second biggest grouping, the Labour Party.

The center-right Fine Gael made record gains in the Irish poll, and with the counting of the final votes continuing into a third day, election officials say it could still take more seats.

However, the party will not have an overall majority, prompting Kenny's talks with the center-left Labour Party.

Additional meetings are scheduled between negotiating teams from each party.

Kenny says one of his top priorities is to renegotiate the country's multibillion-dollar bailout package.

The Dublin government negotiated the 85 billion-euro ($113 billion) loan package from the European Union, International Monetary Fund, and individual European nations late last year. It was prompted by the crippling cost of a government bailout of Irish banks during the financial crisis, but it was extremely unpopular with voters, as was the accompanying government austerity budget.

Many voters blamed the governing Fianna Fail party for the country's monetary woes, and Prime Minister Brian Cowen was so unpopular he had to step down as leader of Fianna Fail before the election.

Kenny has already raised the financial bailout with other European leaders who telephoned to congratulate him on his imminent appointment as prime minister, or taoiseach.

He has also spoken by telephone to European Commission President Jose Manuel Barroso.

Kenny is due to travel to Helsinki, Finland, Friday for a meeting of the European People's Party, with which Fine Gael is affiliated. He will follow that up at the European Council in Brussels next week.

The contacts are intended to garner support for renegotiating the loan package.

Kenny's domestic priority over the next few days is to form "a stable government," he said.

Labour leader Gilmore has said he believes a government needs to be formed for the first day of the new parliament, March 9. Talks with the Labour Party would have to conclude by the weekend to allow Labour to have a special conference to ratify any agreement by that time.

Negotiations could prove difficult, as Fine Gael and Labour are at odds over the length of time it will take to turn around the budget deficit, taxes, public sector cuts, water charges and how to tackle bondholder responsibility for banking debts.

Kenny has described the Irish election as "a democratic revolution at the ballot box."

Fine Gael, Labour and Sinn Fein have all won record numbers of seats. But Fianna Fail suffered a crushing defeat, losing three-quarters of its lawmakers.

The Green Party, which had been in coalition with Fianna Fail, lost all six of its members of parliament.