Irish centre-right parties seek coalition deal as Trump threat looms

By Padraic Halpin and Conor Humphries

DUBLIN (Reuters) -Ireland's two large centre-right parties are set to begin their search for a coalition partner this week after Friday's election left them just two seats short of the 88 needed to govern, a choice that will help determine their policy platform.

Fianna Fail and Fine Gael, who between them have led every government since the foundation of the state almost a century ago, bucked a global trend of voters rejecting incumbents when they won 48 and 38 seats respectively after receiving a broadly similar number of votes as the last election in 2020.

After outgoing junior coalition partner the Greens lost all but one of its seats, the choice is between one of Ireland's smaller left-leaning parties or a number of more conservative independent lawmakers.

"There is certainly the possibility for this additional partner to have an outsized impact on the ideological direction," said Theresa Reidy, senior lecturer in politics at University College Cork.

The centre-left Labour and Social Democrats both made gains to take 11 seats each and have said they will discuss government formation with all parties. Ireland's disparate collection of independent lawmakers have 20 seats.

Deals would likely be needed with at least six independents to form a comfortable working majority.

Fine Gael and Fianna Fail have formed stable governments in the past backed by independents and both have governed with Labour. The relatively new Social Democrats has never been in power.

The two leading parties have ruled out a deal with the other main party Sinn Fein, the leftist opposition who came second on 39 seats. Its vote fell to 19.0% from 24.5% in 2020 and 35% in opinion polls a year ago when it appeared on course to lead the next government.

POTENTIAL MAJOR THREAT

Almost uniquely in Europe, no far-right candidates made a breakthrough in Ireland despite anti-immigrant riots in Dublin and grass-roots protests against refugee accommodation around the country over the last year.

The next government will remain under pressure over how to manage a big rise in asylum seekers, as well as frustration among many voters at its inability to turn the healthiest public finances in Europe into better public services.

Senior Fine Gael and Fianna Fail ministers have said talks on forming a new government would take weeks at least. Party figures have said they would like a deal before the inauguration of U.S. President-elect Donald Trump on Jan. 20, but that it is not a hard deadline.

Trump's pledges to slash corporate tax and impose tariffs pose a potentially major threat to Ireland's economy, which is heavily dependent on the taxes and jobs of a cluster of U.S. tech and pharmaceutical multinationals.

"Ideally if we can form a government prior to that (Trump's inauguration), that's positive, but I think we need to form a government that can last," Finance Minister Jack Chambers of Fianna Fail told Reuters, adding that negotiations should not take the 4-1/2 months needed in 2020.

($1 = 0.9456 euros)

(Reporting by Padraic Halpin and Conor Humphries;Additional reporting by Graham Fahy; Editing by David Holmes and Stephen Coates)