June date for bank deal will not be met

Taoiseach Enda Kenny has admitted that the Jun 2014 deadline for a deal on the recapitalisation of the banks will be missed, but insisted a legacy bank agreement is still be on the table.

“I wouldn’t think it would be met. No. I always said in the latter half of 2014. I may be wrong here because when you sit around the table with 28 others, complications can arise from any point,” he said.

Ireland will continue to try and claw back some of the €28bn it used to fund the country’s three main banks when new structures are in place next autumn, despite EU sources pouring cold water on the idea at last week’s summit in Brussels.

Ireland’s argument is focusing on the pledge by eurozone finance ministers in Jun 2013 which specifically stated that retrospective recapitalisation could be possible “on a case-by-case basis”.

Mr Kenny said the size of Ireland’s national debt, now approaching €206bn, was “an issue” and the finance ministers’ decision last June recognised it.

“That’s why Ireland is often referred to as a legacy case and that’s why others recognise us as having very special circumstances... which must be taken into account.”

Meanwhile, one of the county’s top economists has insisted Ireland needs to formally request recapitalisation and mark a pathway as to how it will work.

Constantin Gurdgiev criticised Ireland’s attempts so far, saying the Government had not even put together a coalition of like-minded states such as Portugal and Greece to make the case stronger.

He described comments last week by European Commission chief Jose Manual Barroso that the eurozone was a victim of Ireland’s banking system as laughable.

He said: “The whole notion that a small country like Ireland could have been instrumental in the euro crisis is nonsense. Imagine if at some future date the US blamed a crisis on the dollar happened because of some bank in New Hampshire, it would be laughed out of the room.”

Mr Gurdgiev said the main problem was that Europe was afraid that any deal for Ireland will mean other countries seeking similar retro cash deals.

The difficulties facing the Government in securing some sort of rebate for the €64bn in total plugged into Irish banks cannot be underestimated.

Last week in Brussels, one senior EU source put it fairly bluntly. “It’s possible but very unlikely,” he said.

Mr Barroso attacked the forces that led “to a major destabilisation of the euro area” which “happened under the responsibility of the national authorities of Ireland” — effectively saying the euro was a victim of malpractice in Ireland.


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