Public given ‘hope’ of bank debt reduction

A Government TD has criticised the Coalition for prematurely raising people’s hopes that Ireland would secure a reduction on its bank debt.

Fine Gael TD John Deasy said the Coalition had suggested during the referendum campaign that the fiscal treaty and bank debt were separate issues, only to link them after the result was declared.

He said the Government had proceeded to give the impression after last week’s yes vote that a deal on the debt was now more likely. But Germany and the ECB had quickly beaten that idea on the head, he said.

His comments came as Tánaiste Eamon Gilmore acknowledged that any EU deal on Spain’s bank debt might not necessarily be extended to Ireland.

Mr Gilmore told the Dáil that while it was possible a Spanish solution could be “translatable” to Ireland, “we do have to be careful that we don’t hang our hat entirely” on such a hope.

Mr Deasy, speaking subsequently at a meeting of the Dáil Public Accounts Committee questioned the Government’s communications on the issue. “We spent the entire campaign telling people that a yes vote wasn’t linked to a reduction in our banking debt…

“What I don’t understand is that [in] the two days after the referendum result, the impression was given very quickly that a deal might be forthcoming on our banking debt. And then we had a response very quickly from the German ministry of finance, followed up by [ECB chief] Mr Draghi’s comments yesterday talking about no quid pro quo.”

People had been given “hope” that there would be a reduction in the debt only for Germany and the ECB to “pretty much beat it on the head very quickly”.

Mr Deasy suggested communications on the matter needed to be “tighter”. He was directly addressing John Moran, the Department of Finance secretary general.

“I’ve heard ministers coming out and talking about Spanish debt when it’s turned out that there is no basis for their comments in some cases. I think it needs to be tighter, and I think your department is central to that.”

It came as Taoiseach Enda Kenny defended his decision not to divulge the response of German chancellor Angela Merkel to his request for a deal on the bank debt.

“It’s not for me to disclose details of discussions I had with any head of government,” Mr Kenny said. “We don’t conduct negotiations or international relations by having a press conference on the detail of everything we have discussed.”

He reiterated that his “central message” to fellow European leaders in the wake of the referendum result was that “an alleviation, a re-engineering, of our bank situation would be of great benefit to the Irish people”.