Taoiseach ‘pretending debt deal is on track’
The Taoiseach told the Dáil yesterday that last week’s EU summit was “very positive from both an Irish and a European perspective”.
He said member states, at the insistence of Ireland and others, had “explicitly reaffirmed the commitment” made at the June summit to break the link between banking and sovereign debt, and to provide for the recapitalisation of banks by the ESM, the new eurozone bailout fund.
Speaking after last week’s summit, German chancellor Angela Merkel appeared to rule out the ESM being used to recapitalise legacy debts such as Ireland’s.
But Mr Kenny told the Dáil he had a “good conversation” with Ms Merkel on Sunday, as well as a positive meeting with French president François Hollande on Monday, and that both recognised Ireland’s “special circumstances”.
“I will not say to the House that we will have a deal on our banking debt by a particular date, nor will I say how such a deal will be structured,” said Mr Kenny. “The Government has always said that getting the right deal is better than getting a rushed deal.”
“However, the very public acknowledgements by both Chancellor Merkel and President Hollande over recent days of our particular circumstances and the necessity for those circumstances to be fully taken into account as work is taken forward are, I believe, positive developments for Ireland and lend weight to the case we will continue to press.”
However, Mr Martin said it was “factually untrue” for the Taoiseach to state the that June deal had been reaffirmed in full. He said last week’s summit had, in fact, diluted its June predecessor in two ways.
The first was that the implementation date for the new banking supervisory regime had been pushed back.
The second was an agreement that ESM money would not be made available for bank debt until the new supervisory system was up and running.
He also claimed Ms Merkel had not actually said she would support the use of the ESM to cover legacy debt.
“Germany, the Netherlands, and Finland have a fundamental problem with the ESM retroactively or retrospectively financing debt,” Mr Martin said. “The rearguard action of recent days has done nothing to challenge the basic fact that the supposed campaign for debt relief for Ireland has been nothing of the sort.”
