Coalition accused of being 'too passive' on debt issue

Fianna Fáil leader Micheál Martin has accused the Government of being “too passive and too acquiescent” in accepting that sovereign and bank debt will not be separated.

Briefing reporters on his view of the implications of the Spanish bailout for Ireland, Mr Martin called on the coalition to assert Ireland’s position.

“This is a bad deal insofar as it does not deal comprehensively with the issue facing the euro zone itself and the euro zone crisis. As predicted, it’s too little to late yet again,” he said.

“For the euro zone generally it’s a bad deal and it’s a bad deal for Ireland in the sense that it didn’t herald the severing of the link between the sovereign debt and the bank debt,” he said.

Mr Martin said Taoiseach Enda Kenny had refused to tell him in the Dáil what German chancellor Angela Merkel had said during a telephone conversation about bank debt in the aftermath of the fiscal treaty referendum.

“I think we got a sense of the answer this week in the context of the Spanish deal. Clearly Angela Merkel was not up for a severing of the sovereign debt from the bank debt,” he said.

He called on the Government to publish the technical paper that it has been working on with the troika since last September, saying people needed to know what the Government was looking for.

The Taoiseach today said he agrees in principle with a European banking union. "I think that is an issue which could be brought to a conclusion successfully," he added.

Mr Kenny said it was a less complex issue than other elements such as a fiscal union. He was replying in the Dáil this afternoon to Independent TD Shane Ross who said such a union would be a good idea and might be helpful to Ireland.

Ireland, said Mr Ross, was facing an extraordinarily urgent recapitalisation of the banks which had not yet been acknowledged. “It is going to happen sooner rather than later," he added. "And a banking union could help us in this particular project."

The Taoiseach said he would not comment on the future of the euro or the euro zone, adding that Ireland strongly supported both.

Fianna Fáil leader Micheál Martin said the Spanish bailout represented another "sticking plaster" approach to the resolution of what was a fundamental euro zone crisis.

Sinn Féin deputy leader Mary Lou McDonald said the Taoiseach should give a clear indication of the Government’s strategy relating to the promissory note and the overall banking debt.

Mr Kenny has rejected claims that Spain got a better deal than Ireland in terms of its bank rescue.

Yesterday, he said the €100 billion rescue package for Spain’s banking sector will bring “stability to the euro and the euro zone”.

He said the deal for Spain was slightly different from that of Ireland in that Ireland received a package that dealt both with bank recapitalisation and the running of the State.

In Spain’s case it was recapitalisation money for its banks. Spain would have to pay the same interest rate as Ireland in that regard and would have to underwrite that. “Spain have to deal with their [deficit] reduction to 3 per cent by next year. Ireland has a further year in which to do that,” the Taoiseach added.