Gilmore to raise bank debt with Germany

EU BANKING CRISIS:IRELAND'S BANK debt will be on the agenda when Tánaiste and Minister for Foreign Affairs and Trade Eamon Gilmore meets German foreign minister Guido Westerwelle in Berlin later this week.

Mr Gilmore said this was the latest in a series of discussions with his German counterpart since the EU summit statement on bank debt last June.

“I have spoken to the foreign minister on a number of occasions. He is my direct counterpart and on Friday I will be meeting with him again,” he said.

Ireland’s EU presidency next year and bilateral relations will also be discussed at the meeting. The Tánaiste will meet separately with the parliamentary leader of the SPD [Social Democrats], Frank-Walter Steinmeier.

Mr Gilmore said he had no regrets about using the word “game-changer” to describe the EU statement on bank debt last June.

“It was a change which said very clearly that sovereign debt and bank debt would be separated,” he said.

Asked if he was concerned about German chancellor Angela Merkel’s apparent rejection of retrospective debt relief, Mr Gilmore said: “I am concerned about it but we need to make a distinction between what one leader says at a press conference and what 27 agreed to do at the formal European Council meeting.”

Fianna Fáil finance spokesman Michael McGrath said: “The road to a bank debt deal is clearly going to be a lot longer than the Government had envisaged.

“I still believe that a deal can be done, if the Government changes its approach and engages more directly with the governments that have put such a narrow interpretation on the June summit statement.

“There has been a distinct lack of contact between the Taoiseach and the head of the most powerful government in Europe, that being Germany.

“What the Government seems to forget is that there will be no bank debt deal for Ireland unless Germany consents to it.”

Sinn Féin finance spokesman Pearse Doherty said: “When chancellor Merkel outlined her opposition to any retrospective recapitalisation of banks on Friday the Government press office vainly tried to say that she wasn’t talking about Ireland.

“Two clarifications from her office later and it is clear that the German government is opposed to using European Stability Mechanism (ESM) funds to retrospectively recapitalise banks. The Government’s strategy is now in tatters.”

He added that it was “time for the Government to start playing hardball”.

Minister of State for Finance Brian Hayes said: “Everyone knows our debt position is unsustainable and we have got to get a deal on bank debt but we should be judged on the conclusion of those negotiations, not in the middle.

“Nothing that chancellor Merkel said and nothing the German government has said has changed the June 29th accord.

“What I find astonishing is the complete opportunism of the Opposition and particularly Fianna Fáil.”