Kenny says Europe needs new tools to address crisis

Sat, Apr 21, 2012, 01:00

TAOISEACH ENDA Kenny has said Europe should consider “federalising” the response to the banking crisis, while urging voters to back new budget rules in next month’s referendum.

Speaking yesterday to a conference of centre-right European political parties in Dublin Castle, which included three ministers from other EU countries, he proposed giving the euro zone’s permanent bailout fund the powers “to directly recapitalise systemically important financial systems”.

Mr Kenny compared the situation in Europe unfavourably to that of the US, where the citizens of one state had “not been required to single-handedly bail out banks that lent foolishly in that state”.

Although he did not advocate replicating US banking structures, he said Europe needed “new tools” to address the crisis.

Mr Kenny also raised the political ramifications of recent events, warning that deficit and surplus countries were being pulled apart by the crisis, and that this was “undermining trust across the euro zone”.

The stability treaty was a first important step in “building the type of economic union needed to support recovery and a single, stable currency”.

“At its heart the treaty is about rebuilding trust and solidarity,” he said.

Mr Kenny went on to say that he would “vigorously” make the case for a Yes vote “as a vital contribution to Ireland and Europe’s recovery”.

Speaking before the conference, the Taoiseach said no attempts would be made to pressure people into voting in favour of the fiscal treaty, but added that it was necessary to inform voters “how important” the treaty was.

Mr Kenny, who described the euro zone as the “epicentre” of the global financial crisis, made a number of criticisms of Europe’s response to the crisis.

“The insistence to date that taxpayers in each member state must stand behind the entire liabilities of banks regulated in their jurisdiction has probably been the greatest reversal in the European single market since its foundation,” he said.

This was a criticism of the insistence that the State pay off unguaranteed Irish bank creditors.

Describing his first meetings with his counterpart prime ministers and heads of state in Brussels last year, he said they had collectively been “guilty of procrastination”.

He went on to criticise their “interminable wrangling about intra-institutional differences”.

The EU had been “behind the curve”.

He described economic and monetary union as “incomplete”, and its deficiencies as “woefully exposed” by the crisis.