Noonan says he never shared 'panic' over Merkel remarks

IRISH REACTION:MINISTER FOR Finance Michael Noonan said he was always confident Ireland would get a deal on legacy bank debt and never shared the degree of "panic" that swept through the public following German chancellor Angela Merkel's comments on Friday.

Mr Noonan said the negotiations would revolve around the quality of the concession on legacy debt that Ireland could obtain rather than whether the Government could secure a deal.

The Minister, speaking in Limerick yesterday, said negotiations on dealing with the cost associated with bank recapitalisation (estimated at €64 billion) would have no impact on the budget on December 5th. No move could happen until after the architecture to set up the new European banking supervisory body was put in place (a January 1st, 2013, target date was agreed at last week’s summit).

“We are looking well into next year, quite clearly after the budget,” said Mr Noonan. “If we get a resolution which makes the debt more sustainable obviously that improves budgets in the future.”

He said German had a vested interest in Ireland’s programme being a success. “[It’s in Germany’s interest that] Ireland becomes a sustainable economy again where we make our own decisions and organise our own affairs [and] where we are getting funding through the markets. To get us into that position we need a deal on both elements of the debt. I’m confident that there are two parts to the deal and there will be intense negotiation, and I’m very hopeful that we’ll have a resolution.”

Tánaiste Eamon Gilmore said Ireland was being treated as a “special case” when it comes to bank debt so the State could be the “winner” the EU needed.

He insisted there was political support for tackling Ireland’s debt problem in capitals throughout the EU, “including, in this case, in Berlin”.

Mr Gilmore said the joint statement by Mrs Merkel and Taoiseach Enda Kenny on Sunday night made Ireland’s position clear.

“It is being regarded as a special case firstly because of the progress we have been making and, secondly, because the European Union and the Eurogroup needs a winner, and Ireland is the best placed candidate to do that.”

He said the deal on Ireland’s bank debt “was never off track”, although he conceded there was “concern” at Government level on Friday after Mrs Merkel dismissed retrospective recapitalisation of banks in response to a question about the Spanish situation.

He said contacts between Berlin and Dublin began immediately after Mrs Merkel’s comments and continued at very senior diplomatic level over the weekend, culminating in a telephone discussion between Mrs Merkel and Mr Kenny.

Fianna Fáil finance spokesman Michael McGrath said the joint communiqué by the Taoiseach and Mrs Merkel was welcome but still open to interpretation.

“Does it override the statement made by the finance ministers in September and [Mrs Merkel’s] comments on Friday that ruled out legacy debt?”

He said the Taoiseach had faced a barrage of criticism following Mrs Merkel’s comments.

“He picked up the phone and I give him the credit for making the phone call. He got something from Angela Merkel. He got a statement.”

Sinn Féin leader Gerry Adams described events at the weekend as the Government stumbling from one difficulty to another.

“The problem underpinning the Government’s failure thus far is its insistence on paying the debt despite its unsustainability and the cost to the Irish people plus the absence of any coherent negotiating strategy. It is little wonder the Government stumbles from one difficulty to another.”

Fine Gael TD Paschal Donohoe challenged as a “flagrant disregard for facts” Mr Adams’s assertion that €64 billion of the €67 billion Ireland received from the troika was used to recapitalise the Irish banks. All of the €67 billion was used for day-to-day costs while €17.5 billion from the State’s own resources went to the banks.