Kenny insists June decision on bank debt still stands

Thu, Sep 27, 2012, 01:00

THE TAOISEACH and the Minister for Finance have insisted that the June EU summit decision on Ireland’s banking debt stands.

Enda Kenny said the Government wanted to see the clear decision and mandate given by the European Council implemented.

“That will be the focus and direction of our negotiations. It will be to follow through on the decision made to break the link between sovereign debt and bank debt, to allow for direct recapitalisation of banks, and, in the case of Ireland, to improve its capacity to meet its debt problems.”

Michael Noonan drew the Dáil’s attention to the European Commission’s comments yesterday, “which set out that the June 29th agreement was quite clear regarding the ESM and breaking the ‘vicious circle’ between sovereign and banking debt”.

Mr Kenny, replying to Opposition Leaders’ Questions, said the June decision had affirmed it was imperative to break the link between banks and sovereigns and examine the situation of the Irish financial sector to further improve the sustainability of the well-performing adjustment programme.

“These were the two decisions made about the euro zone and Ireland specifically,” he said.

“They both stand and will be implemented. They are decisions, without equivocation, made at the meeting of the heads of government on June 29th.”

Fianna Fáil leader Micheál Martin said the joint statement of the ministers for finance from Germany, Finland and the Netherlands on the separation of bank and government debt was a grave disappointment and extremely depressing.

He suggested to Mr Kenny that “the grass has grown under his feet since the June summit meeting”.

He urged the Taoiseach to undertake an urgent diplomatic initiative with the prime ministers of the three countries “to have a clear and honest articulation of what they are prepared to do to genuinely separate bank debt from sovereign debt”.

Mr Kenny said it was not a case of the decision of three ministers or any other commentators.

“It is a decision made by the heads of government of the 27 countries of the EU, reflecting the analysis of how to deal with the euro zone crisis.”

Sinn Féin deputy leader Mary Lou McDonald said the Taoiseach had oversold the position last June.

“Then we had last night’s statement from the finance ministers. These are not just any finance ministers; they are the finance ministers of the AAA-related countries; Germany, Holland and Finland.”

Shane Ross (Ind) said the statement indicated that the policy, particularly that pursued in June, had failed and that the general policy was now also under question.

“This particular statement was a statement which was unfriendly and unhelpful to Ireland and deliberately damaging to Ireland.”

Later, under topical issues, Fianna Fáil finance spokesman Michael McGrath said the statement could only be seen as a major setback to the efforts to secure an overall deal on bank debt. While it was fine for the Taoiseach to state that the June summit statement stood, it was no good to Ireland unless it was implemented.

“The bottom line is that the summit statement will not be implemented without the support of the Germans, the Dutch and the Finns.”

Mr Noonan said that possible differences of interpretation were in the nature of EU business.

“On thing is clear: the principle of breaking the link between the sovereigns and banks has been agreed by heads of state and government. No one has questioned that.”

Mr Noonan said that ambassadors in the relevant capitals and senior officials in Dublin were yesterday urgently making contact to follow up on developments.