BAILOUT TALKS:TAOISEACH ENDA Kenny has received the endorsement of his EU counterparts to delegate a solution to the Irish banking problem to the union's finance ministers.
At the conclusion of the European Council meeting in Brussels yesterday, Mr Kenny also revealed the Government’s view that a referendum would not be necessary in Ireland to endorse EU treaty changes being put in place to avert future budgetary crises.
The Taoiseach told a press conference he had suggested to the council meeting that the finance ministers should take on the Irish banking issue.
“That means that when we have final clarity on the stress tests next week we can then proceed to have the next phase taken by the ministers for finance. I am happy that colleagues endorsed that,” he said.
Mr Kenny said the meeting was tamer than his first council meeting two weeks ago when he clashed with French president Nicolas Sarkozy. He said all the leaders were determined to secure a comprehensive package to deal with the difficulties that faced the EU. “We agreed arrangements to improve the operation of the current stability facility from which Ireland is receiving assistance as well as the features of the permanent mechanism, the ESM [European Stability Mechanism], which will operate in 2013.”
He said the effective lending capacity of €440 billion for the current facility was approved, as was a permanent mechanism that will have an effective lending capacity of €500 billion, requiring an overall capital level of €700 billion.
Some €80 billion of the capital will be contributed pro rata by member states in five equal annual instalments from July 2013.
The Taoiseach said the heads of government had also finalised arrangements for changes to the treaties to put the mechanism on a firm legal footing, and member states would now launch their own individual national procedures to allow that to enter force on January 1st, 2013.
“That means in Ireland we will have to introduce a parliamentary Bill and put it through the Houses of the Oireachtas,” he said.
Mr Kenny said there had been agreement to press forward with the process under which the member states will submit programmes in April of this year for recovery budgetary plans and structural reforms. A draft plan had already been submitted quite some time ago from Ireland.
“We welcome progress on the six legislative measures which will strengthen progress on the stability and growth pact and improve economic governance within the union.
“We underlined the importance of the European bank stress tests and underlined that member states must have ambitious strategies in place to deal with any consequences prior to the publication of those results.”
On the Irish situation he said there was no reference to corporation tax during the meeting but he had made it clear that Ireland would be prepared to discuss papers prepared by the commission on the creation of a common consolidated corporation tax base, while retaining a healthy scepticism about it.
“What I did was speak to practically every leader at the summit over the last few days during the breaks and I think that is an important element of what Ireland has to do here in rebuilding our own sense of confidence, trust and understanding, and we will intensify that level of discussion and interaction when the stress test figures finally become known.”
He added that there was a very strong feeling from the heads of government at the council meeting that the euro was here to stay and would be protected.
On the question of the interest rate being paid by Ireland for the EU-IMF programme, he said that a rate reduction had been agreed in principle at the last meeting.
“There wasn’t any discussion at this meeting about a quid pro quo but what I did say in passing was that Ireland had taken serious austerity measures for the last three years and that the Government is committed to the reduction of the deficit target to 3 per cent by 2015.”