VIENNA – Tánaiste Eamon Gilmore has said Ireland made a “major mistake” when it guaranteed all liabilities of the banks in 2008 but the guarantee would be honoured.
Speaking in Vienna last night, where he addressed the Diplomatic Academy, Mr Gilmore said: “I think it was a mistake.Tying the fortunes of the State to the misfortunes of the banks was a mistake. That said, it was done and we have to honour it.”
Last week, the controversial guarantee was criticised by Joaquin Almunia, EU commissioner for competition on a visit to Dublin. He said the “unilateral” action was the trigger for subsequent EU-level actions to preserve continent-wide financial stability.
Speaking to an audience of bankers in Dublin last Friday, Mr Almunia repeated criticisms of the guarantee he had made earlier in the week. Among other things, he said that it had limited the “margin for manoeuvre to seek burden-sharing from senior bondholders”.
In his speech last night, Mr Gilmore said the economic and financial crisis had severely affected member states of the EU “as well as far beyond our borders. Almost all of us have been affected to one degree or another, while some countries have thus far bounced back faster and more completely.”
The situation in Ireland, he said, was part of a wider financial and economic crisis which, in essence, was European. A solution could only be found in that wider framework, he added.
Mr Gilmore said later this week EU heads of state and governments would once again meet in the European Council and would address the economic challenges which confronted them.
“A treaty establishing a European Stability Mechanism is to be signed, the first European semester is to be concluded and we will review the challenges that collectively confront us and to which we collectively respond.
“There is no shortage of determination or of ambition to get this right.”
He said since the Government had come into office just over three months ago, “we have taken resolute and decisive action to confront and get on top of daunting challenges which face us, among which is an unprecedented banking sector meltdown”.
The Tánaiste said Ireland’s experience over the last number of years had undoubtedly been severe, even “extreme”.
“However, after three successive years of contraction, our economy is projected to return to growth, albeit modest growth, this year.
“That growth is forecast to accelerate next year and to become self-sustaining.” – (Bloomberg)