Noonan anxious for Ireland to escape any contagion

THE GOVERNMENT wants to ensure any deal to settle the Greek debt debacle carries no risk of a “contagion effect” for Ireland, Minister for Finance Michael Noonan said last night.

Arriving in Luxembourg for emergency talks on the increasingly tense situation in Greece, the Minister said the Government wants to prevent any negative spillover to Ireland.

Mr Noonan did not say what exactly he meant by that, but he is known to back the European Central Bank’s argument that there should be no compulsory measures to ensure private creditor participation in the effort to rescue Greece. Euro zone ministers are working on a voluntary plan in which investors would be encourage to renew their exposure to Greece as their debt matures. Mr Noonan is believed to see merit in such an initiative, which has received tacit ECB support as it would not alter contractual bond terms.

Asked about a weekend report that the ECB was “furious” with him for saying the Government wants to impose losses on unsecured senior bondholders in Anglo Irish Bank, the Minister said the Government had had no direct contact with the ECB to support that.

The Minister’s remarks come amid acute concern in Government circles that the turmoil surrounding the financial and political crisis in Athens could engulf Ireland and compromise the effort to regain entry to private debt markets next year.

“I’m not too sure what’s going to be achieved but what I hope is that the meeting tonight will commence the process towards a solution of the Greek problem,” he told reporters.

Last night’s meeting – the second unscheduled engagement between ministers in less than a week – will be followed by further talks today and an EU leaders’ summit next Thursday and Friday.

Mr Noonan indicated, however, that an overall deal is unlikely before the ministers’ monthly meeting in July. “I would hope then that, over the next few weeks or so leading up to the 11th of July, a full solution would be put in place which would be credible and long-term,” he said.

Asked whether a credible solution was in prospect, he said that was what the negotiation was about. “I think it has the possibility of being very credible,” he said.

“The primary Irish interest here is to ensure that whatever solution is put in place doesn’t contain elements which would affect us adversely. So we’ll be certainly saying no contagion for Ireland regardless of what the provisions are.” Asked what he meant specifically, he said that would depend on what measures were forthcoming.

“But I mean in very simple language, we don’t want knock-on effects from a Greek deal which would work against Ireland’s interests and I think that so far that’s not going to happen.”

Mr Noonan said he did not wish to comment on a report that the ECB was enraged at his stance on Anglo. “Well I never respond to unnamed sources and certainly we’ve had absolutely no direct contact at all, which would suggest there’s not any veracity in that,” he said.

“In my interview in the United States I made it very clear that the bond issue which I have referred to was something that Ireland will taking up with the ECB and the IMF and the community in the autumn and it wasn’t a matter that we would pursue immediately.”