Taoiseach rules out early bank debt solution

 

Taoiseach Enda Kenny has ruled out a solution for Ireland’s bank debt issue during Ireland’s EU council presidency next year.

In today’s Bild tabloid Mr Kenny said he had “never” considered pulling Ireland out of the euro zone because of the crisis and that the Irish remained pro-European because they “know where future lies”.

But Mr Kenny conceded that EU leaders had a lot of work to do before discussing either pooled sovereign debt – so-called Eurobonds – or a banking union – a Berlin precondition to breaking the banking-sovereign debt link.

“The discussion will continue for a very long time, we shouldn’t get on the wrong track,” he said, according to an advance copy of the interview. “We have to hurry to negotiate the EU budget 2014-2010, then bring about the banking union. This is particularly important for Ireland because capital assistance for banks would then no longer automatically increase the sovereign deficit.”

Mr Kenny was pessimistic that the banking union would be agreed during the six-month Irish presidency from January.

“A legal framework should be agreed by the end of this year, then the concrete rules for a common banking regulator,” he said. “That will take longer than half a year. I hope that the banking union is agreed in the second half of 2013.”

Asked about the mentality difference between the Irish and Greeks – above all the lack of public protest in Ireland – Mr Kenny said he didn’t want to draw any comparisons between countries.

“We Irish know our problems won’t vanish if we wait and that, above all, we have to solve them ourselves,” he said. “We’ve been familiar with crises and problems for centuries. We’re very pragmatic: the Irish know they have to meet their obligations.”

New trust

“When we say we’ll do something, then we do it. That’s the only way to win new trust. Only then will the jobs come back that we lost in the crisis.”

Mr Kenny told Bild readers that his Government had put significant demands on Irish citizens: it increased the retirement age, cut pensions, shrunk public service headcount and cut public service salaries by 14 per cent.

“But we tell people: when we have that behind us, Ireland will be more competitive than before. That convinced the Irish,” he said.

“They want to get out from the conditions that we accepted for the billions of assistance.”

Irish pragmatism was the key to understanding its continued support for the EU and the euro — indicated by the large majority in favour of the fiscal treaty.