French confirm to Creighton support for EU retroactive recapitalisation of banks

‘It is important that agreement to break link between sovereign and bank debt be implemented,’ says minister of state

Miniser of State for European Affairs Lucinda Creighton.

Miniser of State for European Affairs Lucinda Creighton.


Minister of State for European Affairs Lucinda Creighton obtained reaffirmation of French support for direct and retroactive EU recapitalisation of banks when she met her French counterpart, Thierry Repentin, yesterday.

Ireland hopes the European Stability Mechanism will help to recapitalise AIB and Bank of Ireland. “It’s important that EU heads of state and government are seen to – and in fact do – implement the [year-old] agreement to break the link between sovereign debt and bank debt,” Ms Creighton said. “We are very anxious that there will be direct recapitalisation . . . that the option be left open.”

Euro zone leaders have decided that retroactive recapitalisation must be by unanimous decision, and on a case-by-case basis. “That argument suits us very well,” she said. “We have said for a long time that Ireland is a unique and special case.”

Pending issues
In the last week of the Irish presidency, three important issues are still pending: the common agricultural policy; banking union; and the next multiannual framework or seven-year budget for the EU.

“It’s inevitable that when you come to the end of a very short, six-month presidency, a lot of issues will go to the wire,” Ms Creighton said.

If the EU parliament does not endorse the budget, “it will not be for want of effort on the part of the Irish presidency. That is acknowledged across the member states. We have done as much as we can.”

On May 29th, French president François Hollande and German chancellor Angela Merkel agreed, for the first time, on a nine-page “contribution” to this week’s European Council.

Asked if Ireland feared the big countries would dictate the agenda, Ms Creighton replied: “I would be much more concerned if there were a fracturing of the relationship between Berlin and Paris.”

The Franco-German document calls for “the convergence of tax systems” in the euro zone. That “is not going to happen”, Ms Creighton said.

All decisions on taxation in the EU must be taken unanimously. “When it comes to setting tax rates, that is something that we will never agree to. And nor will a whole number of EU states. It’s not a question of Ireland being out on a limb here, or being isolated.”

Ms Creighton has just returned from a visit to Serbia and Kosovo. The council is likely to vote to set dates for the beginning of negotiations on Serbian accession and Kosovar association this week.

“It’s one of the miracles of the EU enlargement process,” she said. “You have two countries that were being bombed by Nato 14 years ago, that were at war with each other, that are now moving to peace, democracy and rebuilding their relations.”