Yes vote 'strengthens' Ireland's hand
Tánaiste Eamon Gilmore has insisted ratifying the European fiscal treaty will strengthen Ireland’s hand in renegotiating its bank debt.
Mr Gilmore dismissed German claims that restructuring the Troika rescue arrangements would send a wrong signal to Europe, saying last week’s Yes vote in the referendum has put the country in a more powerful position to ask for a debt write-down.
“The decisive decision that was made by the Irish people on Thursday has certainly strengthened the hand of the Government, giving us added authority in talking to the European institutions and the other European member states,” said Mr Gilmore.
“We are going to continue doing that to secure a deal in relation to our bank debt which is satisfactory for the point of the Irish taxpayers.”
Speaking on his way into a Cabinet meeting today, Mr Kenny said there were other serious issues to be addressed by European leaders before any deal could be discussed.
The Taoiseach raised the bank debt issue with German chancellor Angela Merkel last Friday, but senior German officials dispute Mr Kenny’s interpretation of Ireland’s fiscal treaty vote as a “message to European Union leaders” for a “just” debt deal.
“We see no need for movement at the moment,” said Martin Kotthaus, spokesman for finance minister Wolfgang Schäuble.
The Government wants to ease the burden of the €60 billion-plus bank bailout and the EU-IMF-ECB troika is studying a technical proposal to reduce the €47 billion Anglo Irish Bank promissory note scheme.
A final, unanimous decision to reshape the programme must come from EU leaders. A negative response from Berlin, the largest donor to EU bailout funds, would scupper any deal.
“Ireland is considered a model bailout student so you have to think of the consequences of such a renegotiation which would, in effect, double Ireland’s bailout programme,” said a senior German official.
This morning, Minister for Justice Alan Shatter sought to play down the comments from Berlin, noting that
discussions in the area are ongoing.
"This is a daily issue on which different individuals are making comment across Europe from political leaders to middle rank officials, " the Minister told RTE's Morning Ireland. "I don’t think there’s any purpose in responding to what every anonymous official says in commentary to the papers."
He added: “This is an issue I expect will continue to be on the agenda for some weeks yet."
Irish officials conceded yesterday that, technically, the referendum changed nothing on Irish banking debt. However, after keeping the issue out of the campaign, the Taoiseach is anxious to remind European leaders of what, in Ireland’s view, is the unresolved bank debt issue.
“It is not about having a bargaining chip with the Germans,” said a Government spokesman, “but it is Europe that has to negotiate any changes . . . there are many perspectives.”
The German response came as the European Commission warned against linking Ireland’s endorsement of the treaty with the clamour for a concession to ease the burden of the banking rescue.
“It’s a further commitment but it has nothing to do with the work that Ireland is doing with the help of the troika,” said a commission spokesman. “I’m not sure we can mix all the different processes that work in parallel.”
The Government sees a chance to move forward its bank debt concerns as anxiety intensifies over Spain’s banking sector. “As the situation in Europe changes, so does the context,” an Irish official noted.
Spain denies it needs any external aid but official observers in Brussels and elsewhere believe the country is in danger of being quickly shut out from private debt markets if investor sentiment does change radically.
Direct ESM aid for Spanish banks might avert the need for a full-blown EU-IMF bailout, but the ESM is not allowed do that at present and Germany does not want to change the fund’s mandate.
The commission has suggested changing the rules to allow such intervention to create a euro zone “banking union” to avert bank runs.
French finance minister Pierre Moscivici backed such an idea, calling it a “fundamental issue for which proposals are on the table”.
Dr Merkel supported the idea of a banking union but not ESM direct lending or mutualised debt. She met European Commission chief José Manuel Barroso in Berlin last night.
Finance ministers from the G20 and G7 groups will hold emergency talks today on the situation in the euro zone, said Canadian minister Jim Flaherty.