TAOISEACH ENDA Kenny said “an avalanche of speculation” over Ireland’s debt legacy last weekend was damaging as he confirmed the process of assistance for Ireland under the European Stability Mechanism was under way.
He said this process did not involve a second bailout programme, and reiterated the decision of June 29th to break the link between sovereign and bank debt.
Speaking at the announcement of 100 jobs at Voxpro in Cork yesterday, the Taoiseach referred to what he described as damaging speculation last weekend over comments by German chancellor Angela Merkel which appeared to rule out backdated recapitalisation’s of euro zone banks.
“There was an avalanche of comment and speculation as if this was reality last weekend. Doing down our country, in fact, when clearly at the very highest level of the European Union we have a clear understanding from our communiqué and from the press conference with the French president of what that understanding actually is. So we are now in a process of negotiation and discussion about how the assistance can be given to Ireland, not if any assistance can be given to Ireland.”
Responding to comments by a spokesman for Dr Merkel’s CDU party yesterday, who said new conditions would have to apply if the ESM was used in such a manner, Mr Kenny said that he had never “envisaged” a second bailout.
“I wouldn’t put any kind of term like that on it,” Mr Kenny said. “Part of that decision was to recognise the special circumstances that apply in Ireland’s case in that our banks have already been recapitalised at public expense.
“The joint communiqué issued by myself and the German chancellor on Sunday … clearly says that the special case that applies in Ireland will be taken into account in the negotiations and the discussions that are now the mandate of the eurogroup or the ministers for finance.”
He said the Government was pursuing the decision made on June 29th to bring it to reality.
“This is not a sort of troika bailout situation that applies now, Ireland’s banks have been recapitalised to the highest level. that’s a matter of historical record. That burden has been put on our taxpayers and that’s why we are pursuing the decision taken on June 29th to bring that to reality which will ease our position somewhat.”
Taoiseach Enda Kenny and the German Chancellor Angela Merkel have issued a joint communiqué saying that Ireland’s banking crisis was “unique” and that Ireland was to be considered a special case in the forthcoming negotiations over the role of the new bailout fund the European Stability Mechanism in supported troubled banks.
The statement followed a phone call between the two leaders this afternoon.
It comes after two days of opposition attacks over Ms Merkel’s apparent rejection on Friday of the ESM being used for so-called legacy debt.
Her remarks triggered a barrage of opposition attacks against Mr Kenny, who had hailed the summit as a success.
While Berlin confirmed that the chancellor meant that only future debts would be covered, over the next 12 hours the Chancellery issued two apparently mollifying statements supporting Ireland’s reform efforts and a return to the bond markets.
This evening, following a half hour phone call, the two leaders issued the joint statement reaffirming the commitment of 29 June, which said that Ireland’s bank debt situation would be looked at.
Encouragingly from the Government’s point of view, the statement described Ireland as a special case and the circumstances surrounding the banking crisis as “unique”.
This would be taken into account by eurozone finance ministers, the statement concluded, as they begin negotiations on how the ESM will work, once a banking supervision system is in place.
The statement did not spell out that legacy debt will be covered but it will provide the coalition with some badly needed cover following the criticism it has taken since Friday lunchtime.