THE GOVERNMENT is intensifying efforts to secure the recapitalisation of Irish banks through European Stability Mechanism (ESM) funds and has stated Ireland should benefit retrospectively if more favourable terms are applied to Spain.
Tánaiste and Minister for Foreign Affairs Eamon Gilmore said the Coalition was working to achieve political support across Europe for a deal to ease Irish bank debt, which he described as an “obstacle” to domestic growth.
“We have been telling leaders in the capitals of Europe that we want to get a deal in respect of our bank debt, that the bank debt that the Irish taxpayer is bearing is very, very heavy indeed and it is one that is committing us to very high interest repayments,” Mr Gilmore said.
He said simultaneous expert and technical discussions were taking place with the “troika” of the IMF, ECB and EU, as well as European institutions.
“And what we now have to do is we have to bring those together in order to land the deal,” he told RTÉ Radio One’s This Week programme yesterday.
All parties to the discussions were “very much aware” that utilising the ESM was one of the Government’s preferred options, although it was not the only option.
“The ESM is one of the options that has to be looked at. The idea for example of the ESM possibly directly recapitalising banks has been talked about as an option,” he said.
Mr Gilmore said it had been talked about as an option in respect of Spanish banks. “If that were to emerge, that would be an option that would be one of the approaches that could be used in respect of Ireland.”
He said a strategy to bring about a long-term re-engineering of promissory notes, “which are a very big burden on the Irish tax payer”, was also being pursued.
He reiterated his belief that the result of Thursday’s fiscal treaty referendum “strengthens the Government’s hands” in negotiations.
Minister for Transport Leo Varadkar said if Spain got better terms than Ireland, the State should be allowed to benefit from the same favourable terms retrospectively.
This would respect a “long-standing precedent” in Europe, he said.
“If you sign up to something early, if you like, and the conditions improve, then the principle in Europe has always been that those better terms are applied retrospectively to the country that went in first,” Mr Varadkar told The Week in Politics. “We would expect that if Spain does get better terms than we got, that we should have those terms applied to us retrospectively as well,” he said.
A spokesman for Minister for Finance Michael Noonan said proposals to allow European funds directly to recapitalise banks were supported by the Government, which would ensure any proposals advanced at EU level were in the best interest of Irish taxpayers.
The European Stability Mechanism Bill 2012 is scheduled for consideration in the Dáil on Thursday.
Fianna Fáil’s spokesman on finance Michael McGrath called on the Government to “up the ante” as a matter of urgency. Mr McGrath said developments in Spain offered a “window of opportunity” for Ireland to achieve a much-needed reduction in bank-related debt.
“The Government now needs to up the ante and bring talks to a conclusion. We all want to see an overall deal secured as quickly as possible,” Mr McGrath said.
Sinn Féin leader Gerry Adams said the Government must “fulfil its referendum commitments” by removing the burden of banking debt from taxpayers and initiating jobs stimulus projects.
“Fine Gael and Labour must not renege on these promises as they did with their general election promises, and they should not see the referendum result as any sort of endorsement of their austerity policies.”
