EU must aid countries in crisis, says Taoiseach

EUROPE MUST do more to help member states facing serious economic challenges, Taoiseach Enda Kenny has warned.

He said it was unfair that because of national interests within the EU, there was a view that Ireland should not get the same interest rate reduction as others without the extra condition of an increase in the corporation tax rate.

He was responding to Opposition claims that the Government had failed to get a deal for a reduction in its interest rate and had done a U-turn on its pledge to renegotiate the rate.

Fianna Fáil leader Micheál Martin accused the Government of failing to negotiate anything with the EU. Mr Kenny replied that they were having the discussion because of the “lousy legacy” left by the previous government and the deal that “your government negotiated with the IMF-ECB-EU”.

Mr Martin also asked if the Government was still negotiating for a reduced interest rate payment of €400 million as the Taoiseach and Minister for Finance said last week or had it walked away from the table and “settled for the €200 million figure talked about yesterday”.

Sinn Féin deputy leader Mary Lou McDonald said she was beginning to suspect that the tenure of the bailout agreement “will have run out and you’ll still be coming in here telling us that you’re going to do the business” on the rate.

She said the Minister for Finance had performed another U-turn for which the Government was now becoming famous and the Taoiseach was backing down on “your stated and hyped demand for a reduction in the interest rate in the face of French intransigence”.

But Mr Kenny said the issue of an interest rate reduction on Ireland’s international loans is being allowed to drag because of national issues that are blocking Europe’s progress as an entity and not just the Republic’s return to economic independence.

“I think it’s unfair that having renegotiated an austere set of conditions in which we found ourselves, that because of national interests some view that we should not have an interest rate reduction which is applied to others without extra conditions being imposed on Ireland,” Mr Kenny said.

They had to look at how the new European funding mechanism could be structured when it came into effect in July 2013 to help countries help themselves and not hinder progress towards economic prosperity.

Mr Martin said the Taoiseach had stated “that Ireland is funded into 2014 in all circumstances. Both you and Minister Noonan repeated this and said that a 1 per cent reduction in interest rate would be worth over €400 million a year to Ireland. But on Tuesday Mr Noonan told this House that in fact we are not funded to 2013. Almost in the same breath he halved the projected saving we would get from an interest rate cut.” Mr Noonan had accused others of “hyping it up” but, Mr Martin told the Taoiseach, the fact is that “this issue was hyped up by you, your party and your partners in Government”. He added that trying to whitewash away those promises would not work.

Mr Kenny rejected Mr Martin’s claim that he had said Ireland was funded until 2014. “That’s not what I said. The bailout deal goes well into 2013” and they would not give up the corporation tax rate for an interest reduction worth about €150 million.

The Taoiseach said €15.6 billion had been drawn down from the financial packages, €11.4 billion from the European Financial Stabilisation Mechanism and €4.2 billion from the European Financial Stability Facility. Any interest rate cut would apply in respect only of the remaining €24.6 billion, were that to be the case.