Taoiseach tells EU to stand by Irish bank debt pledge

TAOISEACH ENDA Kenny has demanded EU leaders “stand by” their decision to ease Ireland’s banking debt, warning of damage to trust between member states.

EU economics commissioner Olli Rehn said yesterday there were “different interpretations” of what was agreed at the June EU summit in relation to using the euro area’s bailout fund to recapitalise banks.

However, Mr Kenny inisted last night the decision was binding and called on fellow leaders to demonstrate they could follow through on the agreement.

“In meetings of EU leaders one of the problems you find is the missing element is trust that if they make a decision they will stand by it,” he said at the International Bar Association conference’s opening in Dublin.

“There is a need for transparency, for decisiveness, for clarity,” he said, departing from a prepared script.

Finance ministers from Germany, Finland and the Netherlands delivered a surprise blow to Ireland’s campaign for debt relief last week when they argued national bodies should remain liable for most bank losses.

Mr Kenny’s comments last night echoed remarks contained in his speech to Fine Gael’s presidential dinner on Saturday night, when he insisted a binding decision had been taken by heads of state.

“There is no resiling and going back from a formal decision made by the leaders of the 27 countries of the European Union,” he said. “I was happy that at that meeting in June there was a clear and unequivocal decision made not by ministers, not by civil servants, not by commentators but by the heads of government of the 27.”

Mr Kenny said the decision had two parts: “Firstly, to break the link between sovereign and bank debt to allow for recapitalisation directly of banks and secondly, that a review of Ireland’s position would be held to improve our capacity to meet our debts and that equal treatment would be given to the country,” he said. “They’re the decisions that were made. They’re the decisions that stand.” Mr Kenny was warmly applauded for his comments.

Ministers are expected to raise the question of Ireland’s debt sustainability when 11 of them fly to Brussels on Wednesday to meet European Commissioners as part of Ireland’s preparation to take up the presidency next year.

Mr Rehn said he was working to resolve disagreements over how the EU crisis fund could be used to recapitalise struggling banks. “It seems there have been different interpretations about the June decision,” he said. “Already this week the member states have begun to discuss with the help of the European Commission on what exact rules could be implemented in bank recapitalisation. This work proceeds in parallel to the work on the banking supervisor.”

Sinn Féin’s Pearse Doherty accused the Government of having “over-egged” the June decision and said the statement had not said anything about retrospective debt.

Meanwhile, Mr Kenny said additional savings under the Croke Park Agreement would minimise budgetary cutbacks to frontline services.

“What we need to do is to maximise what we can get out of the Croke Park agreement in the shortest time with greatest impact for people, so as not to have to make decisions where frontline services might potentially suffer as a consequence,” he said.

Mr Kenny said he had met three Ministers on Friday to discuss their proposals for “reinvigorating” the Croke Park agreement and accelerating the level of savings to be generated under the deal.

He also said Tánaiste Eamon Gilmore and himself were absolutely focused on implementing the programme for government. He said the level of unemployment was still far too high.

Separately, a spokeswoman for the Department of Social Protection said any decision about taxing maternity benefit would be taken collectively by Cabinet at budget time.