The prospect of a comprehensive deal on Ireland’s bank debt seems to be slipping further into the distance following the meeting today between Ministers Michael Noonan and Brendan Howlin and the German Finance Minister Wolfgang Schauble, according to Fianna Fáil Finance Spokesperson Michael McGrath.
Deputy McGrath stated, “Four months on from the June summit heralded as a ‘game changer’ by the Irish government, the promised deal on Ireland’s banking debt seems to be slipping further and further into the distance. Ominously, the German Finance Minister echoed the views of ECB President Mario Draghi that it could be into 2014 before the single supervisory mechanism would be fully operational – a necessary condition for the possible direct recapitalisation of banks by the ESM. It is apparent now that the Irish government is not confident that a deal on bank debt involving the ESM can be done in the next twelve months and is now concentrating on the promissory note.
“We can only assume that Ministers Noonan and Howlin asked Mr. Schauble if he still holds the view – expressed jointly last month in a hard line statement with the Dutch and Finnish Finance Ministers – that the ESM could not be used to deal legacy debt. Certainly in his public comments today, Mr. Schauble did not in any way unwind those comments. Following today’s meeting, we are none the wiser as to what Ireland’s ‘special case’ status will mean when it comes to securing a deal on bank debt.
“Mr. Schauble’s comments about how well Ireland is doing will provide little comfort to thousands of families across the country afflicted by mortgage arrears, unemployment and emigration. Mr. Schauble seems to hold the false view any suggestion of a deal on bank debt would undermine the impression that is held abroad about how well Ireland is doing.
“Mr. Schauble expressed his total confidence that Ireland will not need a second bailout programme but doesn’t seem to realise that reaching an overall deal on the cost of recapitalising Irish banks will greatly assist Ireland’s efforts to successfully exit the existing programme. Without such a deal on bank debt and if tangible economic growth remains elusive, Mr. Schauble’s confidence could well prove to be misguided.”