The shape of the bailout deal for Spanish banks is deeply disappointing and reinforces the current eurozone policy that ordinary citizens would ultimately bear the burden of bank losses, according to Fianna Fáil Finance Spokesperson Michael McGrath.
Deputy McGrath stated, “It had been hoped that agreement could be reached to enable Europe to directly recapitalise the Spanish banks and avoid the debt being attached to the Spanish State. This would have been a ground breaking development and would have opened up major possibilities to revisit the bank debt in Ireland. However, the nature of the Spanish deal is a victory for Germany and reinforces the policy that ordinary citizens have to carry bank losses.
“The deal can also only be seen as a setback to the Irish government’s efforts to reduce the burden of our bank debt. The endless ‘technical talks’ on the promissory note arrangement seem to be going nowhere and we have no indication of when the long-promised technical paper will be completed and published.
“The Spanish bailout is focussed exclusively on the banking sector but it remains to be seen whether Spain will be able to continue to fund itself on the sovereign debt markets at affordable interest rates. Once the final shape of the Spanish deal is concluded, all aspects including the terms and conditions need to be carefully examined to see if there has been any preferential treatment for Spain over Ireland. The most disappointing aspect of the deal is that the link between State and bank debt is copper fastened.
“The government here has utterly failed so far to achieve any reduction in the burden of bank debt. The Taoiseach hasn’t even asked for a write down of our bank debt. The efforts now need to be intensified to achieve an overall deal that would make our financial position much more sustainable. In essence, the Taoiseach and Minister for Finance need to start fighting Ireland’s corner in a more vigorous and forceful way.”