The implications for Ireland of yesterday's statement by the Finance Ministers of Germany, the Netherlands and Finland on the role of the ESM in recapitalising banks.
I have noted yesterday’s statement by three Finance Ministers from Germany, Netherlands and Finland.
The statement addresses issues already decided upon by Eurozone leaders when they met in Brussels on 29 June. As the Taoiseach set out this morning, the Heads of State and Governments made two important decisions on the 29th of June. The first was and I quote: "We affirm that it is imperative to break the vicious circle between banks and sovereigns." The second related specifically to Ireland: I quote: "The Eurogroup will examine the situation of the Irish financial sector with the view of further improving the sustainability of the well-performing adjustment programme. Similar cases will be treated equally." I would emphasise the reference to equal treatment.
Since that date work has been proceeding on both of those elements. Officials from my Department have travelled to several capitals. I travelled to Paris, Berlin, Rome and onto the Informal Ecofin in Cyprus two weeks ago, during which I had constructive talks with my colleagues. The Taoiseach met with several colleagues last week in Rome and all agreed that the imperative is to move ahead urgently to implement all of the important decisions taken on 29 June.
I would also draw the House’s attention to the comments from the European Commission this morning, which set out that the June 29th Agreement was quite clear regarding the ESM and breaking the "vicious circle" between sovereign and banking debt.
We are engaged in a diplomatic offensive to implement the decision of 29th June to break the link between the banks and sovereign and to enhance the sustainability of our debt. Indeed, I would like to acknowledge that the three Ministers and their officials I met in their Capitals, along with other EU Finance Ministers, have been very helpful in moving forward the technical discussions with the troika (the ECB, EU Commission and the IMF) on the banking debt issue in respect of the Irish needs.
In the nature of EU business, there may be differences of interpretation. One thing is clear. The principle of breaking the link between the sovereigns and banks has been agreed by Heads of State and Government. No one has questioned that. That being so our ambassadors in the relevant capitals and senior officials in Dublin today are urgently making contact to follow up on developments.
This morning, a number of Deputies were disingenuous in attributing statements to my Department. As those of you who actually read the Statement from three Finance Ministers will have seen they made reference to the recent positive reviews of the Irish and Portuguese EU/IMF programs and this is of course welcome. The strong implementation of reforms is one of the reasons why Ireland’s global reputation has improved so significantly and has lead to record levels of foreign investment in the State. This Government is committed to restoring confidence, both at home and internationally and the recognition of the three Ministers of the sacrifices that the Irish people have made should be welcomed.
Ireland will be fully engaged in the process by Eurogroup and Heads of State and Government on how this will happen. In putting forward our ideas, we must be conscious that other member states will also put forward their proposals. However, as was pointed out by the Taoiseach this morning and by my Department yesterday afternoon, Ireland’s position is clear in this regard and work is continuing in line with the June 29th Summit agreement to break the link between banks and sovereign and the principle that similar cases will be treated equally. As I have already said, the EU Commission reinforced this point this morning.
It is worth pointing out that the Taoiseach, the Tánaiste, and I along with Ambassadors and Senior Officials have been very vocal in our view that the vicious circle between banking and sovereign debt should be broken. I would remind the Deputy of the letter that the Taoiseach sent to his fellow leaders earlier this year setting out the Government’s position.
We want to continue to work in a constructive spirit to enhance the sustainability of our debt. We have made strong solid progress in implementing the terms of our EU/IMF programme and have lived up to all of our commitments. The financial markets have recognized this and this is reflected in the reduction of our bond spreads in recent months. Let me be clear, HOSG have made a decision on these issues and we continue to work within that framework to deliver the best possible outcome for the Irish Taxpayer.