Enda Kenny says bank deal would not amount to 'second bailout'

Tuesday 30 October 2012 13.45
Enda Kenny has responded to comments from Germany
Enda Kenny has responded to comments from Germany

Taoiseach Enda Kenny says he would not put a term like "second bailout" on what would happen to Ireland if the permanent bailout fund, the European Stability Mechanism, is used to alleviate Ireland's bank debt.

He was responding to comments by a spokesman for Chancellor Angela Merkel's CDU party, who said new conditions would have to apply if the ESM was used in such a manner.

Mr Kenny said that he had never envisaged a second bailout.

He reiterated that part of the decision made by the European Council on 29 June was to recognise the special circumstances that apply in Ireland's case.

"This is not a sort of Troika bailout situation that applies now," Mr Kenny said.

"Ireland's banks have been recapitalised at the highest level, that is a matter of historical record, and that burden has been put on our public and on our taxpayers.

"That is why we're pursuing the decision made on the 29 June, to bring that to a reality which will ease our position somewhat."

Tánaiste Eamon Gilmore has said there is a clear understanding with the German government that it will co-operate in working through the issues relating to bank debt.

It was Norbert Barthle, leader of the CDU group in the Bundestag budgetary affairs committee, who said use of the ESM would have to be considered as a second bailout programme.

Under German law, his committee is required to approve any future support programmes undertaken by the ESM.

Mr Barthle said that Ireland's current programme falls under the European Stability Mechanism's predecessor, the EFSF. Under the rules, he said, if Ireland applied to the ESM for its bank debt then a new programme would be required.

That would come with its own conditionality, he added.

His remarks indicate that there is flexibility in Berlin's thinking, following last week's controversy over Chancellor Merkel's apparent rejection of legacy debt being covered by the ESM.

Tánaiste Eamon Gilmore said earlier today during a trip to Berlin that there was a clear understanding with the German government that it would co-operate with Ireland in working through the issues relating to bank debt.

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