EUROPEAN COMMISSION chief José Manuel Barroso urged EU leaders not to renege on their pledge to break the link between bank and sovereign debt after talks with the Taoiseach.
Echoing words used in Brussels yesterday by Enda Kenny, Mr Barroso said Europe’s credibility was at stake in the debate over a summit deal in June to allow the European Stability Mechanism bailout fund to rescue stricken banks.
“I will make clear at the next European Council in October that we must stick to the commitments we made in June,” Mr Barroso told reporters at an event with Mr Kenny. “It is a question of credibility for the EU and for all the member states that are our union.”
Although Mr Kenny had said it was always his understanding that the June deal embraced existing “legacy” debts in the banking system, Mr Barroso declined two opportunities to say whether that was his sense too. “I’m not now going to enter in any kind of discussion on semantics about the interpretation of the conclusions of the European Council,” he said.
“I think it is essential to find the best possible solution for Ireland and the euro area and we are working with our partners to that end.” However, the commission chief is said in private to be backing Mr Kenny’s position.
The Taoiseach and 10 other Government figures met 27 commissioners to discuss Ireland’s presidency of the EU in the first half of next year. In spite of the commission’s support, the real test for the Government is to persuade Germany and its allies to agree to a deal to ease the cost of the €64 billion bank bailout.
One week after the finance ministers of Germany, Finland and the Netherlands questioned the scope of any ESM interventions in the banking sector, the Taoiseach said EU leaders must act with confidence and decisiveness to make good on their pledge.
“Be in no doubt we will be punished if we resile from the decisions that are made or if there is either backsliding or stepping away from what has already been agreed,” he said last night in Brussels.
“As you’ve already seen in the goldfish bowl that Europe has become, every speech, every statement, every press release, is parsed and analysed for any nuance or any shift in position.”
The Taoiseach said the Government’s priority for Ireland’s seventh presidency of the EU was to promote economic growth and stability in the euro zone.
The Government would seek to advance the creation of a new euro zone bank supervisor within the European Central Bank if this is not agreed as planned by the end of the year, he added.
This is important because Germany and its supporters have said they will insist on proof that such a supervisor is functioning effectively before the ESM rescues any banks.
“All I am saying is that in the event that this is not dealt with before Ireland assumes the presidency, obviously this is an issue that we would run with very strongly in order that the decision of the council is implemented and that obviously includes banking,” Mr Kenny said.
Tánaiste Eamon Gilmore said the Brussels meeting was the beginning of Ireland’s presidency process.
“In a way, it is the conjoining of the Government’s national objective for economic recovery and the European objective to drive growth and recovery in the European economy,” he said.
The plan for a banking union is but one of several major portfolios which the Government will have to advance next year. This includes talks on new measures to deepen economic and monetary union, which could lead to a new European treaty, and a new seven-year budget package for the EU.
Other Ministers present in Brussels were: Michael Noonan, Brendan Howlin, Richard Bruton, Joan Burton, Pat Rabbitte, Phil Hogan, Simon Coveney, Leo Varadkar and Lucinda Creighton.
