BAILOUT TERMS:TAOISEACH ENDA Kenny last night asked EU leaders to allow a more sustainable way for Ireland to pay back the €63 billion cost of bank recapitalisation.
In his opening contribution to a dinner attended by all 27 EU leaders, Mr Kenny made the case for allowing the State access to new mechanisms of paying back the debt, including extending the period for which it could be paid.
Sources for the Government said last night that it had pumped billions of euro into bank recapitalisation at very high interest rates before Ireland entered the EU-IMF bailout programme.
The sources emphasised that Ireland was not seeking debt reduction or a haircut, rather the opportunity to get access to a “range of instruments”, not just EFSF mechanisms, which would extend the time or reduce the interest.
Mr Kenny made the same argument in a letter to EU Council president Herman Van Rompuy this week. He contended that Ireland could be the first state to emerge from an EU-IMF programme, instilling confidence elsewhere.
The Government insists this is not being presented as a quid pro quo, or ultimatum, for having to accept changes to the EU treaty this weekend, changes that may require the holding of a problematic referendum.
The sources said Mr Kenny was not expecting an outcome on this issue from the summit. Rather, they said, he was keen to “start a conversation”. In the letter to Mr Van Rompuy, Mr Kenny pointed out that Ireland had made enormous sacrifices and was achieving targets, by dint of very austere budgetary adjustments.
“When we entered the programme there were instruments that were not available that are available now. Getting access to the new instruments would lower the cost and extend the time frame,” said a source.
Earlier yesterday, Mr Kenny, speaking in Marseilles, also outlined the Government’s new effort to persuade its EU partners to accept a more sustainable programme for debt repayment.
In an address to the meeting of the European People’s Party, he said: “We have made the point that we want to pay our debt in full, but the cost of that, and the time in which to do it, is an issue that Europe can work with us on, and give us further co-operation.” As he arrived in Brussels last night for a dinner meeting involving the 27 EU leaders, Mr Kenny spoke about the wider crisis affecting the euro. “We hope to make a situation happen here where there is clarity of decision and protection of the euro and the stability of the euro zone. This is of absolute and critical importance and I hope that the leaders on the council focus on these areas this evening and tomorrow,” he said.
It is also understood that Mr Kenny argued strongly for strong and decisive action by the ECB and the establishment of a credible “firewall” of funding to prevent contagion within the euro zone. He indicated that he would prefer to avoid a change to the EU treaty, which would probably trigger a referendum, saying he supported “testing the facilities that exist under the existing treaties”.
Separately, Tánaiste Eamon Gilmore has accepted that Ireland may need to hold a referendum if EU treaty changes are required to save the euro.