The German government has delivered the first body blow to Irish hopes of a deal on bank debt – despite last week’s endorsement of the EU Fiscal Treaty.
Senior German officials have dismissed suggestions from the Irish cabinet a debt restructuring would be appropriate after the Yes vote in the referendum.
They have told Prime Minister Enda Kenny that any deal to re-open Ireland’s deal for the bank rescue would be a ‘negative signal’ at a time when Spain, Greece and Portugal are beset with similar problems.
PM Kenny admitted on Tuesday morning that no deal was imminent in the foreseeable future after the German remarks.
“I don’t expect any decision on Ireland’s bank debt this month,” said Kenny in Dublin.
“Until other serious issues are addressed, there will be no decision on Ireland’s bank debt
“The Greek and French elections, the assessment of Spanish banks and the ratification of the fiscal treaty by a number of countries will be the focus for June.
“Until they are complete, there will be no decision on the Irish situation.”
Kenny had raised the issue of Ireland’s bank debt with German chancellor Angela Merkel at a meeting last Friday amid talk of a ‘sweetheart’ deal for the Spanish banks.
But German officials have dismissed any suggestion that Ireland deserves a new deal on the back of the Fiscal Treaty endorsement.
“We see no need for movement at the moment,” said Martin Kotthaus, spokesman for finance minister Wolfgang Schäuble, in an interview with the Irish Times.
Another senior German official said: “Ireland is considered a model bailout student so you have to think of the consequences of such a renegotiation which would, in effect, double Ireland’s bailout programme.”
The Irish government is now resigned to the fact that the referendum may have no bearing on the cost of the bank bail-out.
“It is not about having a bargaining chip with the Germans, but it is Europe that has to negotiate any changes. There are many perspectives,” one Irish government source told the Irish Times.
The paper also reports that the European Commission warned against linking Ireland’s endorsement of the treaty with the clamour for a concession to ease the burden of the banking rescue.
“It’s a further commitment but it has nothing to do with the work that Ireland is doing with the help of the troika,” said a commission spokesman. “I’m not sure we can mix all the different processes that work in parallel.”