Sunday 24 September 2017

Referendum could come sooner as EU debt deal nears completion

Thomas Molloy

Thomas Molloy

Europe's top officials aim to complete their political work on a new European debt deal by the end of this month, meaning the Government here will have to face a decision on a possible referendum much earlier than politicians had hoped.

Meanwhile, France and Germany are pressing ahead with a financial transaction tax, despite mounting opposition.

Herman Van Rompuy, president of the European Council, who is in charge of drafting an intergovernmental agreement on budget discipline for the eurozone, told reporters in Copenhagen that the so-called fiscal compact would be signed by early March.

The compact only needs support from eight countries. Taoiseach Enda Kenny has said Ireland would not be able to have an early referendum.

The latest draft would give more power to the executive European Commission to reject national budget plans that deviate from agreed EU targets.

The news that work on the fiscal compact is moving swiftly came as German Chancellor Angela Merkel and French President Nicolas Sarkozy met in Berlin. The two leaders insisted after talks that private sector bondholders must share in reducing Greece's debt burden, along with new European and IMF lending.

They rejected both a call by a leading ECB policymaker to abandon plans to make private investors take losses, and a leaked IMF memo that cast doubt on Athens' ability to reform its public finances.

"We must see progress on the voluntary restructuring of Greek debt," said Ms Merkel.

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"From our point of view, the second Greek aid package, including this restructuring, must be in place quickly. Otherwise it won't be possible to pay out the next tranche for Greece."

The Greek government is currently locked in talks with Greek and foreign banks about the plans to burn bondholders as well as taxpayers.

Ms Merkel and Mr Sarkozy also voiced their determination to press ahead with a tax on financial transactions opposed by both Ireland and Britain, although France appears more eager than Germany for the tax on all transactions.

Mr Sarkozy, facing a strong left-wing challenge in his struggle for re-election in May, suggested France could go it alone.

"A Tobin tax was originally envisaged as a global tariff on foreign exchange trade, and would be ineffective without an international structure," said Davy economist David McNamara.

Irish Independent

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