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Sunday 4 December 2016

Coalition tries to tie referendum to deal on bank debt

Fionnan Sheahan Political Editor

Published 19/12/2011 | 05:00

THE Government is trying to use Ireland's status as the so-called EU poster boys for austerity to get a deal on cutting the country's debt.

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The Coalition is attempting to sell an agreement on reducing the banking debt by telling EU leaders it's in their interests for Ireland's economy to recover quickly.

The Coalition continued to raise the stakes on a possible EU referendum last night by tacking on a demand for a deal on debt to secure a 'Yes' vote.

The Cabinet will discuss the draft plans for tough new budgetary rules for members of the euro at its last meeting before Christmas tomorrow.

But it's still not clear if a referendum will be needed to bring in the strict budget deficit law.

Finance Minister Michael Noonan will participate in a conference call with eurozone finance ministers today.

Mr Noonan upped the ante on a potential referendum last week, describing it as a vote on being in or out of the euro.

The Coalition followed up yesterday by warning the EU it would be difficult to pass a referendum without the sweetener of a debt repayment agreement.

Taoiseach Enda Kenny demanded a deal on reducing Ireland's banking debt as part of an agreement on tough new rules for euro membership at an EU summit a fortnight ago.

Mr Kenny didn't get any agreement on what he was asking for, amid suggestions from some countries that Ireland has already got a concession through a lower interest rate on the bailout funds.

But the Government is now arguing the praise being heaped upon Ireland for performing well under the bailout needs to be translated into a better debt deal.

Sources said the Coalition is arguing that it is "in Europe's interest" to help Ireland recover, emerge from the bailout and return to the international markets.

Rules

After government sources attempted to play down suggestions Mr Kenny was seeking a deal on debt in return for agreeing to wide-ranging changes to EU rules, the Government is now openly attaching such a concession to a possible referendum.

Last night, a spokesman said the Government had consistently said it would take any opportunity it could to reduce the burden.

"At the European summit, the Taoiseach asked colleagues for support in making the burden taken on as a result of the steps we have taken to recapitalise our banks more manageable. That continues to be the Government position.

"It will take some time before the Attorney General can make conclusions regarding a referendum," the spokesman said.

Irish Independent

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