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Wednesday 18 October 2017

Noonan to hand EU €1.2bn despite debt deal doubt

Michael Brennan and Peter Flanagan

THE Government is pressing ahead with its €1.2bn cash contribution to the new European bailout fund despite doubts over whether it will take over our old bank debt.

There are growing indications that the bailout fund will not be allowed to take over around €25bn of taxpayers' money tied up in the bailouts of AIB, Bank of Ireland and Permanent TSB.

But in the Dail yesterday, Taoiseach Enda Kenny said EU leaders had agreed last year to break the vicious circle between bank debt and national debt.

"We will spare no effort in working to deliver on that commitment. The discussions in that context are being led by the Minister for Finance," he said.

But a new report by Finance Minister Michael Noonan (inset) shows that the Government has already paid €509m into the new bailout fund set up to help troubled eurozone countries.

And it is due to make three more payments of €254m – next month, next October and in April 2014 – to bring its total contribution to €1.2bn.

But the head of the Eurogroup of finance ministers, Jeroen Dijsselbloem, has questioned whether the €700bn European Stablity Mechanism fund will ever be used to fund the recapitalisation of banks.

Socialist Party TD Joe Higgins criticised the state of affairs by claiming the bank robberies of today were being planned in Brussels and Frankfurt.

"The godfathers, united in a gang called the troika, send their hitmen and hitwomen in pinstriped suits who stay in luxury hotels at the expense of their intended victims and rob with the threat of a nuclear wipeout of bank depositors, bank workers and the very economies of the target countries," he said.

In the Dail, Mr Kenny specifically referred to the ESM bailout fund, saying that the agreement to set up a single supervisor for all European banks would "pave the way" for it to directly recapitalise banks.

But Fianna Fail leader Micheal Martin said the link between national debt and bank debt had not been broken.

"The justice of Ireland's case for further significant relief from banking-related debts gets stronger all the time. The Taoiseach owes it to the Irish people to explain what exactly he is doing to bring this about," he said.

Meanwhile, the top civil servant at the Department of Finance has insisted that Ireland is not a tax haven and said there is full transparency about banking rules here.

The comments come as a diplomatic row broke out between governments in Luxembourg and Germany over concerns that Berlin is trying to crush smaller offshore financial centres, following on from the Cypriot bailout.

If that were to happen, the financial services sectors in Luxembourg, Malta and Ireland could suffer. However, speaking at a conference on the International Financial Services Centre (IFSC) in Dublin, John Moran claimed Ireland should have few concerns about its tax policy despite ongoing criticism of Ireland as a "tax haven".

"We need to be careful about how we define a tax haven," he said. "That phrase conjures up an image of a place where people go to avoid paying tax and avoid transparency, and that is not Ireland," he said. "As a country, we have signed up to all the requirements of the OECD on tax law and there is complete transparency around our regime."

Irish Independent

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