Debt lifeline as Angela Merkel says Ireland a ‘special’ case
Late intervention from Berlin shows Taoiseach has bond with chancellor
A FLURRY of phone calls between Dublin and Berlin all weekend led last night to a joint statement that brought a significant political victory for Taoiseach Enda Kenny.
Mr Kenny secured a commitment from the German chancellor Angela Merkel that the Irish case for relief on our gigantic bank debt was indeed a "special" case.
The statement proved Mr Kenny enjoys direct access to Ms Merkel and holds enough sway to get her to agree to the issuing of the Sunday night statement.
While it does not bring a bank debt deal tangibly closer, it shows he has influence at the highest level in Berlin -- which will be hugely significant in the coming weeks and months.
It also comes as Mr Kenny travels to Paris in a bid to get President Hollande's support for more favourable terms on the mountain of debt. At around 5pm yesterday, Mr Kenny secured a personal assurance from Ms Merkel that Ireland was a "special case" for a bank debt deal.
Following two days of controversy over her comments about such a deal, Mr Kenny spoke to Ms Merkel for half an hour on the phone from Government Buildings.
Ms Merkel agreed there were "unique circumstances" behind Ireland's bank and state debt crisis and said measures to ease the debt burden would be examined.
This means Ireland's promised debt deal is still on -- potentially including refunding the taxpayer for some of the ¿64bn injected into the banks from EU bailout funds.
Government sources feel that the clarification of Germany's position shows the chancellor does not put Ireland in the same category as Spain.
Ms Merkel has also reiterated the promise of the EU summit of June 29, of breaking the link between bank and state debt, along with cutting a deal for Ireland.
Mr Kenny travelled to Dublin specially to make the call to Mr Merkel from his office in Government Buildings.
The call to Berlin took place at about 5pm and lasted for just under half an hour.
Afterwards, Mr Kenny and Ms Merkel issued a joint statement on their conversation.
"They discussed the unique circumstances behind Ireland's banking and sovereign debt crisis, and Ireland's plans for a full return to the markets," the joint statement said.
"In this regard, they re-affirmed the commitment from June 29th to task the Eurogroup to examine the situation of the Irish financial sector with a view to further improving the sustainability of the well performing adjustment programme.
"They recognise in this context, that Ireland is a special case, and that the Eurogroup will take that into account," the joint communique said.
The statement will give Mr Kenny breathing space after a weekend where his handling of the negotiations on the promised bank debt deal was widely criticised.
The Government had insisted all along that Ms Merkel's comments on Friday, where she ruled out the use of the new EU bailout fund for backdated cash injections for banks, was directed at Spain.
However, the Government did also accept that her comments were a setback in its campaign for a debt deal.
Tanaiste Eamon Gilmore said yesterday he was "concerned" by the German leader's comments but the agreement of the June EU summit still stood.
Mr Kenny will continue to lobby for a debt deal today when he meets French President Francois Hollande.
This meeting is not quite as urgent for Mr Kenny now the clarification has been secured from Ms Merkel.
The Government is also hoping there will be clarity on Spain applying for a bailout in the wake of regional elections there.
And there is a growing sense the bank debt deal will come in several different forms over a lengthy period of time.
Ireland's ability to be the first troubled eurozone country to come out of a bailout is also seen as an advantage in negotiations.
"Ireland can be the success story Europe needs. The only realistic prospect of a country getting out of a programme is Ireland," a government source said.
"But until Spain settles down, they don't want to do anything that is setting a precedent."
Government sources believed Ms Merkel's stance followed on from her reluctance to adopt a change in policy back at the EU summit in June.