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Germans warn we won't get off lightly in new deal on debt

ANGELA Merkel reckons we're a "special case" -- but a leading German official has warned that doesn't mean we'll get off easily.

There were growing fears that Ireland will not be able to strike a deal on bank debts without serious strings attached.

A key member of Germany's political party CDU, Norbert Barthle, said that he believes that Ireland could avail of the European Stability Mechanism (ESM) but would have to enter a new programme with fresh conditions if it wants support for legacy bank debts.

This would mean that Ireland would enter into a second EU-IMF programme, which would come with brand new terms and conditions.

Irish taxpayers have been lumped with a massive debt after the Government moved to recapitalise banks in 2009.

The Government has been constantly pressing for a loosening of the noose so that we are masters of our own destiny.



Losses

The ESM rescue fund was established to recapitalise lenders directly once the new banking supervision under the European Central Bank was in place, which could have aided our full return to debt markets.

But it has since been clarified that the fund could only be used for future losses and damages.

Ireland's current programme falls under the ESM's predecessor, the European Financial Stability Facility (EFSF).

Mr Barthle told RTE that Ireland had a programme with agreed conditions under the EFSF.

"Therefore it would be difficult to change this programme into the ESM programme."I think it would be necessary to ask for a new programme.

"A new programme with new conditionality and directed into the future," he said.

Under German law, Mr Barthle's committee is required to approve any future support programmes by the ESM.

"It is important for me to say that we are very happy about the way Ireland goes, Ireland is on the track, therefore we have great confidence in Ireland," Mr Barthle said.

He made the remarks in advance of the visit to Berlin today of Tanaiste Eamon Gilmore.

See Dan White: Page 16


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