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Germany: Irish bank debt 'special circumstance'

The Local · 22 Oct 2012, 14:08

Published: 22 Oct 2012 14:08 GMT+02:00

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Steffen Seibert told reporters at a regular briefing that Chancellor Angela Merkel and Irish Prime Minister Enda Kenny had discussed on Sunday ways to decouple the problems of banks in Ireland from the country’s sovereign debt.

"They spoke about the special circumstances of Ireland's banks and the sovereign debt problem," he said.

"The Eurogroup is to look at Ireland's situation in the context of improving the sustainability of the Irish [debt] programme," referring to eurozone finance ministers.

Seibert noted that "no country is like another" and that Ireland had recapitalised its banks with its taxpayers' money - a factor to be considered while trying to break the vicious circle in which stricken banks sink an economy and force a bailout.

The Irish government issued a statement after Kenny and Merkel held telephone talks late on Sunday on what it called "the unique circumstances behind Ireland's banking and sovereign debt crisis, and Ireland's plans for a full return to the markets".

"In this regard they reaffirmed 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," Dublin said.

"They recognise in this context, that Ireland is a special case, and that the Eurogroup will take that into account."

Dublin had hailed an accord at the EU summit in June as offering a way of getting billions in bank bad debt off its books, thereby strengthening the public finances at a stroke and allowing some leeway to stimulate the economy.

However Merkel said after another EU summit last week that ailing Spanish banks could not benefit retroactively from a direct bank recapitalisation by the eurozone's bailout fund, comments that spooked many in Ireland.

Story continues below…

Ireland had to seek an EU-IMF bailout in late 2010 after government efforts to keep its banking sector afloat left it virtually bankrupt, forcing it to seek outside help in return for tough and unpopular austerity measures.


The Local (news@thelocal.de)

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Your comments about this article

17:18 October 22, 2012 by royp
The headline should be Irish state bails out German investors in private Irish banks with Irish taxpayers money after being bullied by the ECB, with the threath of the ECB withdrawing temporary cash flow facilities. The ECB did this because of German insistance to prevent the American cash flow crisis spreading. The Irish Government had lost the right under EU law to restrict euro cash flow into Ireland, this cash flow to a growing economy created a property bubble. But when this bubble burst, what was an EU euro & EU legislation created problem, suddenly became just an Irish problem for irish tax payers. So the rule is we are all Europeans and eu laws must apply when it is making money for German banks but you are on your own when it fails, and it is your problem, although we had taken away your powers at EU level to prevent this bubble.
18:19 October 22, 2012 by IchBinKönig
@ royop

Bravo. Well stated. All part of 'brilliant notion' that is the EU.
19:32 October 22, 2012 by Englishted
Ireland is still running a deficit of 15 billion euros a year ,after it has cut it's social spending to the bone .

It will need another bail out soon but the spin doctors of the E.U. will keep this one out the news.
16:44 November 2, 2012 by quiller
Good boy, Enda. That's a good boy ! Now that you have had your lunch - what time does your plane leave at? How is the austerity going? Does anyone know what the salary / pension of the Irish Prime Minister and the German Chancellor is or will be?
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