That Merkel torpedo October 21, 2012Posted by doctorfive in European Politics, The IMF Republic.
Friday evening, Merkel..
It will not be a retroactive direct capitalisation. If recapitalisation is possible, it will come for the future.
Friday evening, Dept of Taoiseach
The meeting of the European Council of today and yesterday reaffirmed the commitments made in the Euro Summit Statement of 29 June.
In that Statement European leaders agreed to enhance Ireland’s debt sustainability, and also agreed to break the link between bank and sovereign debt. Those commitments stand.
We understand that Chancellor Merkel was asked a direct question about the recapitalisation of Spanish banks and she replied in that context.
We will continue to work with our partners on the implementation of what was agreed in June.
The Spanish context you see?
Not the one our whole piggyback strategy relies on.
The Government was urgently seeking clarification from Berlin last night after Angela Merkel appeared to have dealt a death blow to hopes of cutting the country’s massive bank debt.
It has emerged that Taoiseach Enda Kenny at the two-day summit in Brussels did not even raise the issue of the EU’s rescue fund taking over the banks
While he would not go into detail about it after the meeting, he appeared confident the issue would be decided in Ireland’s favour by the eurozone finance ministers over the next few months.
The Taoiseach, who was derided in the Dáil on Wednesday when he revealed there had been no contact with Europe since the ”seismic” June summit again fails to get anything vaguely concrete after two days in Brussels. Now we’re told have confidence in the same lowly finance ministers we’ve been playing down since Helsinki?
4pm Saturday, across the Irish press, but nowhere else
Amid fears of a stand-off, the German government today issued a statement stressing it would work closely with Ireland to “improve the sustainability of the Irish programme”.
In response, a spokesman for the Irish Government said the German statement represented a “clear affirmation of support for Ireland’s position”.
Mrs Merkel’s remarks at a news conference yesterday came in response to a question related to indebted Spanish banks.
It is understood the Irish authorities have since received assurances the Chancellor’s comments were specifically about Spain and did not relate to the Irish bailout programme.
No sign of this statement outside what the Dept of Taoiseach said a German said. After two solid weeks of bluster alleged assertions from an unnamed official now carry more weight then very public statements from three AAA finance ministers & the Chancellor of Germany.
Let’s start with the bank supervisor. Germany said no money for the banks without a European supervisor for the banks. France, Spain and the rest responded by saying fine then let’s have a bank supervisor in place and functioning by January 2013. The German response was not so fast and maybe by 2014 and maybe the ECB is not the right instrument and maybe not for all of the banks. On the surface you might think that these points are all distinct and separate but if you do; you are incorrect. The translation here is that Germany does not want to fund the European banks and so has set up a road block, a diversion, to stand in between “we will not fund the banks directly” and the desires of France and the rest who want a harmonized Europe where every country pays for everything for all of them; a socialized Europe. You see, the diversion is the bank supervisor and it allows Germany to thwart the desires of the needy countries without having to address the problem directly.[..]
Here is the issue of legacy liabilities. Here Germany has been fairly clear. The new ESM fund will not pick up the cheque and it is up to each country to pay for their own past problems. You may translate this piece of jargon into a “No” to Ireland that the ESM will not pick up the bill for the Irish banks and the same response for Spain. This new German definition puts Portugal, Greece, Spain and Ireland back at square one and effectively closes the door on any further negotiations. While all of this wrangling continues the tone at the summit was no longer the nicey-nice repartee of past meetings.
A door that was barely open up to now and a big hole ahead of the budget. One they cannot pin on anyone else unless they are prepared to admit either they or the creditors are pulling one. Big effort over the next few days I think. At home rather then Europe of course.