Despite his previous prediction two weeks ago, Taoiseach Enda Kenny has failed to secure reduction in the interest rate on the EU bailout for the 26-County State at a summit of European leaders today.
Mr Kenny declared he had ‘changed strategy’ after apparently getting knocked back by top EU bureaucrat Herman Van Rompuy. Following a meeting between the two, the issue of the interest rate on the EU bailout loan was dropped from the summit agenda.
“I feel it is much more important to be absolutely clear about the extent of liability before we make any further discussions about negotiations,” Mr Kenny said.
He ordered a fresh round of ‘stress tests’ to evaluate the financial position of the Irish banking system.
At the summit, Mr Kenny came under pressure from his euro zone partners to ensure that this round of ‘stress tests’ are complete and yield a final total cost in terms of the financial aid required to keep the banks out of public ownership.
A number of such tests in recent years emerged as being either wildly over-optimistic, or else sham operations intended to dupe the capital markets.
There is already 35 billion euro set aside in the bailout funds to pump into the banks, but it is increasingly clear the new government intends to continue Fianna Fail policy and deliver considerably more into the failed banking system. The cost of the banking crisis to the 26-County state has run in excess of 50 billion euro a year since it emerged in late 2008, doubling the state’s national debt.
French president Nicolas Sarkozy said he would not attempt to change Dublin’s corporate tax regime until the results of the stress tests are made known.
Sinn Fein President Gerry Adams has said Mr Kenny must explain why he has not stood up for Irish interests at the summit meeting.
Mr Adams said the issue of the interest rate on the loan was a key plank of Fine Gael’s election campaign and the Taoiseach had majored on his intention to deal with this issue at this Summit.
“The real issue that should be discussed at this EU Summit meeting is Ireland’s inability to repay this loan and our inability to sustain the debt.
“With yields on ten year Irish bonds passing the 10% mark today we are in very dangerous territory and cannot afford to put negotiations off any further.
“All parties have moved closer to the Sinn Fein position that there needs to be some form of burden sharing but we cannot continue to kick the can down the road to 2013. Ireland simply cannot afford to wait that long.”