European Council president also plays down talk of treaty change.
Herman Van Rompuy, the president of the European Council,
has urged European Union member states and the European Parliament to strike a
swift deal on banking supervision plans – and the European Commission to make
deeper banking union proposals before the end of the year.
Van Rompuy said that breaking the “vicious circle” between
bank debt and sovereign debt was vital if countries were to recover from the
He was speaking in Dublin after holding talks with Enda
Kenny, Ireland's prime minister, to mark the start of the country's six-month
presidency of the EU's Council of Ministers.
Breaking the link between bank and sovereign debt is
particularly critical in Ireland, which has been saddled with a €64 billion
bill for stabilising its stricken banking sector.
Kenny said that as president of the Council of Ministers
Ireland was determined to push the banking union agenda forward. The
establishment of a single supervisory mechanism, as agreed by EU member states
last month but needing European Parliament approval, would pave the way for
direct recapitalisation of banks by the European Stability Mechanism (ESM), the
eurozone's rescue fund.
Eurozone finance ministers have been given the task of
working out whether and how the ESM can pay for Ireland's “legacy” assets, the
banking problems that already exist and the state has already paid for.
Ireland is also negotiating with the European Central Bank
(ECB) to extend the period of time it pays for promissory notes – a type of IOU
– given to two of its banks as part of their restructuring.
“We need this deal,” Kenny said. “Solidarity works both
He said that without an easing of Ireland's terms, the
country would not be able to extricate itself from the tough conditions of the
eurozone/International Monetary Fund bail-out programme and make a fully
fledged return to the markets to raise money.
Van Rompuy said he hoped that the Commission would make
proposals for common EU bank recovery and resolution arrangements this year.
This is expected to prove even more contentious than the single supervision
Van Rompuy and Kenny both played down the likelihood of EU
treaty change, either as part of deepening economic and monetary union or as
part of the UK's attempts to claw back some powers from the EU.
“We don't need treaty change to deliver on the deepening of
economic and monetary union,” Van Rompuy said. “We can do much of this within
the existing treaties.”
He said that where treaty change was necessary, it would be only
after European elections in 2014, if at all, and that there was “no consensus”
on what the changes would be. He added: “So there's a possibility, but it's not
Kenny added that it would be “disastrous” if the UK were to
leave the EU.
However, in a blow to the attempts of David Cameron, the
British prime minister, to revise the terms of the UK's membership, Kenny
added: “I don't see situation where we're reopening the treaties for change in
the near future.”
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