“To say Ireland is cornered might be to understate the situation.”

No agreement emerged on the details of Germany and France’s proposed “pact for competitiveness” for the eurozone at yesterday’s EU Council meeting.

The Irish Times reports “a swathe” of opposition expressed at the meeting, while The Guardian editorialises against the German model – but accepts that the eurozone’s “economic rules do need an overhaul”.

The EU Council press release is brief on the topic

The economic situation

The EU leaders discussed the economic situation in Europe and the eurozone. President Van Rompuy stressed that the economic outlook has improved substantially, including in those eurozone countries which recently have been in difficulty, although “there is still a lot of homework to do”. The European Council further agreed on the tasks that need to be completed before the next European Council meeting in March.

Interestingly, RTÉ reports that Brian Cowen has said that the next EU Council meeting will be after 9 March – which is later than was expected and would be just after the next Taoiseach takes office – with a final decision to be made on 24-25 March.  That’s confirmed in a separate Irish Times report which adds

There were sharp exchanges on the issue at an EU summit in Brussels yesterday between Taoiseach Brian Cowen and French president Nicolas Sarkozy, long a critic of Ireland’s 12.5 per cent corporate tax rate.

In the course of a lunch discussion of measures first proposed by German chancellor Angela Merkel, the strained atmosphere between leaders was described as a “bloodbath at times” by a European diplomat. “Mr Sarkozy said: ‘I have saved you, I went to parliament on your behalf’,” the diplomat said of Mr Sarkozy’s exchanges with Mr Cowen. “Sarkozy criticised the Irish choice of the American model. Cowen made clear the toxic system was not due to the American model.”

From an Irish perspective, the going at the summit was said to be “tough”.

And, as the Irish Times‘ Arthur Beesley notes, Ireland’s room for manoeuvre is limited

Agreement on all this is not a given. Little more than a year away from his re-election campaign, Sarkozy would hardly relish a drive to bring the French retirement age close to the current German target of 67 from his own target of 62. That’s not something French voters like.

Likewise, Belgium has been quick to declare opposition to Merkel’s suggestion index-linked wage bargaining should be brought to an end. Luxembourg, too, sees little good in that.

Thus Ireland’s resistance to harmonisation measures in the corporate tax arena does not cast the State as uniquely opposed to Germany and France. What gravely weakens Ireland’s position, however, is the fact that its euro-zone partners are guaranteeing the loans it uses to keep the State afloat.

No support from the euro zone and the lights go out. It’s as simple as that. Now the two dominant euro countries are pushing against Ireland’s corporation tax regime. Merkel wants harmonised rules on the calculation of such taxes; Sarkozy wants to go further by setting a minimum corporate tax for the euro zone at large. In normal times it would be open for Cowen – or any taoiseach – to say to Berlin and Paris, “No thanks, we like things just as they are.” Yet these are not normal times. [added emphasis]

The bailout already gives Europe and the IMF a huge say in the running of the domestic economy. Any effort to extract a lower interest rate on bailout loans or any debt restructuring will be judged by Europe’s most powerful leaders through the prism of Dublin’s response to their new competitiveness pact. To say Ireland is cornered might be to understate the situation.

As ever, read the whole thing.

, , , , , , , , , , , , ,

  • Soon to be Ire-lander.

  • We are basically a 100% owned subsidary of the Bundesbank

  • wee buns

    Key statement:
    ‘Mr Cowen would not say if any link was made between Irish concessions on tax and the prospect of lower interest on Ireland’s bailout loans’.
    Couldn’t be more cornered.

  • Mack

    There is little point in negotiating a reduction in the interest of a minuscule portion of our future national debt in exchange for crippling our ability to repay that debt.

    I.e. the EU’s portion of the bail out fund is something like €45bn. The interest rate on the IMF’s portion will likely be lower now anyway, because of some technical issues related to Ireland’s status within the organisation.

  • Pete Baker

    Mack

    Corporation tax is not the only tax, or spend, available.

  • ORWELLSPEN

    Default, default, default. As my namesake said in Down and Out in Paris and London “one spends so long worrying about going to the dogs yet when the dogs have arrived, you realise it’s not so bad and why you ever worried in the first place”. Ok I paraphrase but the meaning is clear.

    What Germany failed to do militarily, it will achieve through fiscal cunning.

  • Pete Baker

    “Default, default, default.”

    And then what?

  • pippakin

    Pete Baker

    And then what? and then the Euro goes down.

  • ORWELLSPEN

    Mr Baker. We are brainwashed into thinking what the Eurocrats want us to believe ie there is no future without the Euro or Eurofederalism. On defaulting, Eire reconstituted the Punt and we begin again. We kick out the corporations but encourage the creation and growth of small businesses and remove all bureaucratic and pseudo educational barriers ( one cannot become a toilet cleaner or a bouncer without a bloody NVQ these days. Formal quakifications bear no relation to the reality of any job and only serve against the fluidity of the labour market)

  • Nunoftheabove

    ORWELLSPEN

    Have you been a member of the Republican Sinn Fein National Executive long ?

  • ORWELLSPEN

    Nope, I’m actually a Unionist who also cares deeply for Eire. Not that unionism or nationalism means anything anymore as power does not reside with parliaments or PMs but international finance and demagoguery of multinationals

  • ORWELLSPEN

    A message to Irish Republicans: you need to realise that enemies change. Britain may have been your enemy until recent times but open your eyes and take a look at who are the current oppressors of the Irish people. Aoife is timed by her call centre manager when she goes to the toilet. Sean has lost his job and banks are threatening to take his house away. You are now occupied not by English soldiers but call centres, Tescos and other weeds that are strangling your spirit and the startup of indigenous Irish small businesses

    Perhaps your strategy should look beyond reunification and focus on the reconstitution of Irish pride, self worth and empowerment; rugged individualism tempered with humanitarianism to those less fortunate

    While you still take aim at old foes, the new ones dance merrily around you

  • Nunoftheabove

    ORWELLSPEN

    Why are you a unionist if you believe that it means nothing any more ?

  • ORWELLSPEN

    @NONEOFTHEABOVE
    I am a unionist as in I am emotionally and by nations attachment, British and Irish second. In reality, I’d prefer it if Eire rejoined the UK but this is by the by and we are going off the thread and topic. I would like to hear a republican response to my assertions above

  • Nunoftheabove

    ORWELLSPEN

    Very well – I could certainly provide you with a global republican perspective on it but I suspect that what you have in mind is either a revisionist provo party line perspective and/or an RSF/Eirigi-ish traditionalist republican one so….over to them’uns.

  • ORWELLSPEN

    Just because I eat cornflakes does not make me a Provo if Gerry Adams also eats cornflakes.

  • Mack

    @Orwellspen

    Aoife is timed by her call centre manager when she goes to the toilet.

    Around 150,000 people are employed directly by multinationals here – many in software engineering, accounting, marketing, pharmaceuticals etc. Most of these jobs are high skilled, high tech, well paid with good benefits and working conditions. Another 100,000 or so are employed indirectly. Not to mention the impact of higher income, corporation, vat taxes (etc) on the ability of the exchequer to provide another 300,000 or so well paid jobs in the public sector. Followed by whatever trickled down impact those 550,000 mostly well paid jobs create in the service economy.

    You turn your back on that, at your peril. You certainly couldn’t hope to provide an equivalent standard of living for those workers in the medium term after chasing out the multinationals. In fact most of them would be lucky to have a job at all.

  • ORWELLSPEN

    @mack. You are your ilk presume and insult Irish people as being nothing but fit but being merely fodder for foreign payrolls. I say we are fit to be a nation of artisans, small business owners and tradespeople who do business with one another. We can generate wealth and well being without being the lick arses of big business who are only here because we are the cheapest whitest English speakers. Their presence is am insult and people like you display lack of imagination of any of form of state and economic system. I hope you enjoy your big mac and bottle of bud. It’s probably the intellectual limit of your recreational activity

  • Pete Baker

    Orwellspen

    Play the ball!

    And use spell-check…

  • Mack

    So Google is in Dublin because we are the cheapest white english speakers?
    What insulting rascist idiocy!
    Why are they in Zurich, by the way?
    Why do they, like the others, hire talented workers from across europe, and as far away as india, pakistan, china and africa.

    You have no clue about working conditions in multinationals in ireland, but from the insulting tone of your reply, doubtless you’ll continue to belief whatever bollocks you,ve brainwashed yourself with regardless.

  • Antoin Mac C.

    EEColagy first emerged as a direct result of a coaliton of bankers,and has now evolved to EUallergy which is affectin the exchangeolagy at the post office every week,and under the next shower of politicalogists about to invade the corridors of power will surely evolve to become a new version of the good old reliable manurolagy that will keep the poor people in a mystical void of well,eh,povertolagy.
    Povertolagy comes in various forms.Its most strikin pose is Travellerolagyism,Unemploymentism,Slave-labourism and has been found everywhere in the diction of real irishism….
    which of course differs 4rom the disease of egyptionist poverty,tunisiastism poverty,jordanianist povertolagy and the scotish povertyoligism of govansolagy.Social Scientists have begun to link the causes of povertolagyism and believe due to scientificolagy that parrallell lines can b drawn between the two opposing forces of rich and poor,needy and the greedy,us and them,anywhere,anytime by anybody,
    but unfortunately they now believe that results of such studies will not produce any new shades of real socialism ’til
    Engelsolagy is put to bed,and the poor wake up and remember that the ECColagy experiment was not their invention,as is certainly not their responsibility.Chavazism
    is like anything else,human and imperfect,and involves the power of waggin da finger at the politically bankrupt advocates of well,eh,the political bankers.What’s the difference between a banker and a politican?Their both law-abiding honest brokers who’ve got rich from the fruits of the labour of well,eh,the workerolagists who well,eh,work hard and power the entire economy,but alas,have no stake in bankerolagy,no stake in the holidayolagy and golfists societys,that are the preserve of the Masters of the Slaves.