Rehn: “I expect this issue of pricing policy will be looked at from the overall European perspective…”

The European Union’s economic and monetary affairs commissioner, Olli Rehn, has been making somewhat encouraging noises  [for the new Irish government] ahead of a series of key European meetings for the incoming Taoiseach.

From the Irish Times breaking news report

“We look forward to continue supporting the Irish people and the next Irish government in the implementation of the EU- IMF program, which is key for Ireland’s economy and its revival,” Mr Rehn told reporters in Brussels. “We have the common goal for Ireland to revive its growth dynamics and succeed in ensuring its debt-sustainability,” he said.

Mr Rehn said pricing policy, referring to the interest rates, was a key issue that would be discussed as part of the comprehensive strategy of the European Union.

I expect this issue of pricing policy will be looked at from the overall European perspective over safe-guarding financial stability in the euro area and ensuring debt-sustainability of all its members,” he said. [added emphasis]

As Arthur Beesley notes, also in the Irish Times

Mr Kenny’s election victory comes as negotiations intensify on reforms to the euro bailout fund. These discussions are set to culminate next month, meaning core election pledges will be put to the test within weeks.

He will press for a lower interest charge on bailout loans, which is already on the table, and compulsory “haircuts” on unguaranteed senior bank debt, something ruled out by the European Central Bank. He must also confront a renewed Franco-German onslaught against Ireland’s corporate tax system.

The risk Mr Kenny faces is that Ireland’s chief sponsors resolve to set a concession on corporate tax as the price of a lower interest rate. Mr Kenny’s negotiating position is feeble due to Ireland’s reliance on external financial aid. [added emphasis]

Indeed.

The game’s afoot!

Adds  Worth noting Enda Kenny’s comments in this BBC report yesterday

Mr Kenny said the IMF/EU bail-out was “a bad deal for Ireland and a bad deal for Europe”.

“We are not going to cry the poor mouth, other than to say the reality of this challenge is too much. I don’t want to talk about difficulties, I look for co-operation, consensus and support across Europe,” he said.

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  • Greenflag

    ‘We look forward to continue supporting the Irish people and the next Irish government in the implementation of the EU- IMF program’

    Translation :

    2013 . And maybe we’ll do a deal with Mr Kenny’s successors assuming that in the meantime the ‘irate ‘ Irish haven’t hanged all their surviving politicians and burnt down their banks and dragged complicit French , German and British ‘reckless ‘ banks along with them into the abyss .

    Mr Kenny doesn’t know the kind of ‘animal ‘ he’ll be up against . This ‘animal’ is the much inbred descendant of every predatory bank in European financial history and first cousin to the IMF .

    Good luck Enda 😉 Remember vis a vis global banking interests Ireland has no friends . A couple of hundred international bondholders mean much more to Brussels and Frankfurt and New York and London than the 6 million people on this island or their economic future much less their current survival or living standards . If the entire island were to sink below the Atlantic tomorrow it would be mentioned in the weather forecasts and the financial reports but the remaining 99% of the EU economy would just have one less problem to deal with ;(

    But Enda is just following the same road as other politicians before him were made to . Even Bill Clinton was more than a bit taken aback when almost from the start of his presidency ,his principal economic advisor , former Goldman Sachs Chairman Robert Rubin ,persuaded the new President to ‘defer to the debt market’ prompting Clinton’s famous reply ‘

    ‘You mean to tell me that the success of my (economic) program hinges on the Federal Reserve and a bunch of ‘f***ing bond traders’

    Well quite .

  • Pete Baker

    “Mr Kenny doesn’t know the kind of ‘animal ‘ he’ll be up against ”

    Wrong, Greenie.

    Mr Kenny knows exactly the kind of animal he’s up against.

    Look again at the quote from the BBC report yesterday

    Mr Kenny said the IMF/EU bail-out was “a bad deal for Ireland and a bad deal for Europe”. [added emphasis]

    “We are not going to cry the poor mouth, other than to say the reality of this challenge is too much. I don’t want to talk about difficulties, I look for co-operation, consensus and support across Europe,” he said.

    And at what Mr Rehn had to say today

    “We look forward to continue supporting the Irish people and the next Irish government in the implementation of the EU- IMF program, which is key for Ireland’s economy and its revival,” Mr Rehn told reporters in Brussels. “We have the common goal for Ireland to revive its growth dynamics and succeed in ensuring its debt-sustainability,” he said.

    Mr Rehn said pricing policy, referring to the interest rates, was a key issue that would be discussed as part of the comprehensive strategy of the European Union.

    I expect this issue of pricing policy will be looked at from the overall European perspective over safe-guarding financial stability in the euro area and ensuring debt-sustainability of all its members,” he said. [added emphasis]

    They are on the same page…

  • Kevin Barry

    I hope you’re right Pete about these two being on the same page, otherwise we’re [INSERT WHATEVER EUPHEMISM YOU WANT]

  • Pete Baker

    Kevin

    Just because they’re on the same page doesn’t mean that the outcome will [necessarily] be particularly favourable…

  • Jimmy Sands

    The EU will want to collaborate with Kenny in allowing him to crate the impression at home that he has achieved a substantial renegotiation. To that extent they are on the same page.

  • wee buns

    Pete B

    Enda & Olli might appear to be ‘on the same page’ (all of a sudden there is ‘give’ on the interest rates where last week there was zero, but let’s ignore Olli’s mercurial behavior for a minute).
    Shaving a fraction or percentage off interest rates is like ‘rearranging the chairs on the Titanic’.
    Greenflag is right, Enda, as one gets the sense of him; he has no idea of the nature this beast, will be chewed up & spat out. He can’t even think the D word, never mind utter it.
    How I wish it was d-d-d-different.

  • Greenflag

    Pete ,

    I can read believe it or not

    ‘The risk Mr Kenny faces is that Ireland’s chief sponsors resolve to set a concession on corporate tax as the price of a lower interest rate.’

    The sponsors of the previous Irish goverment’s rash and foolish guarantee to bail out German , French and British and other bondholders are from larger EU countries i.e Germany , France and the UK who have been affected adversely by the ‘ease ‘ with which their USA corporation competitors have been enabled to become very competitive in European markets while taking advantage of Irish low corporate taxes . I’m sure there may be some in the UK (think NI) who certainly believe that the low corporate rate tax rate in the Republic has deprived them of much needed FDI . Ireland was and still does receive much more FDI from the USA than it ought to on the basis of population size .

    I’m not against a change in this rate in the longer term but it would serve the EU better if the outer peripheral zones such as Scotland , Northern England , Western Spain , Southern Italy and some of the newer Eastern European countries could be ‘lower corporation’ taxed as a spur to investment .

    While Mr Kenny and Mr Rehm may be on the same page the German Kanzler and French President have pressing domestic political challenges from electorates who don’t care how hard the Irish orange is squeezed as long as they get enough ‘juice ‘ to keep their ‘banks ‘ from keeling over in domino fashion.

  • Driftwood

    http://www.scientificamerican.com/article.cfm?id=financial-flimflam

    At least Cheltenham Festival gives you a run for your money.

  • Kevin Barry

    Pete,

    I couldn’t agree more with you and this is what worries me (not the agreeing with you, but Kenny and Rehn).

    I don’t know if you had a chance to read today’s FT but Wolfgang Munchau had an excellent piece in it where he advocated the rejection of the Franco-German competitiveness pact and how by a perverse twist of fate it would seem that though this pact would be bad for the market the market seems to be the ones pushing it as they want some form of stability.

    Interesting times…

  • Pete Baker

    “Interesting times…”

    Indeed, Kevin.

    But not necessarily the time to take direction from another economist…

  • Kevin Barry

    Perhaps Pete, though I suppose it depends who you pick. We all suffer from confirmation bias in all things and walks of life.