Arthur Beesley on Enda Kenny’s European adventure (which given the times that are in it are more important than next week’s much reduced St Patrick’s day jaunt to the States):
…one of Kenny’s prime tasks today is to convince his counterparts that his Government intends to make good on its pledge to doggedly pursue the fiscal path of rectitude and reform.
In the first instance at least, this overrides debate on the interest rate and the banking debacle. Indeed, the basic case for any easing of Ireland’s rescue terms rests on Kenny’s ability to persuade other leaders that he has the mettle and gumption to keep going when the going gets rough.
He continues, on the subject of Ireland’s preferential corporation tax rates (which is both filching revenues from other EU countries and one of the few taxes still bring in cash to the Irish revenue):
Kenny, of course, has vowed not to accept a common corporate tax base. Also, his administration can abstain from imminent commission legislation on this front. This is still very uncomfortable ground for him, particularly as he is looking for a substantial reduction in the interest rate on bailout loans.
Here he runs into German demands for reciprocation, a stance bolstered by Dutch resistance to any rate cut and wariness among Austrians and Finns. It is a given that their combined clout easily exceeds that of Ireland’s supporters, who include other “PIGS” group luminaries like Greece, Portugal and Spain.
Ireland argues that the moral hazard case for a penal interest rate is overstated, bailouts carrying a significant political cost for the recipient. In addition, the case is made that the high interest rate is unsustainable and undermines the bailout’s core objective of restoring order to the public finances.
Against that, however, is the case that the 17 euro countries signed up to the bailout scheme on the basis that loans would be released only at dissuasive, penal cost. This argument still has many adherents.
If the Taoiseach will not concede on corporate tax, what else can he give Merkel? This debate centres now on a debt brake, which would place a strict legal limit on the national debt. Kenny favours this notion already but there is some reluctance to go the route of a constitutional amendment.
What are the odds of a Yes vote if a referendum were portrayed as a German-inspired initiative.
The most recent precedents on that are not particularly promising.