Ireland is doubly unlucky. Not only is France prepared to play hardball, but there is also no good reason for it to calculate its interests are being damaged by Ireland’s corporation tax rate to any real extent. It is impossible to get a good explanation from any French person as to why the issue has come to be more strongly felt there than in any other country.
If France often forgets that it is no longer so great a power, Germany seems frequently to forget that it is the most powerful state in Europe. The strongest criticism that can be made against Germany – from an Irish or European perspective – is that it has underplayed its powerful hand during the crisis, not that it has used that hand to manhandle small countries.
Apart from the German finance minister attempting to frogmarch Brian Lenihan into a press conference to announce the bailout last November, it is hard to think of examples of Germany leaning on Ireland unduly. This makes recent outbursts of anti-Germany rhetoric, some of which would make even tin-hat-wearing English Eurosceptics blush, appear all the more puzzling.
More often than not during the euro crisis, Angela Merkel has dithered and delayed. Only when matters have come to the brink has she been decisive. This is a cause for concern. Brinkmanship can go very badly wrong.
And, with Greek parties unable to reach a political concensus and the IMF threatening to withdraw its support, elsewhere in the same paper Arthur Beesley warns of the “potential for a dangerous spill-over into weakened countries like Ireland”.
This is perceived to reflect increasing IMF frustration at the monumental standoff between the euro zone’s political leadership, in which a move to ease Greece’s debt burden is gaining support, and that of the European Central Bank (ECB), which recoils in horror at the very notion. “We are at the end of the tunnel but there is no light,” said a diplomat who is involved in the drama.
Crucial here is the political interest of powerful people such as German chancellor Angela Merkel and many of her counterparts, who are deeply reluctant to expand their support for Greece. The vulnerability of European banks to any losses on their investments in euro zone sovereigns is another factor.
Important too is the ECB’s agitation against anything — ie any hint of sovereign default — which might undermine market confidence in the euro zone’s many weaklings or damage its own over-extended balance sheet.
The upshot of all this is endless euro zone haggling over the next step for Greece, very little certainty over what actually happens and a sense of perpetual crisis overshadowing the entire European body politic.
There’s a definite sense of frustration in the reported comments by the Irish Minister of State for Europe, Fine Gael’s Lucinda Creighton.
“Europe falters today because we have become afraid to challenge public opinion. Politicians have become sheep, not leaders,” Ms Creighton, who has been deeply involved in lengthy talks with European counterparts, told a Trinity College Dining Club gathering in London.
“They govern by focus group, by opinion poll and by their popularity ratings vis-à-vis the next election. This becomes more alarming when we recognise that given the multiplicity of governments and elections in an enlarged European Union, the EU is caught up in a dizzying merry-go-round of perennial election campaigns, leading to dangerous levels of populism,” she said.
Or will domestic political pressures, in Ireland and elsewhere, hold sway?