Taoiseach’s core task is to build confidence of outside world in the project he has taken on
ENDA KENNY kissed Angela Merkel on both cheeks as he greeted the German chancellor at the outset of the EU summit, a crucial encounter as he campaigns to extract a lower interest charge on Ireland’s bailout loans.
New to this scene, the Taoiseach stood near the door of the meeting room in the vast Justus Lipsius complex to be greeted by smiling fellow leaders.
These included Jean-Claude Juncker of Luxembourg, who is chairman of parallel talks between euro finance ministers on bailout fund reforms. Kenny also shook hands with Belgian leader Yves Leterme, Borut Pahor of Slovenia, French president Nicolas Sarkozy and British premier David Cameron.
Proceedings before the doors close for these meetings are informal enough. But Merkel’s huddle with Finnish leader Mari Kiviniemi and Dutch premier Mark Rutte was an illustration of the unyielding northern alliance for stringent bailout terms.
As Kenny took his place at the summit table, the late Séamus Brennan’s immortal words to the Greens regarding coalition government – that they were playing “senior hurling now, lads” – came to mind.
Kenny met privately in the hours before the summit with Greek premier George Papandreou, a man who shares his interest in lower interest for bailout recipients. Indeed, the arrangements when euro zone leaders meet are such that Papandreou sits to Kenny’s right.
Papandreou was long the public face of Europe’s debt debacle. Like Kenny, he inherited a dire situation from his predecessor. Not a year since its EU-IMF rescue, Greece remains in the grip of unyielding economic turmoil.
Papandreou frequently appears at international events, incessantly repeating the mantra that his administration will do what is required to tackle the crisis. This mirrors one of the Taoiseach’s core tasks – the drive to build the confidence of the outside world in the monumental project he has taken on.
It will not be done in a day, or in a year. Of necessity it is a slow-burn plan. Yet Kenny’s long walk to power says much about his patience and perseverance. He will need these qualities in spades in the years ahead. Just a few days into the job, however, there is no time to saunter.
Kenny arrived in Brussels to the strains of fresh Franco-German agitation on the corporate tax front. Merkel had told German MPs in private she wants Ireland to sign up for a common tax base in return for lower interest. Her finance minister Wolfgang Schäuble went further, saying he expected Ireland to “improve its fiscal income” by raising the tax rate.
In Paris, senior Élysée Palace officials peddled the line that the Sarkozy administration believes the corporate tax rate should remain on the agenda. None of this would come as any surprise to the Taoiseach, but it illustrates the scale of his challenge.
While he went into the meeting saying he would not yield an inch on corporate tax, the issue was present in lights in final drafts of the “competitiveness pact” that euro zone leaders hoped to adopt last night.
While avoiding reference to the rate, the draft duly noted imminent commission legislation to harmonise the base. “Developing a common corporate tax base could be a way forward to ensure consistency among national tax systems while respecting national tax strategies, and to contribute to fiscal sustainability and the competitiveness of European businesses,” it said.
It also pledged member states would engage “in structured discussions on tax policy issues, notably to ensure the exchange of best practices, avoid harmful practices and fight against fraud and tax evasion”.
None of this is at all good from Kenny’s perspective. He believes a common tax base would harmonise the rate by the back door. What is more, the reference to “harmful practices” implicitly plays on long-standing Franco-German complaints about tax seepage from their systems into Ireland.
The reality, however, is that the Taoiseach has little choice but to sign up to the pact if he is to have any chance of securing a lower interest charge. That he has no intention of introducing the base in Ireland makes his position all the more difficult. In all likelihood he will need further European help, too, on the banking front.
By their very nature, European talks on the debt crisis tend to be long and circular.
After many long months of prevarication, the self-imposed deadline for comprehensive bailout fund reforms looms on Friday week. Kenny has but two weeks to snatch a deal on the interest rate. He will need much more than his charm to do so.
At the start of the meeting he received a round of applause. Game on.
