As expected, Ireland's budgetary policy was censured yesterday by the European Union's Council of Economic and Finance Ministers for breaching the broad economic policy guidelines agreed by all member-states (Ireland included). These lay particular stress on containing inflationary pressures and this was the nub of the council's criticism. Given the distinctive performance of the Irish economy and the Fianna Fail-Progressive Democrat coalition's policy profile in recent years, it is not surprising that there should have been such tension. The merits of the case made by the Government are well reflected in yesterday's speech by the Minister for Finance, Mr McCreevy. What is far more puzzling - and worrying for the future - is Ireland's complete isolation on the question and the extent to which this State's political capital in the EU has been needlessly and thoughtlessly expended in recent days and weeks.
Ireland has benefitted enormously from pooling sovereignty within the EU to optimise international and European influence. Whether in agriculture, structural and cohesion funds, the European single market, trade and enlargement negotiations, and common foreign and security policy, the trade-off has been conspicuously positive for this State. The same applies to the single currency. As preparations proceed to introduce euro notes and coins next year, it was inevitable that close attention should be directed towards co-ordinating economic policy.
That is the whole point of yesterday's proceedings, conducted by Mr McCreevy's elected peers on the proposals of the European Commission. They also examined the stability programmes agreed by the French, Italian and British governments. This is uncharted territory for all concerned, requiring careful attention to tactics and strategy with a view to balancing the short and longer term interests of all participating states.
Such a nuanced approach by the Government appeared to have paid off in a compromise text agreed by officials two weeks ago. It fell short of the Commission's firmer line and would have allowed for a more political strategy towards managing this exceedingly tricky policy issue. Unfortunately, that approach was undermined by an ideologically assertive intervention in the debate by the Tanaiste, Ms Harney and increasingly defiant justifications of Ireland's distinctive economic policy by Mr McCreevy. In the absence of countervailing action from the Taoiseach, Mr Ahern, and the Minister for Foreign Affairs, Mr Cowen, these were taken to be the Government line by other euroland ministers and senior Commission officials. Their line hardened in response, leading to yesterday's comprehensive and potentially damaging isolation of this State on the issue.
The affair exposes the weaknesses of the current system of managing Ireland's EU policies. It gives priority to lead departments (in this case the Department of Finance) and is insufficiently orchestrated and scrutinised for the overall balance of national interests. Those who rush to applaud Mr McCreevy's audacity pay little attention to the need to cultivate EU allies in anticipation of more difficult negotiations to come, whether on BSE, the Common Agricultural Policy, structural and cohesion funds, security issues or food safety. Political capital within the EU is all too easily squandered by such thoughtless tactics. As a result of this mismanagement, the Government has also made its task of winning the referendum on the Treaty of Nice, to which the Taoiseach virtually committed himself last week in the name of supporting EU enlargement, much more difficult.