EU MEETINGS:ENDA KENNY faces a series of key European meetings within days of taking office, which will determine if he can extract better EU-IMF bailout terms and preserve Ireland's contested corporate tax regime.
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.
Before he receives the seals of office, Mr Kenny will meet European centre-right leaders at an informal summit in Helsinki next Friday. He will have an opportunity there to meet German chancellor Angela Merkel and French premier François Fillon, who is close to president Nicolas Sarkozy.
Also present will be European Council president Herman Van Rompuy and European Commission chief José Manuel Barroso, who are formalising a Merkel-Sarkozy push for new euro zone “competitiveness” measures.
It is in this context that Dr Merkel and Mr Sarkozy have criticised Ireland’s 12.5 per cent corporate tax rate. Dr Merkel is also a prime supporter of imminent commission proposals to harmonise EU corporate tax rules, something Dublin resists because it would dim the lustre of the Irish system.
The Helsinki meeting is a prelude to a summit of the 17 euro zone leaders in Brussels on Friday week, two days after Mr Kenny is expected to assume the office of taoiseach. This meeting, which Dr Merkel wanted, was held back in view of the Irish election.
The euro countries hope at this engagement to clear the way for the 27 EU member states to reach a final consensus at another summit on March 24th and 25th. This will be difficult as they are deeply divided over the scale and scope of bailout fund reforms.
It will fall to finance ministers, however, to work out the nitty-gritty. Euro zone ministers meet in Brussels on March 14th and all 27 ministers meet a day later.
If they do not make swift progress — and top-level European sources believe they will not — euro ministers meet again on March 21st. Another ministers’ meeting may be required to hammer out a deal before the summit starts on the 24th.
