Kenny in conflict with Merkel

Wed, Nov 16, 2011, 00:00

Taoiseach Enda Kenny has expressed grave reservations that Germany’s demand for European Union treaty change will help resolve the euro zone crisis.

After talks in Berlin, Mr Kenny said he understood Chancellor Angela Merkel’s call for tighter EU oversight of euro zone budgets to prevent another crisis - but not if it slowed progress or inhibited member states’ own particular budgetary strategy.

“We need to deal with the crisis with the tools we have now,” he said. “I don’t want to get into a position where you have major a major competency change that would open the door to many countries wanting treaty change from their own point of view. That would be a long situation.”

Standing beside an increasingly testy German leader, Mr Kenny said that, in Ireland’s view, EU members could best regain market confidence by exhausting first the “feasibilities in existing schemes”.

By contrast, Dr Merkel said Berlin was seeking “very limited but clear treaty change” to allow “more ability to intervene” in national budgetary policy.

“We are of the opinion that . . . member states should be able to be taken before the European Court for not adhering to the terms of the stability and growth pact,” she said. “This is possible for all other EU legislation but not for the stability and growth pact.”

The chilly press conference was in stark contrast to the warm welcome for the Taoiseach, with full military honours at the Chancellery. After a working lunch, the temperature dropped visibly between the two leaders.

Irish delegation officials conceded Dublin was playing “hardball” after sensing no readiness by Berlin to support the principle of greater flexibility in Ireland’s EU-IMF programme.

“As we make progress as a small country in bailout position it is important and has been recognised that countries' like us need demonstrations of support,” said Mr Kenny.

Apart from praise from Dr Merkel for Ireland’s “admirable” reform progress, she signalled movement on programme terms.

Mr Kenny insisted that “three forensic assessments” by the troika had confirmed that “Ireland has always supported fiscal responsibility and discipline”.

In a clear dig at his host, Mr Kenny added: “Ireland has always complied with the conditions of (euro zone) membership, we’ve never broken the stability pact rules. If it wasn’t for the prerequisite to recapitalise banks we would have a lower than average debt to GDP ratio.”

Minister for Communications, Energy and Natural Resources Pat Rabbitte said this morning that while the Government did not want to hold a referendum on treaty change, it would not “dismiss it sight unseen".

"No Irish political party wants a referendum. But I don't think we should dismiss it sight unseen. I have great confidence in the common sense of the Irish people," Mr Rabbitte told RTÉ's Morning Ireland.

"If there was a pathway out of the morass in which we find ourselves now and if there was significant alleviation in terms of the debt burden promised as a result of whatever treaty changes might be contemplated, then we would have to look at that situation very seriously," he said.

Mr Kenny held talks with German finance minister Wolfgang Schäuble this afternoon and gave a keynote address to the Konrad Adenauer Foundation, a major political think-thank.

In the evening, he meets important Irish trade partners in Frankfurt.