Barroso brings tough love to table in Dublin

Thu, Jan 10, 2013, 00:00

It’s been more than three years since José Manuel Barroso’s last official visit to Ireland. Then, the president of the European Commission was in town to persuade a disaffected populace to vote Yes in the second Lisbon Treaty.

Today he arrives in Ireland with a very different agenda. Barroso and his team of more than 20 commissioners travel to Dublin to mark Ireland’s commencement of the presidency of the European Council. As well as meetings with Government Ministers, the commission will also attend a ceremony in City Hall to mark the European Year of Citizens.

But while the prevailing mood may be one of ceremony and celebration, the underlying economic reality is very different. Since Barroso’s last visit in September 2009, Ireland has received an IMF-EU-ECB bailout, has sustained a string of austerity budgets, and unemployment has hovered at 14 per cent. All of this against a backdrop of a grave European financial crisis.

‘Sacrifices’

Barroso is under no illusion about the social impact of fiscal consolidation, despite his high praise for what he calls the “extraordinary resilience of the Irish economy”.

“We know very well the costs, the very real sacrifices. We are very grateful to the people of Ireland and Irish society, but frankly there was no other alternative to put the economy back on track.

“With or without the euro, Ireland would have to be making exactly the same kind of efforts, with a difference – it would not be receiving the support it has been receiving from countries in the euro.”

This policy of tough love is characteristic of the president’s response to the euro zone crisis.

As a former Portuguese prime minister, he has first-hand experience of the effects of fiscal consolidation in his home country. But even his strong social conscience is eclipsed by a deep belief that Europe’s economic policy is the right one.

“I just came from Portugal where I saw how difficult, how painful these kind of reforms [are]. The same feeling you have in Ireland I can tell you have probably even stronger today in Portugal.

“Yes, I feel a lot of sympathy . . . but it is my duty at the same time to say to our public that the alternatives will be much more costly. If anyone believes that for the growth of Ireland, for instance, not to control the public deficit, they are wrong. This is critically important for confidence.”

Faith in EU

Barroso believes Europe’s response to the crisis has been “simplified” and “caricatured”.

“The commission is not advocating only the stabilisation of public finances. Yes, this is an indispensable condition, but we are saying at least as important are structural reforms and investment – targeted investment for the areas of the future.”

Barroso (56) was re-elected the head of the European Commission in 2009 for a five-year term. He has always been a committed European integrationist. Once a left-wing activist, he moved towards the right in later years. Today he sees himself as a centrist and something of a consensus-builder in his role as representative of 27 member states.

As Europe enters the fourth year of the financial crisis, his faith in the European project is unabated, even as the policy of fiscal consolidation is attracting renewed criticism amid spiralling unemployment and stagnant growth figures.

“This crisis was not created by the European Union. This crisis was created by unsustainable public debt created by national governments and by irresponsible financial behaviour tolerated by national supervisors,” he says. “The European Union is a victim of the crisis, not the cause of the crisis. We are not the problem. We are part of the solution.”

Barroso is at his most eloquent when defending the European project, such as during his rousing addresses to the plenary sessions of the European Parliament. Ask Barroso to defend the European project, and his response is quick, cogent and logical as he sweeps away the enormous difficulties that have beset the continent.

‘Myth’

“Sometimes in the debate this is presented as a crisis of the euro, which it is not. The reality is that countries that are not in the euro are some of the most affected,” he says. “For instance, the country that has done more to mobilise taxpayers’ money in supporting the banks was Britain, not a euro area country. Or let’s not forget the case of Iceland.”

Austerity, he argues, has also been erroneously characterised as a European policy.

“Some people try to link the policy of rigour in public finances to the euro. This is a myth. Britain is having the most restricted budget since the second World War and Britain is not a member of the euro. It’s true that financial stability in the euro area, because of the differences among the 17 countries, raises specific challenges and that is what we have been trying to address.”

According to Barroso, who holds bilateral talks with Enda Kenny today, Ireland’s presidency offers Ireland an opportunity to “make its case” over a restructuring of bad debt. The commission is “supportive of finding a solution for the issue of the promissory notes”, though he stresses that this is an issue for the European Central Bank.

“Generally speaking, the commission has been supportive of all the measures that improve public support for the adjustment programme and reassure financial markets of debt sustainability, in this case Ireland’s debt sustainability. Of course, we are supportive of finding a solution for the issue of the promissory notes.” Welcoming the NTMA’s sale of €2.5 billion of syndicated bonds this week, he believes a full return to the bond markets this year is “critically important”.

“That is one of the objectives, if not the most important objective, of the programme. Ireland is showing that it is possible to go back to the markets.”

‘Democratic’

Reaching accord on the European budget and Common Agricultual Policy ap negotiations will be among the priorities of the Irish presidency, he says, though he is ambiguous over whether a deal on the Multiannual Financial Framework will be completed by February.

“Yes, I think agreement is possible in February, but positions are still quite divergent. We need an immediate decision,” he says, pointing out that the deal also needs European Parliament approval. Ireland’s special relationship with the US may also play a role in the upcoming EU-US trade talks.

As he marks the start of the EU Year of Citizens today in Dublin, Barroso is keen to reconnect with an increasingly disaffected public. He hints that national governments have a part to play in this regard. “Some national politicians when things go well say that it is their merit, when things go wrong it is the fault of Brussels. Many national politicians have a tendency to nationalise success and to Europeanise failures.

“Europe is not just Brussels. It is Dublin, Galway or Cork. As I’ve said before, Europe cannot be bureaucratic or technocratic or even diplomatic. Europe has to be democratic.”