Prospect of early debt relief breakthrough seems remote

EUROPEAN DIARY:Europe is in a tiresome back-slapping groove in which praise is routinely heaped on Ireland as the bailout class star pupil, writes ARTHUR BEESLEY

THE CONSTITUTIONAL court in Germany has given Europe a fillip with its go-ahead for Berlin’s participation in the ESM fund. Together with the European Central Bank’s new bond-buying plan, this stands as limited good news for Ireland at a time when the deadline for a bank debt deal is slipping.

For once, the debt mess does not seem to be worsening by the day, but the euro zone is still in a dire place and a clutch of slippery questions must soon be settled. Uncertainty surrounds Greece, Spain and the banking union initiative.

Yet more issues arise when it comes to the debate on the currency’s long-term future.

This is the backdrop against which Michael Noonan is meeting his counterparts in Paris, Berlin and Rome en route to a gathering of all European finance ministers tomorrow in Nicosia.

Despite the promise in July of a debt relief agreement next month, the target now seems to be receding.

Noonan argued in Paris yesterday that it might be more advantageous to wait until Spain concludes a rescue agreement in Europe for its banks.

That’s fair enough, as far as it goes, but it still raises inevitable questions as to what exactly is in store and when. The sense of urgency in Dublin is not replicated elsewhere. Ireland is simply not a priority case right now.

This is unfortunate. When Noonan pushed for an early deadline during the summer, his objective was to achieve clarity over the bank debt situation in time for the Budget in December.

Infighting and agonising within the Government over the next round of cutbacks illustrates just how difficult a prospect that is.

This presents an obvious test for the Fine Gael-Labour coalition, but Europe is stuck in a tiresome back-slapping groove in which praise is routinely heaped on Ireland as the star pupil in the bailout class. It’s as if the relentless spin that things are improving has led to a perception – a misperception really – that the Irish problem has been solved. If only.

For the moment, however, Ireland remains stuck in a holding pattern behind Spain as its prime minister, Mariano Rajoy, tries to plot a way out of his own fiscal mess.

Top European officials would prefer if a reluctant Rajoy signed up to a formal policy programme to take advantage of the ECB’s largesse.

The signals from Madrid are mixed to say the least, though, with the prime minister fearful of the damaging political stigma attaching to intrusive policy oversight by the EU and the International Monetary Fund.