UK role at core of EU fundamental for Ireland, says Kenny

Tue, Jan 10, 2012, 00:00

TAOISEACH ENDA Kenny has said it is “absolutely fundamental” for Ireland that Britain stays an active and core member of the European Union despite remaining outside the fiscal stability pact for euro zone members.

Mr Kenny confirmed yesterday he will meet British prime minister David Cameron in Downing Street on Thursday to discuss the ongoing euro zone crisis.

It will be the second bilateral meeting to be held between the leaders in a month.

Alluding to the Government’s concerns about the situation that has arisen since Britain refused to support the fiscal compact, the Taoiseach portrayed the meeting as taking place at a time when the relationship between both countries “has never been more critical”.

In another significant development yesterday, France and Germany said they have agreed on the “principle” of a financial transaction tax in Europe, but bilateral talks in Berlin failed to bridge differences on a timetable for its introduction.

German chancellor Angela Merkel said there was a “good chance” of agreement on an inter-governmental fiscal compact later this month and called on new initiative to boost job creation and competitiveness in the euro zone.

French president Nicolas Sarkozy insisted he will push for agreement in France on a financial transaction tax by the end of the month, saying it was “scandalous” such a tax did not already exist. Once established in Europe such a tax would, he said, soon generate a momentum of its own elsewhere.

“The whole world will say, ‘why is [our] financial sector excluded from a tax that the euro zone was clever enough to create’,” said Mr Sarkozy.

The Government yesterday said it had no objection in principle to such a tax but only if it was applied on the widest possible basis.

A spokesman for Minister for Finance Michael Noonan said he held the view that the EU and the IMF should “move in tandem” in a global manner. Ireland’s stance has been interpreted in some quarters within the EU as somewhat negative towards the tax.

On the wider euro zone issue, Ireland has substantial concerns about the impact a fiscal compact excluding Britain will have for Ireland’s relationship with its biggest trading partner.

Speaking in Westport, Mr Kenny said a central focus of the Government’s strategy at the meeting of European leaders later this month would be to prevent a widening rift between Britain and the group of states backing tight new rules.

“[It is vital] the links between Ireland and Britain, which have been historically so important from a trading point of view, be maintained, and that it be clearly understood that Britain is an essential part of the European Union and that the European union needs Britain insofar as full membership is concerned,” said Mr Kenny.

Speaking in Berlin, Dr Merkel welcomed France “putting its money where its mouth is” on a tax Berlin has long demanded. “We have to act, we’ve said we want a final position from the finance ministers at the end of March,” she said.

Unlike Mr Sarkozy, however, Berlin is in no hurry: only after a final round of talks among the EU 27 members will it shift to the fallback plan of a euro zone tax.

Looking to the wider inter-governmental talks on a euro zone fiscal package, the leaders said they were optimistic that agreement on a treaty would come in the next days ahead of a signing in March.

Officials from the troika will arrive in Dublin today to begin a 10-day review of Ireland’s implementation of the bailout programme for the last quarter of 2011. Mr Kenny said he was confident of a positive outcome.

Separately, Ireland needs to negotiate a stand-by second bailout, Citigroup chief economist Willem Buiter said during a visit to Dublin.