Rate cannot be negotiated unilaterally, says Cowen

TAOISEACH BRIAN Cowen said last night that any reduction in the interest rate on Ireland’s bailout loans should be retrospective but declined to say whether he gauged any support from his EU counterparts for Ireland’s request for a lower rate.

As the European summit broke up shortly after 8pm last night, Mr Cowen said it was not open to Ireland’s EU partners to “unilaterally” cut the interest rate. This could only be done, he said, with the unanimous agreement of the 17 euro countries.

The question of reviewing the rate is on the table as euro zone leaders discuss far-reaching reforms to their bailout fund, the European Financial Stability Facility (EFSF).

However, a European diplomat said leaders “didn’t get into the detail” of the EFSF reform package. The summit was dominated by a Franco-German push for an EU “competitiveness pact” in return for a widening of the scope and scale of the EFSF.

While Germany and France want to harmonise corporation tax systems, Mr Cowen would not say whether they wanted concessions from Ireland on those grounds in return for a lower interest fee.

The Taoiseach said there was “no proposal” to the summit on corporation tax but said he defended Ireland’s position.

“It remains to be seen where that will go,” he said of the Franco-German plan.

“The goal of competitiveness in the euro zone is one we all share, but clearly there are different points of view on what it should entail and how it should be taken forward,” he told reporters.

“I availed of the opportunity once again to set out the importance that we attach to our 12.5 per cent rate of corporation tax as a central plank of our drive for competitiveness and as an indispensable part of our strategy for recovery and a return to growth.

“Ireland is working hard on its commitments in its EU-IMF programme. Economic growth is essential for our own people and for our partners and I obviously want to make sure that we pursue that objective. I told the meeting that this view is shared across the political spectrum.”

Mr Cowen said the EFSF interest rate that Ireland is paying is critical to debt sustainability “and I stressed again the need for this aspect to be reviewed” as part of the reform discussion.

“There is this thing going on at home – consistently by the Opposition parties it seems to me and I don’t want to engage in controversy but these are the facts – suggesting that a unilateral negotiation could take place should there be a change of Government after the election,” he said.

“There won’t be a unilateral negotiation for Ireland in relation to that. And my views, and I’ve made it clear in this, that were there to be any developments in that area that would be beneficial to Ireland it should be retrospective and that Ireland would benefit from that obviously.

“There’s a complex set of discussions, there’s a suite of measures being considered, and the point I would make is, I made it very clearly today, the interest rate was set for Ireland looking at the IMF as the benchmark, as you know.

“If in the future, based on the ESM discussions going on which will be the permanent mechanism, and if there’s to be any adaptation of those rules back to the EFSF, that Ireland should be a beneficiary in that of course.

“But it is not correct, and it’s not right, to say that people can engage in a unilateral negotiation for Ireland about changing the interest of the EFSF as it applies to Ireland. It will be an EFSF rate that applies to anyone that joins the facility.”