EURO ZONE leaders will be pressed to reach unanimous agreement on new competitiveness measures in the single currency area when they meet at a summit next month to discuss reforms to their bailout scheme.
With many countries strongly resisting a German drive to deepen the scope of European economic governance rules, the push for a unanimous deal suggests Berlin’s proposal may have to be watered down.
Ireland’s negotiating position is not strong but any dilution of the German plan would be to Dublin’s advantage, given fresh pressure to harmonise corporation tax rules or rates.
The summit of March 11th will come two days after the Dáil reconvenes after the general election, meaning it is likely to be the first to be attended by Brian Cowen’s successor as taoiseach.
Such timing is very tight from Ireland’s perspective, as EU leaders hope to reach a final agreement on a “grand bargain” response to the euro crisis at a subsequent summit on March 24th and 25th.
When all 27 EU leaders gathered last week in Brussels, Mr Cowen argued against corporation tax proposals backed by German chancellor Angela Merkel and French president Nicolas Sarkozy.
This was but one of several elements in the plan to meet resistance from a succession of EU leaders, raising questions about the political viability of Dr Merkel’s endeavour. Still, her position as Europe’s most powerful leader and her alignment with Mr Sarkozy means other euro zone leaders will have to meet their demands in some way.
This also reflects internal political pressure on Dr Merkel, who faces a string of regional elections in the coming months and whose Free Democrat coalition partners are agitating against moves to enlarge the bailout fund.
Free Democrat opposition to such moves stepped up yesterday when its finance and economy spokesman Hermann Otto Solms declared the party was at loggerheads with finance minister Wolfgang Schäuble over reforms.
Mr Solms warned Dr Merkel against making “too many concessions” in the negotiations and said it would be a “wrong decision” to allow it to lend money to countries to enable them buy their own bonds.
European leaders asked European Council president Herman Van Rompuy and European Commission chief José Manuel Barroso to bring formal proposals on this front to the euro zone summit.
Preparations for that engagement are set to intensify on Monday in Brussels when euro zone finance ministers gather for their monthly meeting.
As an EU-IMF mission in Dublin reviews Ireland’s execution of its bailout deal, Greece was told yesterday that it should accelerate its fiscal reform and privatisation policies. Although international inspectors approved the release of the next €15 billion under its €110 billion plan, they called for greater efforts from the country’s socialist government to stimulate recovery.
