EU may yet regret Ireland's budget reprimand

In John Huston's psychological cowboy drama, The Misfits, Clark Gable explains to Marilyn Monroe that his occasional temper tantrums don't mean that he doesn't love her.

"Didn't your Papa ever spank you and then pick you up and give you a big kiss?" he says.

This rather creepy line came to mind last week as the European Commission sought to repair its relationship with Ireland after what are referred to in Brussels as the Events of Recent Weeks.

On the face of it, the decision by EU finance ministers to issue a formal recommendation criticising last December's budget was a triumph for the Commission. And the Government's clumsy handling of the dispute effectively snuffed out any opposition to the censure among our EU partners.

There is little rejoicing, however, in the office of the Economic Affairs Commissioner, Mr Pedro Solbes, and many in Brussels now believe the Commission will live to regret reprimanding Ireland.

Most international financial commentators have criticised the Commission's action and Mr Solbes may have a hard time persuading EU finance ministers to accept his proposals for closer economic policy co-ordination.

The intensity of the Irish reaction to the reprimand took many in the Commission by surprise and some now fear that the forthcoming referendum on the Nice Treaty could be a close-run thing. The Commission is aware that the McKenna judgment on referendum funding has made it more difficult for the Government to predict a Yes vote with confidence.

So Brussels is looking for ways to help the pro-Treaty cause in the weeks before the referendum, which is expected in May. The Commission president, Mr Romano Prodi, is unlikely to visit Ireland before the referendum - he has privately explained his failure to visit Dublin by saying he can work out the Irish position on most issues by talking to Tony Blair.

Any public intervention by the Commission in the referendum debate runs the risk of being counter-productive. So the Commission's charm offensive is likely to take an unusual form - that of silence.

When Mr Solbes starts work on next year's Broad Economic Policy Guidelines during the coming weeks, he may criticise Ireland once again. But he is unlikely to make such criticism public, at least until after the referendum.

Mr Prodi said recently that tax was like sex - you should not talk about it. And there will be very little said about Ireland's reluctance to harmonise tax rates in the EU - at least for the next few months.

The Government insists that the dispute over the recommendation has been exaggerated and that it will have no impact on Ireland's place in Europe. The Commission and our EU partners will attempt to give the same impression during the run up to the Nice referendum. But the truth may be more complicated.

Ireland has been losing sympathy within the Commission for a number of years, not least because of Dublin's perceived closeness to London on many issues. But the row over the finance ministers' reprimand has provoked a new mood of restlessness among our EU partners, some of whom believe that Ireland has been soaking up subsidies to fund its low tax regime.

The reason the tax issue is so sensitive on the mainland of Europe is that many of the centre-left politicians who govern most EU states are convinced that tax competition could make it impossible to preserve the European social model.

As Europe prepares to kiss and make up with Ireland, the Government could be forgiven for wondering, like Marilyn Monroe, what its partner's real attitude is. In The Misfits, Marilyn ends up returning home with Clark Gable, but not before a succession of painful scenes that cast doubt on their shared future.

And when Gable finishes his speech about spanking and leaves the room, Marilyn gazes into the camera and utters the single word: "Help!"