Fine Gael and Labour close to agreement on draft deal


Fine Gael and Labour negotiators are battling to resolve final key issues in a draft deal to form a coalition government by next week.

Party leaders Enda Kenny and Eamon Gilmore are expecting to be handed a proposed blueprint for partnership by this evening.

Fine Gael negotiator Phil Hogan said there weren’t too many hurdles left to overcome between both sides.

“We are at a stage now where we have a draft of a proposed programme for government. We are going though it to see if we can resolve all the outstanding issues,” he said.

Any deal will be put before a 1,000-strong Labour Party special delegate conference tomorrow, while Fine Gael would seek the backing of its TDs and senators.

The negotiations at Government Buildings are complex, with the parties at odds over the length of time it will take to turn around the budget deficit, tax, public sector cuts, water charges and how to tackle bondholder responsibility for banking debts.

Mr Kenny and Mr Gilmore are expected to decide today on whether to accept the agreement that would see them forming a coalition government next Wednesday.

Both leaders will return today from Finland and Greece after meetings with European colleagues.

Last night their negotiating teams continued work on the text of an agreement that would form the basis of a coalition deal. The teams broke up at 10.30pm.

One of the Labour negotiators, Brendan Howlin, said during a break in the talks yesterday evening that a lot of detailed work had been done, but he expected the talks to continue well into the night.

During the break, the outline of the agreement reached in the discussions was given to the back-up teams from both parties so they could consider a detailed text last night. “There are a number of hurdles yet to be overcome and there will be no agreement until everything is agreed,” said Mr Howlin.

While his party colleague Joan Burton, who is also one of the negotiators, had earlier raised the possibility that the Labour conference might have to be postponed, Mr Howlin said no decision had been made to defer tomorrow’s conference.

The third Labour negotiator, Pat Rabbitte, said that yesterday was “D-Day” for the talks and he expressed confidence that agreement could be reached.

Former Labour Party minister Barry Desmond yesterday called for a major restructuring of government and the appointment of three ministers at the Department of Finance.

He said one minister should have responsibility for the budget, another for public service reform and a third should be in charge of banking policy.

A special delegate conference of the Labour Party has been scheduled for tomorrow to consider the programme for government that emerges from the talks.

Speaking after a meeting of Christian Democrat leaders in Helsinki last night, Enda Kenny said he understood good progress was being made in the talks.

“To be honest with you, as I’m standing here, I can’t give you an idea of a time for conclusion – but I understand that they’ve been getting on very well together and it would be my hope that a really strong programme in respect of the country can be put together to provide a government of clarity and strength.”

He declined to clarify whether he was insisting the finance portfolio should go to a Fine Gael minister.

Meanwhile, German chancellor Angela Merkel has taken a hard line on demands from Mr Kenny for better bailout terms, saying she expects concessions in return for any easing of the EU-IMF deal.

Dr Merkel and Mr Kenny had a brief “informal” meeting in Helsinki last night at which she congratulated him on his election victory.

A spokesman for Mr Kenny said the discussion “went well”, but the chancellor made it clear she expects reciprocal measures if bailout recipients are granted “relief” by their euro zone partners.

“It will be always about taking and giving. It does not make sense to help one country if there are no new conditions on another issue,” she said.

The chancellor also said “there’s no use in offering relief” unless “conditions get tougher” for the countries that seek it. “On this basis, we’ll talk with these countries.”

Mr Kenny’s spokesman said the two leaders “didnt get into that level of detail” when asked whether Dr Merkel had specified what she wanted in return for better bailout terms. While Irelands corporation tax regime has been a frequent target of German criticism, Mr Kenny said he would be making no concessions on that front.

“I’ve made it very clear of our objection both to the corporation tax rate being changed and consolidated common tax base being brought about as a consequence because of the damage that would cause to Ireland and our economy, particularly in the context of foreign direct investment,” he said.

The Helsinki meeting chairman Wilfried Martens said “there was no voice against” Mr Kenny’s call for lower interest rates and “nobody was expressing his voice in favour”.

Additional reporting by PA