EUROPEAN COMMISSION chief José Manuel Barroso played down the prospect of a deal to cut the cost of Ireland’s bailout, saying the matter is not up for discussion when EU leaders gather tomorrow for a summit.
Although certain Dublin sources say efforts are under way to settle the stalemate over the interest rate on Ireland’s rescue loans at the summit, Mr Barroso told reporters in Brussels he was not aware of such speculation. “I cannot at this moment tell you if this will happen in the next days. So far it is not in the European Council agenda,” Mr Barroso said.
Taoiseach Enda Kenny has been embroiled in a dispute over the interest rate with French president Nicolas Sarkozy since his first EU summit in March.
Although Mr Sarkozy wants Mr Kenny to increase Ireland’s 12.5 per cent corporate tax rate in return for a one percentage point reduction in the interest charge, the Taoiseach refuses to budge.
EU leaders agreed at that same March summit to cut the interest rate on Greece’s rescue loans in return for its agreement to embark on a €50 billion privatisation programme.
The country’s failure to advance the initiative since then is one of the prime factors behind the delay in the release of a €12 billion bailout loan to Athens.
Mr Barroso reiterated the commission’s support for a reduction in the interest rate on Ireland’s bailout.
Without the benefit of any decreases, Irish rescue loans are more expensive than those of Greece and Portugal.
A reduction was in the interests of the credibility of Ireland’s rescue plan because it was a way of reducing pain, Mr Barroso said.
He also described the mooted reduction as “a way of increasing our assessment” of Ireland’s debt sustainability.
“I think Ireland is taking good measures and the programme is on track so it is important also to show commitment to the efforts which the Irish authorities and which the Irish people are making,” he said.
“So the position of the commission is without ambiguity: very clearly we are in favour of a reduction of interest rates.”
With Germany perceived by the Government to be warming to the notion of a rate cut, Mr Sarkozy is seen in Dublin as the last holdout against the cut.
In Government circles, both the French finance ministry and its foreign ministry are held to be generally favourable to Ireland’s argument.