Kenny stands firm in Merkel meetings

CHANGING the EU’s treaties will not stop the financial panic.

That was the stark message Taoiseach Enda Kenny delivered to the EU’s most powerful member, Germany.

There was no time to put in place perfect eurozone rules, but instead the bloc must use its most powerful weapon, the European Central Bank, to stop the contagion.

The Taoiseach also spelled out exactly how far Ireland was prepared to go in Berlin’s plans for greater economic and political union, restating that the country would keep control over its tax policies, including corporate tax, and looked forward to regaining its economic sovereignty at the end of the bailout programme.

The Taoiseach went blow for blow with Chancellor Angela Merkel after a working lunch in her official office, insisting the existing powers and tools must be used now to resolve the immediate crisis.

Any warmth between the two at the beginning of the 25 minute press conference seemed to evaporate as he countered her every argument for tightening up the rules now on how countries run their economies.

Ms Merkel spelt out her plan for countries that break the rules to be taken to the European Court of Justice and be fined.

Ireland, he pointed out, knew all about sticks and carrots being in the middle of a bail-out programme that required them to have the budget approved by the Troika.

So the necessary rules were already there. Ireland had put in place an independent fiscal council that would oversee budget decisions and was preparing to legislate for a debt break that would make it illegal for the government to rack up debt and deficits.

His advice was to wait and see what proposals for Treaty change EU President Herman Van Rompuy comes up with for their December summit and take it from there. Passing Treaty changes would not be a simple matter, he warned.

While Ms Merkel insisted that any Treaty change would be limited and clear, Mr Kenny’s view is that this would not be possible. The European Parliament would be involved as would member states and that each were likely to come with their own issues to be addressed in any Treaty additions or amendments.

The atmosphere was more relaxed at the Konrad Adenauer Center, the think-tank funded by Ms Merkel’s ruling party, the CDU. But Mr Kenny met the same opposition from his host, Finance Minister Wolfgang Schaeuble to his insistence that the time had come to deploy the ECB firewall.

“I do not believe we will solve the problems unless the fundamental problems are solved”, he said adding that while the Federal Reserve may do so in the US it would not work in Europe. “We will win just some little time and we will pay a higher price in the end”, he said.

Mr Kenny reiterated Ireland’s commitment to the EU and said that any effort to unravel the euro was to unravel the EU.

He believed the EU is the answer to the fundamental issues of our time including underpinning future prosperity and the maintenance of the social model.

“Failure.. would be a failure of our leadership and a betrayal of the achievements of the last 60 years”, he said.

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