Ireland may accept ban on EU aid for non-treaty countries

By Ann Cahill, Europe Correspondent

Thursday, January 19, 2012

THE Government could accept a ban on Ireland and other eurozone countries accessing the EU’s aid fund if they do not adopt the new treaty, according to Finance Minister Michael Noonan.

He had a wide-ranging discussion in Berlin with his German counterpart, Wolfgang Schäuble, ahead of Monday’s Eurogroup meeting, where most of the outstanding details will be thrashed out.

The current draft says that any country that does not adopt the treaty would not be eligible for aid from the European Stability Mechanism — the rescue fund due to replace the current one, possibly in July.

"The Government is coming around to the view that we can live with the linkage," Mr Noonan’s spokesperson said after the meeting with Mr Schäuble.

However, the issue that would automatically trigger a referendum was still not decided — whether the debt brake, a law preventing governments from running deficits — must be added to the Constitution. This could go to the EU summit on January 30 when the Taoiseach will have to make Ireland’s case.

Ireland would like to see the removal of the phrase that says the debt brake should be "preferably in the constitution". German sources say they could accept some kind of compromise where the law could not be easily changed — but this does not exist in Irish law.

While the link between adopting the treaty and accessing the ESM is likely to remain in the final draft, there appeared to be some flexibility when it came to the wording on putting the debt brake in the Constitution.

Several countries, such as Denmark, which holds the EU presidency, have a problem with putting the brake into their constitutions. The Danes have said it would be impossible for them to do so as it would require a general election as well as a referendum.

A new draft of the treaty is due out today and many of the details are expected to be thrashed out at the Eurogroup meeting in Brussels on Monday, or otherwise left for the summit on January 30.

Yesterday’s meeting in Berlin was not to negotiate any of the issues but to exchange information so each side knew the other’s position, Mr Noonan’s spokesperson said.

German Chancellor Angela Merkel said they were in the middle of talks on the fiscal pact and that some parts "still need to be worked on," although she thought that progress was possible.

Labour MEP Proinsias De Rossa warned that the European Parliament could reject the treaty if there was not a greater emphasis on solidarity and growth with jobs, and greater involvement by the parliament and the European Commission.

This would include setting up a redemption fund, project bonds, a financial transaction tax within EU law and a concrete plan for eurobonds.

The parliament also wants the treaty, which will be an agreement between governments, to become part of the EU treaties. Otherwise there was a danger that "an inter-governmental or Europe of nation states will result in domination by the larger countries, which will inevitably lead to a disintegration of the EU".

This appeared in the printed version of the Irish Examiner Thursday, January 19, 2012