Discussions at yesterday’s Ecofin meeting encapsulate the dilemma facing Ireland in its chairmanship of the council.
The main topic on the agenda was the financial transaction tax. Having failed to secure agreement between the 27 member states on the issue, 11 countries have decided to press ahead with the tax under the principle of enhanced co-operation which came into force with the Lisbon treaty. Ireland, along with Britain and other countries, has chosen to opt out.
Urging progress on an issue on which Ireland has abstained is an awkward one, particularly when Ireland is dependent on its European partners for financial support. Yesterday, Michael Noonan stressed Ireland’s role as “honest broker” with regard to the progress of discussions on the tax, ensuring that all the issues will be discussed in a “fair, open and transparent manner” during the presidency.
That honest-broker role will apply more generally to Mr Noonan in his role as chairman of Ecofin as the EU tries to progress legislation, mainly relating to banking union. Minister of State Brian Hayes will sit in Ireland’s seat for the duration of the presidency. But it is Noonan’s prominence over the next six months that may throw a spotlight on Ireland’s delicate position in Europe.
‘Major milestone’
He emphasised yesterday the discussion centred on progressing the tax proposal rather than its content. Nonetheless, EU tax commissioner Algirdas Šemeta’s warm description of the tax as “a major milestone for EU tax policy” at a press conference with Noonan and EU economics commissioner Oli Rehn was distinctly jarring. Noting that a bloc representing two-thirds of Europe’s GDP is implementing the tax, commissioner Šemeta urged other countries to come on board.
The issue of a common approach to tax avoidance was also discussed. While ostensibly preoccupied with finding a common European approach to the problem of corporate tax avoidance, in reality the question skirts dangerously close to the contentious issue of corporate tax harmonisation, another no-go area for Ireland.
Ireland’s bid to secure debt relief on its bank debt promises to be a sub-text to its presidency of the European Council. Talks with the ECB on the Anglo Irish promissory note are ongoing, while the quest for the EU’s permanent bailout fund to directly recapitalise AIB and Bank of Ireland is in the gift of the euro group.
Irish debt relief
This week’s proposal to seek an extension of the maturities on Ireland’s EFSF and EFSM loans saw the issue of Irish debt relief stray into the territory of Ecofin. The intrusion of the specifics of the Irish debt relief campaign on to the first meeting as chairman illustrates the difficulty in separating Ireland’s domestic interests from its presidency responsibilities. Ultimately, this might not be a bad thing.
