Election to have 'little effect' on German policy
A change in government following elections in Germany this autumn would make little difference to the country's policies towards Ireland, the main challenger to Chancellor Angela Merkel signalled in Dublin yesterday.
Peer Steinbrueck, who is leading the social democrat SPD's election campaign, said he would press for better regulation of banks across Europe and improvements to economic governance, but added he did not plan to push for changes to Ireland's corporation tax rate.
The issue of a deal on the debt linked to Anglo Irish Bank should be sorted out in "weeks" or long before elections, he added.
Opinion polls suggest that Chancellor Angela Merkel will win general elections due in September or October, but the SPD may well join with Ms Merkel's CDU to form a grand coalition.
Mr Steinbrueck served as finance minister in the last grand coalition, but has said repeatedly that he would not serve in any future coalition with the CDU.
While Mr Steinbrueck has been critical of Ireland's corporation tax rate in the past, calling the 12.5pc rate "ruinous" and "unacceptable", he said during a visit to Dublin yesterday that the time had passed for forcing Ireland to change the rate. Still, he complained that countries like Ireland and Cyprus were looking for bailouts from Germany and other countries while not taxing enough at home.
While declining to make any calls for Ireland to change tack, Mr Steinbrueck said the German government and parliament must extract concessions from Cyprus before there can be a bailout.
He wants the island's "bloated" banking industry, which holds assets many times greater than the country's annual gross domestic product, to be consolidated and some banks to be closed. He also wants the government in Nicosia to do more to combat money laundering, raise taxes and join the planned financial transaction tax. Like Cyprus, Ireland has rejected the financial transaction tax and continues to levy relatively low taxes.
Mr Steinbrueck said yesterday that Ireland had improved regulation.
Like many Germans, Mr Steinbrueck complained that ECB governor Mario Draghi's decision to start buying sovereign bonds on the secondary markets might be "undemocractic" but conceded that the effect had been "remarkable".