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Barroso's message of hope should be met with caution

The lyrics of 'A Nation Once Again' featured in the speech by the EU's top official, where he signalled a move away from the policy of seemingly endless spending cuts and tax hikes.

European Commission President Jose Manuel Barroso used Ireland's history to illustrate the aversion of many EU countries to a loss of independence by handing over more power to Brussels.

"For European countries, most of which have fought long and hard to become united and/or independent, the thought of being a mere sub-federal entity is unbearable.

"This aversion to centralisation is both understandable and unsurprising. One of the classic 19th Century Irish nationalist songs goes: 'And Ireland, long a province, be a nation once again.'

"It is only natural that such a nation does not want to go back to being, even if only symbolically, 'a province once again', and the same feeling lives just as strongly in many, if not in all member states.

"Whether or not we agree or appreciate that sentiment, is not the point. The point is, we cannot deny it. We could not cast off the weight of history, even if we wanted to," he said in his address to the Brussels think tank Dialogue.

Mr Barroso's actual intention was to suggest that greater integration within the European Union was the answer to the 27 countries' economic problems.

Although predictably calling for a move towards federalism, his speech stood out for the unexpected doubts he has raised about persisting with austerity policies in the EU.

Drifting away from the official script, the Portuguese said the EU should place a greater emphasis on policies that stimulate growth and less on so-called "austerity" measures, such as cutting government spending.

"While I think this policy is fundamentally right, I think it has reached its limits," Mr Barroso said. "A policy to be successful not only has to be properly designed, it has to have the minimum of political and social support," he said.

Yet his interest in Ireland returned, when he suggested austerity is working in this country in the present. "It is a painful programme . . . but it is working," he said.

Therein lies the difficulty for the Government; there are mixed blessings in Mr Barroso's utterances. Technically, his speech benefits the Government as the country prepares to exit the bailout.

Of the three arms of the troika, two of the bailout partners, the IMF and the European Commission, appear to be signalling they no longer regard austerity as the sole solution to getting countries out of economic crisis.

Government sources said Mr Barroso's speech was "significant", as it may signal a shift in EU policy.

"In terms of the troika, it moves the Commission closer to the IMF. That strengthens the hand of the Government in terms of negotiations. The leaders of two of the three elements of the troika are saying there has to be more flexibility," a senior source said.

"But it is also a question of what will he do to back it up," the source added,

The off-the-cuff nature of Mr Barroso's views on austerity indicate there isn't yet a fully thought out policy to be enacted. Meanwhile, the Government has to stick to its targets as agreed with the troika.

Most notably, this includes finding €300m of savings from the public sector pay bill in the wake of the rejection of the Croke Park II agreement.

The No vote was the very manifestation in Ireland of austerity reaching its limits.

Yet while Mr Barroso was making his speech yesterday, his own institution, the European Commission, was also warning the public sector pay bill has to be cut.

"A further adjustment of government expenditure, including, in particular, the public sector wage bill, is needed to keep fiscal consolidation on track," it said in the latest review of the bailout programme.

Mr Barroso's speech also echoed the sentiments of President Michael D Higgins and Social Protection Minister Joan Burton in the past week in their critiques of austerity policy.

Unfortunately, none of them offered any specifics.

Irish Independent