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Relations stalled as talk turns to our tax

While there was a feeling of 'oui, nous pouvons' (is feidir linn) among Team Ireland in Paris this week, it very much remains to be seen if France, in particular French President Nicolas Sarkozy, will really budge on the thorny issues clouding the Franco-Irish relationship.

With the trade mission to Paris including Tanaiste and Minister for Foreign Affairs Eamonn Gilmore and Finance Minister Michael Noonan, the mood at the Irish embassy in Paris was 'montrez-nous l'argent' (show us the money). The place was hopping with serious nervous energy and maybe a hope that our run of recent diplomatic success on the visits of the Queen and US President Barack Obama could rub off in the city of light.

The visit was held against the backdrop of celebrations to mark the 50th anniversary of the Organisation for Economic Co-operation and Development (OECD). On the agenda were meetings with Ministers Alain Juppe and Christine Lagarde, potential investors into Ireland, as well as the official opening of a Paris office for Irish company Realex, an online payment service.

Speaking with Mr Gilmore in the embassy right after his meeting with Mr Juppe, he seemed relaxed and was unhesitant in his responses.

"We discussed the economic issues. We came very quickly to some areas where there has been disagreement between France and Ireland. We spoke about the application of reduced interest rates and the position France has taken towards our corporate tax rate. I made it very clear to him that we would not be changing our corporate tax rate and explained to him why this was the case."

Yet France's official stance is that any reduction in the interest rate on Ireland's bailout loans is conditional on an increase in the corporate tax rate. So how did Mr Juppe react?

"He set out for me that the perception among the small and medium-sized businesses in France that there was a lower rate of corporation tax in Ireland. He explained France's position and in turn I explained to him that our rate of corporation tax is our rate of corporation tax."

France and Ireland are clearly at loggerheads on this issue. Is Mr Sarkozy trying to bully us -- are we being treated like a dominion?

"Not at all. Ireland is treated with respect. We have differences. Differences will arise between states. We are separate, sovereign, independent states and differences will arise and we'll try to solve the differences."

But doesn't Mr Sarkozy have a habit of trying to tell Ireland what to do? Like the time when he flew into Ireland to meet Brian Cowen for an afternoon after the No vote for the Lisbon Treaty -- i.e. to tell the Irish to vote Yes and go home again. How are Franco-Irish relations right now?

"Ireland and France have a long, good, strong relationship. I pointed out to foreign minister Juppe that our national flag comes from the same gene pool as the French and we come from the same republican tradition and ethos."

Is this a naive way of looking at things -- if France blocks a reduction in our interest rate, that obviously has a negative effect on Ireland and all its people who are suffering through the economic crisis. How can nations be 'friends' under these circumstances?

"I think it would be a great pity if that relationship was damaged by difficulties here and that's why the dialogue between myself and the foreign minister is so important ... it's our job to try and first of all, explain, persuade and get to a point where we can negotiate."

And would it help Ireland if Ms Lagarde became head of the IMF?

"I think Christine Lagarde has a very good understanding of the Irish economy and aside from this particular issue, (i.e. that of our corporate tax rate) she has shown herself to be very supportive of Ireland."

Mr Noonan met with Ms Lagarde on Wednesday last and said she has a "strong appreciation" of Ireland's situation. However, neither Mr Juppe nor Ms Lagarde commented to the press after their meetings with the Irish ministers and there's been no official statement as to any possibility of flexibility with regards to reduction on our interest rate, nor change in the stance on our corporation tax. The French press have pointed out that the Tanaiste has not ruled out the possibility of a compromise, i.e. widening the corporate tax base.

Leaving our meeting, the French fable 'C'est le pot de fer contre le pot de terre' came to mind: 'It's the iron pot against the clay pot'. In the fable, the iron pot proposes a journey together with the clay pot, which is only persuaded by the stronger pot's offer to protect him. When they are jostled together on their way, the clay pot is shattered and only has itself to blame. Time will tell if this tale illustrates Ireland's case -- hopefully France won't prove itself to be the iron pot.

Sunday Independent