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Unity between the French and Germans is bad news for us

SHE is tall; he is small. She is a scientist; he is a lawyer. She can speak foreign languages; he is only comfortable in French. He is brash; she is controlled.

A lot separates German chancellor Angela Merkel from French president Nicolas Sarkozy, but yesterday at a key EU summit they were united like never before and their alliance, however temporary, is likely to have several negative outcomes for Ireland.

Both leaders are determined to end the year-long eurozone debt crisis, while also boosting the competitiveness of the EU; and smaller countries like Ireland (and Greece) are lying as obstacles in their path. France and Germany have laid down the gauntlet to the other European countries, particularly Ireland: sign up to our reforms or forget any agreement to lower the interest rate on the EU/IMF bailout package.

These reforms are not yet fully sketched out. Ceilings on the amount of debt a country can take on, a higher and compulsory retirement age across the EU, harmonised tax rules and pension changes are on this unappetising menu.

Ireland has little negotiating power left.

While a lowering of the 5.8pc interest rate is possible, it will never happen just for Ireland and won't happen in isolation.

Everything in Brussels gets negotiated, often over interminable summit meetings and long lunches. Giving any member state a unilateral deal is almost unthinkable in this consensus-based Belgian city.


If Ireland wins a concession, it won't be getting it without some cost attached. In that context the 12.5pc corporation tax remains vulnerable. The French want a minimum corporate tax rate, while the Germans appear to be more keen on a separate arrangement where large companies would pay one rate of tax on all their operations across Europe.

While the French and Germans have run out of patience with Ireland, this country's economic interests stretch beyond even the EU. Most of the investment Ireland is trying to protect from higher corporate taxation is from the US, not Europe.

The American Chamber of Commerce in Ireland has made it abundantly clear that the 12.5pc rate is non-negotiable, for instance.

Still, Ireland's current strategy to deal with the campaign of Sarkozy and Merkel on this issue is essentially to hope the whole problem just goes away. But this is not likely to happen.

A new Government of Fine Gael and Labour will come into power soon, but they will be inexperienced. It is also unfortunate for them that the momentum being built up by Sarkozy and Merkel already looks unstoppable.

Irish Independent