Thursday 14 November 2019

Fionnan Sheahan: Cordial relations may prove crucial

TAOISEACH Enda Kenny is back where he was last Friday before he got on the jet home from Brussels and German Chancellor Angela Merkel's comments provoked a storm while he was up in the air.

He doesn't have a bank debt deal yet and neither does he have any detail on the timing, size or structure of the deal.

But he does have an agreement in principle that Ireland will be looked at with a view to reducing the burden of the €64bn injected into the banks.

And he has this commitment reiterated by the German chancellor.

The damage of the previous 48 hours is undone.

After being forced into an agreement in principle on the use of the new €500bn EU bailout fund -- the European Stability Mechanism -- to recapitalise banks, Dr Merkel continued to resist such a move as she felt it would prove too costly, particularly when applied to the large Spanish economy.

The German chancellor is not completely isolated.

Apart from being the principal benefactor, Germany can count on the backing of Finland and the Netherlands, as displayed in a statement from the so-called Helsinki Three, when the countries finance ministers jointly expressed their opposition to the use of the ESM for back-dated bank recapitalisation.

Austria can also be counted as being of the same thinking.

After appearing satisfied to let the Helsinki Three be viewed as a solo run, Dr Merkel dropped the bombshell of taking up the mantle in Brussels.

Following a weekend of furore, with Mr Kenny being severely criticised for his negotiation skills, she clarified her position.

Going beyond the talks between diplomats, the two leaders decided to speak to each other one-to-one.

Mr Kenny got a personal assurance from Dr Merkel that Ireland is a "special case" for a bank debt deal and there are "unique circumstances" behind Ireland's bank and State debt crisis.

The Taoiseach's contacts with the German chancellor were used to good effect.

Mr Kenny is used to dealing with Dr Merkel as both their parties are members of the EPP grouping and he enjoys a cordial relationship with the stern chancellor.

Before he even became Taoiseach, Mr Kenny was able to observe her approach to EU summits up close, allowing him to gauge her mood.

He will be familiar with her mannerisms and knows when a policy she adopts is temporary or permanent.

Unlike the hostile body language whenever Mr Hollande is around, the chancellor appears at ease with Mr Kenny.

Yet nothing prepared the Taoiseach for the German chancellor's post-summit volley at the bank debt separation.

After that significant setback, Mr Kenny needs to show there hasn't been a reversal of the decision of June 29.

The coming months will require a sustained campaign at governmental, ministerial, diplomatic and official level to secure a more sustainable banking debt position.

The Government still has until March 31, when the next payment on the €31bn worth of IOUs from Anglo Irish Bank is due.

Allied to the forthcoming EU presidency, Mr Kenny's faces a tough test in the next six months.

Irish Independent

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