On eve of U.S. visit, Irish prime minister Cowen says more cuts are possible

By Anthony Faiola
Washington Post Foreign Service
Saturday, March 13, 2010

LONDON -- At a time of deep concern over growing government debt in Europe and the United States, Irish Prime Minister Brian Cowen is heading to Washington as a global spokesman for fiscal restraint.

Cowen is set to meet with President Obama on Wednesday for bilateral talks before a St. Patrick's Day celebration that last year had the waters in the White House fountain running green. In recent months, however, Cowen has been laboring to put debt-saddled Ireland back into the black. He has been slashing public-sector salaries -- including his own -- and making cuts in social services to assure foreign investors that Ireland can meet its obligations.

Thus far, the pain is paying off, with Ireland largely avoiding the debt crisis seen in Greece as well as the surge in borrowing costs that hit other financially troubled countries in Europe, including Spain and Portugal. But Cowen's government has paid a hefty price: Its approval ratings are among the lowest in recent Irish history.

In a telephone interview on Friday before departing for the United States, Cowen nevertheless vowed there would be more cuts. He called it his responsibility to right Ireland's books regardless of whether the austerity campaign is popular.

"It is worth it in that, frankly, Ireland has no choice," Cowen said. "I don't think any country has a choice. When you have such pressure on public finances, you simply have to confront these issues."

Analysts say Cowen's bravado stems in part from the electoral schedule; Irish voters do not go to the polls for 2 1/2 years. It is giving his unpopular government time to make difficult budget cuts in the hopes that they fuel a foreign-investment-led recovery from a recession and housing bust in Ireland that were worse than the ones in the United States.

The 12.5 percent corporate tax rate in Ireland has made it an attractive hub for U.S. businesses, and Dublin is particularly keen to lure more American companies. Cowen is set to pitch the Emerald Isle in Chicago and California before heading to Washington. That might be a point of friction with Obama, whose administration has sought to discourage U.S. companies from moving jobs overseas and to reform tax codes to capture more of the foreign profits of U.S. companies.

Cowen declined to say whether he would raise Irish concerns over the administration's tax reform plan with Obama, but he defended Ireland's corporate-tax system.

"We are in compliance with all international treaties," he said. "Ours is an upfront and legitimate position."

Cowen's meeting with Obama is also set to focus on a milestone in Northern Ireland last week, where the local assembly secured a key vote transferring domestic policing and judicial powers from London to Belfast.

Former president George W. Bush intervened to lobby for the measure last week. He placed a phone call to the head of Britain's Conservative Party, David Cameron, asking him to get his allies in Northern Ireland to support the vote. Though Cameron's allies voted against the measure, it passed.

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