BRUSSELS — If European leaders expect Enda Kenny to set aside his awkward disputes with the international creditors funding Dublin’s 67.5 billion euro bailout during his six months at the helm of the European Union’s rotating presidency, the Irish prime minister has a message: He is not going to go quietly.
Ireland next year could become the first of the euro zone’s five bailout countries to emerge from a rescue program if all goes according to schedule. But Dublin has been arguing for months that unless it gets some relief from Brussels on 64 billion euros in bank debt sitting on its sovereign books, even a country that has played by tough E.U.-imposed austerity rules may not make it.
“You have to have the principle established here that those who do most to help themselves are encouraged and given assistance and support from the institutions of Europe,” said Kenny in a thinly-veiled swipe at the increasingly generous terms being offered to Greece, which, unlike Ireland, has repeatedly missed its bailout targets.
“It will be a big year for Ireland but also a big year from the union, because it can prove that a country that does work with the rules can emerge here,” Kenny added. “But that requires the support from Europe to actually get us across that line.”
It may appear a delicate line for Kenny to walk — strong-arming his European counterparts for debt relief as he serves as impartial arbiter of the E.U.’s day-to-day business. But during a 45-minute interview, Kenny was not delicate.
He insisted that his government will push the burgeoning list of unfinished E.U. business — next steps toward a euro-zone banking union, finalizing laws giving Brussels more authority over national taxing and spending policies, a deal on a new, seven-year E.U. budget — through the E.U.’s Byzantine legislative process.
But Kenny is monomaniacal when it comes to the deal he really wants to strike, a long-promised change in how it pays off sovereign debts incurred when the bust Irish banking system was bailed out four years ago.
“Because of the fact that the country that I lead politically was the only one that had a policy imposed on it from Brussels and from Frankfurt at that time — that a bank would not be allowed to fail — we’ve had to shoulder a unique burden from any other country in Europe,” he said.
In some respects, the rotating E.U. presidency Ireland takes over in January is a relic of a bygone era. Before the bloc’s new treaties came into effect three years ago, the presidency’s prime minister chaired E.U. summits and its foreign minister represented the 27-member bloc internationally. Those tasks have since been taken over by permanent, Brussels-based figures.
But the presidency still plays an outsize role in striking the backroom legislative deals that make the E.U. work, and how national leaders play on that international stage can shape their image indelibly.
Helle Thorning-Schmidt, Denmark’s charismatic prime minister, has seen her name mentioned as a future European Commission president after this year’s Danish presidency untangled some of the E.U.’s most intractable problems, including a decades-long dispute over a single E.U. patent and complex capital rules for European banks.
Conversely, Demetris Christofias, Cyprus’s mercurial president, found himself the focus of unwanted international criticism when negotiations over his country’s bailout faltered amid Nicosia’s turn at the presidency, which ends next week.
The stakes for Kenny are higher than most. According to the terms of Ireland’s bailout, Dublin is to be gradually weaned off its bailout financing over the year and must raise 6.6 billion euros in the markets before going cold turkey in November, when the three-year bailout concludes.
And while Ireland’s economy is performing better than any other bailout country, its fiscal situation is still dire: next year debt levels will reach a high of 121 percent of economic output and its budget deficit will be 7.5 percent, both among the worst in the euro zone.
There are also signs of mounting political unrest at home. The chair of Kenny’s main coalition partner resigned last week over social welfare cuts in the government’s latest austerity budget, and more defections are possible. The death of a pregnant woman who was refused an abortion at an Irish hospital has become politically divisive and could also overshadow the E.U. presidency.
Kenny is hardly blind to the problems he faces domestically. Indeed, he appears insistent on highlighting them — once again in an effort to convince Europe that Ireland’s fate is touch-and-go without help from Brussels.
“While the outside world may look at Ireland and say, ‘You are doing very well, you are moving in the right direction,’ I have to tell them at all times that our economy is very fragile and this is a very challenging time for our people,” he said.
“A break on the bank debt for Ireland makes it so much easier for the country to emerge from the program,” he said. “It is a win-win situation for Europe and for Ireland — that is what it is.”
— Financial Times