A rose by any other name would smell as sweet

A cut in the rates charged by the ECB/EU/IMF is the first aim of the Government, Taoiseach Enda Kenny said.

But let’s think this through to its conclusion.

When asked if in the longer term he plans to seek a rescheduling of the bailout loans, Kenny said that Ireland has no intention of defaulting on its debts.

He just wants a lower interest rate. Which surely means it will take longer to pay off?

So what he’s really asking for is more time – rescheduling. He wants to kick the can down the road – a kind of financial Ból an bhóthair.

Of course, what it amounts to is a restructure. And a restructure is a default.

It’s a default. It is. It is.

If we get a lower rate it’s a technical default on sovereign debt. A rose by any other name would smell as sweet.

Which is why the French are making such a fuss.

“France wants to see Ireland increase its corporate tax rate before it will approve an improvement in the terms of the (EU) programme,” a French source told Reuters before Minister of State for European Affairs Lucinda Creighton met her French counterpart.

But Ms Creighton told Reuters that raising the 12.5 per cent tax rate, which has drawn billions of euro in foreign direct investment, much of it from the US, was out of the question.

“To take away one of the really essential pillars of our economic policy, which is critical to achieving growth, would be absolutely counter-productive, not only for Ireland but also for the euro zone and the European Union,” she said.

French president Nicolas Sarkozy has accused Ireland of “fiscal dumping” by using its low headline corporate tax rate to lure foreign investment away from other European countries, even as it sought their aid with its acute debt crisis.

French politicians of both right and left ask why their taxpayers should lend money at a concessionary rate to a country with a higher average income per capita than the French if it is unwilling to raise more revenue from multinational corporations.

As if the issue wasn’t thorny enough, in a stark warning, the president and CEO of the US Chamber of Commerce in Washington DC today said that American companies, which employ well over 100,000 in Ireland, will remain committed to their Irish operations only as long as Ireland remains committed to its economic strengths, especially our low corporate tax rate.

Thomas J Donohue said that “Ireland has rightly said no, we’re not going to squander our most important competitive strengths. This is to your Government’s credit and is a very strong signal to send to the international investment community,” he said. Mr Donoghue said US firms will remain committed to Ireland as long as Ireland remains committed to its economic strengths.

Roger Brownlie for Vistage