"The European Union is a unique economic and political partnership between 27 European countries.
It has delivered half a century of peace, stability, and prosperity, helped raise living standards, launched a single European currency, and is progressively building a single Europe-wide market in which people, goods, services, and capital move among Member States as freely as within one country".
The above is how the European Union website describes what the EU is.
What we have seen from French petulance over the last few months is that even people as Pro-EU as myself have begun questioning the actual European situation. The European ideal is very hard to argue against except for those who would be ultra-nationalist. Co-operation, peace and raising living standards is obviously a noble cause however, is this still the European aim of today?
What the French have shown, is that unlike the pragmatic and somewhat more realistic Germans, they will continue to "whinge and bitch" (excuse the term), much like a parent trying to cajole their children into action by making them so sick of listening to them that they eventually do it to "shut them up".
This hasn't worked, mainly because it is one promise that the new Irish Government cannot break. France has now moved into threatening Ireland with using their Veto to stop a reduction in the interest rates that must be paid on the bailout loans which will not only hurt Ireland but this in effect will also hurt France and the rest of Europe (Ireland stays poorer for longer, unable to pay for European imports, another loan maybe needed etc etc etc). Also, the fact that France are the only country set to Veto us it isn't very in keeping with the "Political Partnership" set out in the above EU mission Statement.
So, when judgement day passes, and we are stuck with our punitive interest rates where do we go?
Well I for one believe the French are being extreemly hypocritical. With their effective rate being lower than ours anyway (8.2% Vs 11.9%).
This means that there are 12 countries with a lower effective corporate tax than Ireland (Including France).
They want Ireland to raise its corporate tax rate - the main way it attracts companies to Ireland. With an unemployment rate of 14.7% I really don't think that it is an avenue that Ireland should go down. France is only slightly better off with a rate of 9.4% (Not a nice number but better than Ireland all the same). Sarkozy, is trying to pit some of Frances problems on Ireland and because France/Sarko cannot be wrong, everyone else is responsible for their economic problems. This attitude is of course totally understandable for a President with an election coming up, in extreemly difficult economic circumstances and a massive case of small man syndrome. He has made Irelands corporate rate of tax his "Maginot Line" so to speak, he will not yield and we will not pass.
However, France have once again left their flank open..... Ireland will not increase its Corporate tax rate but it does have the option of lowering it. This is of course a little risky from the point of view of the Global recession as:
1) Companies may not be as quick to move in to Ireland as they once were.
2) The word "Default" hangs over Ireland in flashy bright lights.
3) Ireland needs every bit of revenue it can get at the moment, lowering taxes for corporate business may not help balance the books in the short term.
4) Socially in Ireland it my not go down well with the people who have already seen social payments hit the deck.
It would indeed be a courageous move.
Apart from being courageous, there are other reasons as to why Ireland shouldn't lower their corporate tax rate, I suppose a sense of loyalty to Europe and the fact that they do actually believe in the European Ideal. However, between the Punitive Inflation rates, the pressure coming from France should they really keep listening to Europe or feel like they owe the European project anything?
On the jobs front, this week hasn't been that bad for Ireland. Zynga (based in the US), Teleflex Medical (US), Dell (US), Mycroft (US) and Southwestern (Irish) all announcing extra job creating. What I notice however is a distinct lack of European involvement on the job creation front.
With Obama telling Ireland during his visit that it has to get out of this mess by itself through hard work etc, and Europe playing hard ball it looks like Ireland is heading to a place where it hasn't been in a long time... between a rock and a hard place, without money, and very much on its own.
