Warm start turns chilly as Kenny's golf chatter hints at new hardball approach

THE TAOISEACH’S first official visit to Germany began well, on a sunny if chilly Berlin morning.

“Enda!” cried Chancellor Angela Merkel, in a blazer of Milk Tray mauve, by way of greeting.

She had Enda Kenny chuckling within seconds as they strode down the red carpet before the chancellery. After sprightly renditions of the two national anthems, all seemed well as they headed inside for lunch.

So did something happen between the cod starter, the roast chicken main course and the crema catalana dessert? At the press conference Mr Kenny hit all the right notes: determination to repay loans and boost competitiveness, an iron will to control future borrowing and return to financial markets by the end of next year.

But soon the German leader began to look impatient. She picked at her nails, her eyes narrowed, her frown deepened. Mr Kenny had entered choppy waters.

“Ireland has always complied with the conditions of membership, we’ve never broken stability and growth pact rules,” he said, leaving unspoken that Germany has. “If it was not for the prerequisite to recapitalise the banks we would be below the EU average debt-to-GDP ratio.” The press conference ended soon after that with a smile and handshake for the cameras. But where was the warmth? The word was that hopes of a gesture from Berlin on the principle of flexibility in implementing the EU-IMF programme had not emerged.

And the strategy now? “Hardball,” said one Irish delegation member.

Mr Kenny moved on to a speech at the Konrad Adenauer Foundation, boiling down Ireland’s economic mess for the invited audience.

“People lost the run of themselves and borrowed money way beyond their means and put it into property,” he said. “Irish banks borrowed euro freely from other European markets and made foolish lending decisions into a property bubble which in time became the source of tax revenue for foolish spending commitments.”

His promise was clear: “We will pay our debts and we will pay them in full. But we need further encouragement and assistance in getting the debt burden down.”

Eventually, Mr Kenny returned to the chicken and egg problem facing the EU. For Berlin, tighter budgetary oversight to prevent a second crisis is the best way to calm investors. For Dublin, promises of EFSF reform have amounted to nothing so far while the danger of contagion grows by the day. The ECB is the last resort against financial panic.

“I recognise of course the very divergent views about this within the European Union,” said Mr Kenny.

German finance minister Wolfgang Schäuble listened impassively beside him, betraying nothing as the Irish visitor took issue with Berlin’s proposal for an EU or, failing that, euro zone financial transaction tax.

“We couldn’t have a situation where we have a transaction tax in Ireland and not in London,” said Mr Kenny. “That would put us at a severe disadvantage.” After recalling his first visit to a still divided Berlin in 1979, Mr Kenny remarked that his son was now learning German. His first observation after returning home from a language exchange to Germany? “The Germans do and think things differently.” With differing views on bailout reform, treaty change and a financial transaction tax – it was the understatement of the day.

“The point we are making is that this is a crisis of the now and we need to address that,” said an Irish official, insisting there was no rift. “There was a position before we arrived on treaty change and nothing has changed now that wasn’t the case before we came here.”

Rounding out this robust exchange of views, Mr Kenny recalled getting into difficulties during a round of golf against the German pro Bernhard Langer.

“I needed a little encouragement and support . . . and Bernhard said to me: ‘You can do this, I’ll show you’,” said Mr Kenny. “So he dropped a ball and showed me what should be done and, Wolfgang, by the grace of God almighty, he directed my ball where it should go. So I want to work with you and the chancellor and our friends in Germany as we face a difficult situation, from out of which I know we can emerge successfully.”