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Brian Cowen had a hard time at the EU summit

Brian Cowen had a hard time at the EU summit

Thierry Charlier

Brian Cowen had a hard time at the EU summit

The EU summit the other week did not go well. Should we be glad or should we be sorry?

By all accounts, Brian Cowen had a torrid time for a second summit in a row. Some will be glad about that, and others sorry. But, since the heat was on corporation tax, most will be worried.

One is also told Mr Cowen gave as good as he got. Even if he were staying around, though, being tough is not be enough. It won't be for his successor either. He will have to be smart as well as tough, but opportunities may present themselves. Last week's mini-summit between France, Germany and Poland apparently didn't go well either. The Poles don't like some of the proposals for saving the euro.

You may not realise - because it is so silly - that it is compulsory to join the euro once the entry conditions have been met. Special permission is needed to stay out like Britain, Denmark and Sweden.

Not surprisingly, the Poles are having second thoughts about the euro.

Perhaps we should be glad about these EU difficulties. They may postpone or dilute tough new fiscal rules and oversight. The debt proposals, for instance, have not perhaps received enough attention.

On the most optimistic scenarios, they would require Ireland to run a budget surplus of 2% of GDP a year for 20 years, to get the debt back to 60% of GDP. There would be no sitting back and easing off, even if a surplus is achieved by 2015. Only another 19 years to go.

Then there is the great big elephant of corporation tax. So far, this is proving as difficult as ever for the harmonisers. The eastern Europeans still do not like the idea of harmonised rates. The British do not like the erosion of national tax sovereignty.

The Commission's idea of calculating the basis for corporation tax the same way in each state, even though they could have different rates, is fraught with practical obstacles.

Perhaps, then, Europe's difficulties are Ireland's opportunities?

I would not like to go that far. A European deal would seem to offer the only chance of a restructuring of Irish and Greek debt which does not threaten a new, and perhaps worse, financial and economic crisis.

It will also be required if there is to be any chance of a lower interest rate premium on the rescue funds for Ireland. Indeed, if EU leaders really cannot rise to this challenge, there may not be any EU funding after 2013.

If the Irish Government agrees that a deal is better than no deal, it'll have to box clever.

Public arguments against harmonising corporation rates, or even the tax base, have considerable force and must continue to be made. But one hopes there are private studies ready for the new government about how much, if anything, could be traded without real harm being done.

We have other things to trade. Inflation-linked wages are an abomination, especially in an economy as susceptible to foreign inflation as ours. We could live with a common EU retirement age too.

There are those, of course, who take the opposite view. If the EU is going to falter at this fence, bring it on, they say. We will then be free to cancel our debts, burn our bondholders and start all over again. Which view you take depends on how much self-confidence you have.