‘IT IS SIMPLY fair to say we can only give our commitment when we get something in return,” German chancellor Angela Merkel bluntly told journalists at the end of the EU summit early on Saturday morning. The quid pro quo: Ireland embraces a common consolidated corporate tax base (CCCTB) in exchange for German support for a cut in the interest rate on our bailout – a full 1 per cent was on offer to Greece and Ireland. For new Taoiseach Enda Kenny it was a case of being thrown in the deep end of European politics to face bruising head-on encounters both with Dr Merkel and French president Nicolas Sarkozy on a matter of huge strategic interest to Ireland. Greece accepted the offer, but the terms were not on for Ireland and Mr Kenny rightly held the line, for now. He is being asked to reconsider for the summit on March 24th.

Mr Kenny’s battle with the big beasts of the European Council was, in truth, a sideshow in the broader discussions about strengthening and expanding the effective lending capacity to €500 billion of the euro zone rescue fund. Germany has made its support for that conditional on a package of measures to strengthen the economic pillar of monetary union, what Dr Merkel and Mr Sarkozy have called a Pact for the Euro, characterised as making euro states more like responsible Germany, a political imperative for the chancellor.

Euro group leaders agreed in principle to the pact. It provides for a number of policy guidelines or benchmarking on areas ranging from, among others, pensions and wages, whose precise shape will be fixed nationally but which will be monitored annually by the euro group.

They have also agreed to require members to write into national law constraints on debt and government deficits, specifically the terms of the existing Stability and Growth Pact, a limit of 3 per cent of GDP on budget deficits and 60 per cent of GDP on public debt. “Member states will retain the choice of the specific national legal vehicle to be used,” the leaders’ conclusions say. So an Irish constitutional referendum will not be necessary.

Euro zone finance ministers will also return tomorrow to work on a deal on economic governance rules.

From an Irish perspective, the continued pressure not only on CCCTB but the corporate tax rate itself – a line that cannot be crossed – is deeply worrying. Mr Sarkozy made clear that “we’re not asking Ireland to put up their corporate taxes to the European average but to make some effort”. In reality, of course, he is less concerned about Irish revenues than with the drain on French tax revenue which healthy tax competition facilitates.

There are those, however, who are beginning to suggest an Irish fall-back position on the CCCTB – that what may matter more than the principle is the structure of a CCCTB regime, specifically the mechanism for apportionment of taxes raised in states where multinationals book their profits. In truth, with Ireland desperate to see its interest rate cut and likely when new bank stress tests are published to need further assistance in recapitalisation, Mr Kenny has a very weak hand. His trump veto is simply unplayable.