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Berlin documents were compiled six weeks BEFORE Budget Day

The documents sent to Germany’s parliamentary committees were compiled by Brussels while Ireland was busy with its election.

Image: Michael Sohn/AP

THE BRIEFING DOCUMENTS circulated to members of Germany’s parliamentary committees earlier this week – which allegedly confirm details of the 2012 Budget – were written six weeks before the Budget was due to be announced, TheJournal.ie can reveal.

It has emerged this morning that the government has lodged a formal complaint with the European Commission over allegations that details of the 2012 and 2013 Budgets have been circulated to the German parliament.

The Bundestag’s budget committee was presented with the plans earlier this week, it was reported yesterday – officially notifying German MPs that Ireland was to raise its higher VAT rate from 21 per cent to 23 per cent on December 6.

TheJournal.ie can confirm, however, that the documents circulated to the German MPs were prepared by the European Commission, seemingly with the input of Ireland’s Department of Finance, late last month.

The documents are dated October 28 – the date on which the votes for the presidential election were counted – and were circulated not just to Germany, but to all European Union finance ministers.

So how did the Budget details end up in Berlin in the first place – and why do Germany’s MPs, some of which aren’t elected by the public, get to hear about our plans before our own TDs – or we, the taxpayers – do?

TheJournal.ie has been in contact with authorities in Dublin, Berlin and Brussels – and here’s what we’ve found out.

Not just German

While the German situation obviously has much to do with the Irish fiscal situation – where the government is completely reliant on emergency funding from Europe and the IMF, which is given subject to terms and conditions – it’s not necessarily a ‘German’ thing.

So any preconception that may be out there – that Germany is given the important data before we are, simply because Germany is the main contributor to Europe’s bailout funds – is not accurate.

The data has, in fact, been shared with all 27 of Europe’s ministers of finance – circulated for their attention and reading ahead of a summit of finance ministers in two weeks’ time.

It’s also not the case that the details were handed over by Enda Kenny to Angela Merkel during his official visit on Wednesday – because we’ve established that the documents circulating in Berlin were prepared several weeks ago.

The fact that Irish budget policies are circulating in Berlin is actually more to do with an unfortunate case of timing.

Stop the clocks

We’ve known for a while now that the 2012 Budget will be announced on December 6 – there is, by now, a long-established tradition that Budgets have always been presented in the first week of December (at least since Charlie McCreevy changed the financial year to coincide with the calendar year).

The timing this year is a little bit awkward, however – because ‘Ecofin’, the European Union’s group of 27 finance ministers, is set to meet the previous week.

While it’s the European Commission – Brussels’ central executive branch – that officially writes the cheques for international bailouts, Ecofin must first meet and agree to sign off on the lending before Brussels can release the cash.

TheJournal.ie understands that a provisional agenda for that meeting – set to take place on November 30, just six days before the Budget is announced – includes a vote to release the next quarterly batch of loans to the Irish government.

The vote is expected to be quite routine, however – so much so, in fact, that the matter is only noted on the agenda as being ‘for adoption’ and not actually for debate. This indicates that the council expects simply to rubberstamp the next round of loans without internal hassle.

Even if the Irish vote is more contentious than anticipated, it’s not likely to be the main talking point – not when that Ecofin meeting will also be hearing from the new finance ministers of Greece and Italy – and possibly Spain – for the first time.

Accounting accountability

So it’s this Ecofin meeting which has to sign off on giving us our loans – and because the meeting is taking place a week before Ireland announces its Budget, it’s realistic to assume that our international paymasters be given details of what will be contained in that Budget.

Put it this way: why would a council of ministers agree to lend Ireland billions of euro when Ireland could announce a completely different Budget the following week, and run the risk of squandering that European money?

The problem now, for the Irish government, is that political reality – and an increasingly hectic European financial calendar – means documents being considered at Ecofin need to be circulated a few weeks in advance of the meeting.

Germany’s finance minister Wolfgang Schauble, therefore, would have been sent a copy of the Ecofin documents – as would every other finance minister on the continent: George Osborne, Francois Baroin, Mario Monti and everyone else.

In Germany’s case, though, the political opposition has been strongly opposed to bailing out ‘weaker’ European countries – which has led to political compromises where parliamentary committees get to make the decision about approving loans to others.

When Ecofin meets in two weeks it won’t be Wolfgang Schauble that’s making the decision – it’ll be the finance and budget committees of the German Bundestag.

And that’s where these documents have ended up. A spokesman for the Bundestag explained yesterday that while the budget committee hadn’t met this week (the Bundestag is on a week-long recess, and nobody is in Berlin) it had received the briefing documents.

Sign-off

The two committees are now expected to meet in the next two weeks to approve Germany’s release of the next round of bailout funds – which are required by Ireland to cover the gap between its spending and its income.

TheJournal.ie understands that German officials did not realise the documents were so sensitive – or that the Irish public had not been privy to their details – before they were circulated to the MPs.

78 of the Bundestag’s 620 members sit on either the budget or finance committees – meaning a substantial chunk of the German parliament has been made privy to the documents.

The Irish government, for its part, insisted last night that the 2 per cent increase of VAT was included in the EU-IMF bailout agreement “for later years”, a fact set out by Michael Noonan two weeks ago.

“The budgetary measures are currently being considered.  No decisions have been taken on budgetary measures,” the department said.

It is implied that the measures in the documents sent to the Ecofin ministers were not final, and that the Irish government had still to reach a final agreement on what measures it would introduce.

Enda Kenny told reporters in Berlin that Michael Noonan was due to present details of the 2012 Budget to the Troika yesterday – perhaps indicating that the final decisions were only to be revealed at that point.

Confusion over how Budget documents ended up in Germany >

Opposition calls on government to explain 2 per cent VAT rise report >

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Gavan Reilly

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