Enda Kenny

Peter Spiegel

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Mr Kenny with Irish president Michael Higgins after formally dissolving parliament Wednesday

To date, no eurozone leader who has guided his country through a bailout has emerged politically unscathed on the other side. Portugal’s Pedro Passos Coelho was deposed as prime minister in November after inconclusive general elections. Earlier last year, Greece’s Antonis Samaras suffered a similar fate at the hands of leftist Alexis Tsipras. And Spain’s Mariano Rajoy is looking increasingly unlikely to win back the premiership in Madrid after informing King Felipe VI this week that his coalition-building efforts were going nowhere. Can Enda Kenny end the losing streak?

The Irish prime minister asked for parliament to be dissolved yesterday, setting the stage for a three-week sprint to election day on February 26. Mr Kenny is already touting his economic record, and to any outsider, that would seem to be enough to put him over the top. Ireland is expected to be the fastest-growing economy in the EU in 2016, which would be the third year running. Its unemployment rate of 8.6 per cent, while still high, is lower than the eurozone average and well below the 14.7 per cent rate when Mr Kenny assumed office in 2011.

Despite that record, opinion polls have stubbornly shown his Fine Gael party unable to get much above 30 per cent, a good-sized decline from the 36 per cent they took in the last general election. More troublingly for Mr Kenny is the demise of his coalition Labour party, which has seen its support cut in half. Without Labour, it’s unclear who Fine Gael would go into coalition with – which could produce a similar result to that faced by Mr Rajoy and Mr Passos Coelho, who emerged from their elections atop the largest party, but one too small to cobble together parliamentary majorities. Read more

Peter Spiegel

Ireland's Enda Kenny, left, and Germany's Angela Merkel meeting last year in Berlin

With just over a month of funding left in Ireland’s €67.5bn three-year bailout, Irish prime minister Enda Kenny sent a subtly-worded letter to his fellow EU leaders as they gathered in Brussels today for their two-day summit.

At first glance, the letter (we’ve posted a copy here) seems to simply repeat messages that Kenny has made in the past: he’s weighing whether to request a line of credit after they exit the bailout; he wants quick completion of the eurozone’s “banking union”; he continues to hit his bailout targets.

But a closer read between the lines shows a more complicated game going on. In essence, Kenny is reminding other leaders they have failed to live up to promises made to Ireland last year that would have significantly lowered the Dublin’s sovereign debt levels. An annotated look at the letter after the jump.

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Peter Spiegel

Ireland's Kenny, right, with European Commission chief Barroso at start of the Irish EU presidency.

Ireland appears to be taking advantage of the comparatively positive sentiment in the eurozone that has marked the start of the year by moving back into the bond markets in a major way.

Last week, Dublin raised €2.5bn by issuing additional five-year government bonds, and then days later was able to convince private investors to buy €1bn in debt it holds in one of the largest banks nationalised at the peak of its banking crisis. This morning, the government was at it again, announcing a €500m auction in short-term t-bills will take place tomorrow.

Despite the winning streak, there’s still a lot of nervousness in official circles about whether Ireland can fully emerge from its bailout when its €67.5bn in rescue loans run out in November. All this has led to a debate in Dublin about whether Ireland should seek additional aid, such as a line of credit from the International Monetary Fund or the EU – which would be backed by the European Central Bank’s new limitless bond-buying programme – to provide a backstop to new Irish bonds.

The Irish website TheStory.ie got its hands on the new European Commission report on the Irish bailout, which makes clear on page 44 that Dublin is in discussions with the troika about whether the ECB’s bond-buying programme – known as Outright Monetary Transactions – can be accessed: Read more