Ireland to hold referendum on EU fiscal treaty | Europe| News and current affairs from around the continent | DW | 06.03.2012
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Europe

Ireland to hold referendum on EU fiscal treaty

Ireland is set to be the first country in the eurozone to let its people vote on the German-backed EU fiscal pact. The latest polls indicate that the treaty will pass, but history shows the government should be cautious.

European leaders signed a German-driven treaty last week (02.03) to enforce greater budget discipline within the bloc. The so-called "fiscal compact" aims to prevent the 17 members of the eurozone from running up huge debts like those which have already forced Greece, Ireland and Portugal to seek international bailouts.

Ireland is set to become the first member of Europe's monetary union to let its people vote on the treaty, which will also be put before the national parliaments. Irish Prime Minister Enda Kenny said he had been advised by his chief legal officer that "on balance" a referendum should be held under the terms of the Irish constitution.

"I am very confident that, when the importance and merits of this treaty are communicated to the Irish people, they will endorse it empathically by voting 'yes' to continued economic stability and recovery," Kenny told Irish lawmakers.

Ireland's Prime Minister leader Enda Kenny

Irish Prime Minister Enda Kenny is confident

Critics of the fiscal treaty argue that it is essentially a political gesture aimed at reassuring taxpayers in Germany, who are concerned that they will have to foot the bill for bailing out other, less disciplined eurozone countries; Europe's largest economy already has budget prudence written into its constitution.

Will history repeat itself?

Ireland has a track record of rejecting EU treaties. The Irish public voted against the Treaty of Nice in 2001, and the Lisbon Treaty in 2008, before approving both in subsequent referenda after obtaining concessions.

An electoral rejection of the fiscal compact could be politically embarrassing for Kenny, who assumed office only a year ago. He was elected with a promise of extracting better terms from Brussels and the European Central Bank on the Irish bailout package.

"I think there is a big risk that the referendum may be defeated, and this would presumably have profound political consequences for Enda Kenny's government and also obvious consequences for the country," Pat Leahy, political editor of the Dublin-based Sunday Business Post, said in an interview with DW.

Opinion polls conducted this weekend indicated that the Irish government should win the referendum. A survey for the Sunday Business Post found that 44 percent of respondents would vote yes, 26 percent would vote no, with another 26 still undecided.

Germany's Chancellor Angela Merkel signs the fiscal compact

The fiscal compact was driven by German Chancellor Angela Merkel

Leahy agreed that the poll showed that support for the treaty was relatively strong at this stage and that those in favor should be "cautiously optimistic." "But our experience of European referendum campaigns here in the past has often been that the campaign starts with strong support for the treaty and is whittled down over the course of the campaign and is finally rejected on polling day."

"There's a long way to go, the debate is only really starting here, and the experience previously has been that people change their minds over the course of the campaign," he added.

Fears for the future

The result of the Irish referendum is unlikely to affect the passage of the fiscal compact, which only needs to be ratified by 12 of the 17 eurozone governments to take effect. But a rejection could damage cohesion at a critical time for the eurozone. And crucially for Ireland, any state that fails to back the pact would lose the right to future bailouts.

The European Union and the International Monetary Fund handed out 85 billion euros ($113 billion) to the Irish government in November, 2010 and there are fears that the Irish may, like Greece, require a second bailout. At the moment, Ireland is on course for recovery, and market sentiment towards the country has improved drastically in the last six months, but Leahy believes the Irish won't want to cut off the option of further assistance:

"The biggest fear in Ireland - and it's probably the strongest card that the government side has in the course of this debate - is that if the treaty is rejected, then … it would cut off Ireland from future recourse to the European Stability Mechanism, the so-called second bailout fund."

EU heads of state pose for a group photo during an EU summit in Brussels, Thursday March 1, 2012.

EU leaders will now put the treaty before their national parliaments

Fiscal compact or 'austerity treaty'?

The "no" camp includes parties from both the hard left and the Catholic right, along with Irish republican party Sinn Fein, which refers to the EU fiscal compact as the "austerity treaty." They will no doubt try to turn the referendum into a vote of confidence on the present government, and to exploit the sense of unease among the Irish public, with the economy still deep in recession and unemployment running at 14 percent.

Shane Ross, an independent lawmaker who is critical of Ireland's bailout terms, argued that a rejection of the fiscal compact was the only was to stop a process that would end in Ireland's surrender of economic decision-making. Ross said the treaty was "a forerunner of further fiscal union down the road" that would set the stage for "greater sacrifices of our independence."

Despite the economic hardship in Ireland, and the humiliation of the EU/IMF bailout, there has been little public display of discontent on Ireland's streets. Pat Leahy attributed this to a number of factors, including the government's attempt to spare public sector workers from the worst of the cuts.

"I think one of the principle reasons why there have been no mass demonstrations against the bailout is that the last government, in a policy continued by the present government, has sought to keep the trade union movement very much on board with its plans," Leahy said.

He added that many people were also pragmatic about the situation in which the country finds itself:

"While a lot of people are unhappy, and a lot of people are feeling the pinch of austerity programs that the government has implemented, many of them don't see a viable alternative. They know that there is a huge current budget deficit in the government's finances, they know that sooner or later that has to be closed, and they don't really see a viable alternative to some period of austerity."

Author: Joanna Impey
Editor: Gabriel Borrud

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