EU to Ireland: your referendum won't stop EU financial treaty

Despite German anger at Ireland's decision to hold a referendum on the European Union financial treaty, Europe will go ahead – with or without Ireland.

Dublin's snap decision to hold a referendum on the eurozone "fiscal compact" will have no impact on the plans, regardless of the outcome, politicians have insisted.

Yesterday's decision to greenlight a public referendum was taken on advice from Ireland's top legal official, attorney general Máire Whelan, who said that "on balance" a public vote was demanded by the Constitution.

Many in Ireland's governing coalition, nervous about the possibility of a rejection, sought to avoid a referendum – with some support from the EU. Prime Minster Enda Kenny said passing the treaty was in Ireland's national interest and that he was "very confident" of a yes vote. 

The compact imposes stringent budget controls on eurozone members, requiring that structural deficits not exceed 0.5 percent of GDP and that debt-to-GDP ratios be lowered to 60 percent and be kept at or below that level. Countries that run up excessive deficits will be subject to direct EU intervention in their economic policies and action can be taken against them in the European Court of Justice.

German news media today thundered about Ireland's decision.

Der Spiegel complained "the new architecture of the euro is threatened by a birth defect," while the Süddeutsch Zeitung warned "the outcome will have a much greater impact on Ireland than it will on the euro community."

Gerry Feehily, English-language editor at Paris-based PressEurop - himself Irish - says the German press's response mirrors wider fears across Europe, including in France, where an election is due in April.

"French president Nicolas Sarkozy for one would prefer this hadn't happened as he faces into a presidential election campaign," he says.

Mr. Feehily says the shockwaves sent out by the Irish decision are unrelated to whether or not Ireland itself plays ball. "It sets a precedent that austerity policies have to be put before the people, not just in Ireland," he says.

History of rejection

Ireland has twice previously rejected EU treaties — but this time is different as Irish rejection alone cannot scupper the deal.

In December 2011, Britain vetoed a full-fledged EU treaty, resulting in the creation of the intergovernmental "fiscal compact" that will be signed into law once it is ratified by 12 of the 17 eurozone members. A traditional EU treaty requires unanimous ratification by all 27 EU member states.

Should Ireland - or any other country - fail to ratify the compact, it will be excluded from any future funding from the European Stability Mechanism, the new permanent EU bailout fund. The Irish Times today reported that Michael Meister, budget and finance spokesman for Germany's ruling Christian Democratic Union said: "Whoever doesn't accept the treaty has no protection from the ESM bailout fund."

Opportunity to demand concessions

The uncertainty presents Ireland with the opportunity to demand concessions from the EU on debt repayments in order to ensure that the public approves the treaty, which the EU is desperate to see passed.  

Speaking in parliament yesterday, Prime Minister Kenny sought to put a positive spin on the move, saying the vote would cement Ireland's place in the eurozone.

1 | 2

Next