Ireland to vote on European Fiscal Compact
On May 31 Irish citizens will vote on whether to ratify the European Fiscal Compact. The document, formally called the “Treaty on stability, coordination and governance in the Economic and Monetary Union”, has already been signed by Ireland and all other members of the EU except the UK and the Czech Republic, but will need to be ratified by the parliaments of at least 12 signatories to come into effect.
Opinion polls in Ireland have tended to show a large minority of the population in favour of the treaty, with fewer opposed and a significant number undecided.
Among other provisions, the compact sets out a commitment for governments to maintain their budgets in balance or surplus. This has led to the compact being described as “the Austerity Treaty” by the Irish anti-ratification campaign, spearheaded by Gerry Adams, head of left-wing party Sinn Féin, the fourth largest party in Ireland’s lower house. Éamon Ó Cuív, of Fianna Fáil, Ireland’s centrist third largest party, stood down in protest against his party’s pro-treaty stance.
Meanwhile, Fine Gael, Ireland’s centre-right ruling party, and its left-wing coalition partners the Labour Party, are running a pro-treaty campaign, stressing the risk that a withdrawal of bail-out funds would pose, in a country which is still in recovery from the effects of the 2008 crisis.
An Irish no vote is unlikely to threaten the status of the compact, which will come into force when it is ratified by 12 signatories, whatever the results of the referendum. However, according to one of the recitals at the beginning of the text, a no vote could cut Ireland off from future bailouts by the European Stability Mechanism, the Eurozone’s future bailout fund. This precondition, which was absent from earlier draughts, is believed to have been insisted upon by Germany. The compact also allows the EU Court of Justice to fine countries up to 0.1% of GDP if they fail to apply it once ratified.
Although the Irish vote is not key to the success of the compact, it places the Irish population in the position of choosing whether to commit to unpopular austerity measures, or to face an on-going Eurozone crisis without the safety net of the ESM.