Wednesday

16th Jan 2019

Ireland to hold referendum on fiscal compact

  • Enda Kenny says the Irish people need to be consulted on the fiscal treaty (Photo: Council of European Union)

In a surprise move, the Irish government on Tuesday (28 February) decided to hold a referendum on the new intergovernmental treaty on fiscal discipline demanded by Germany for future eurozone bail-outs.

"The Irish people will be asked for their authorisation in a referendum to ratify the European stability treaty," Prime Minister Enda Kenny told parliament in an unplanned intervention.

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His announcement came after a legal opinion by the country's attorney general which was largely expected to say no referendum would be needed for the ratification of the brief legal text. The new treaty enshrines a 'balanced budget' rule in national legislation and gives the European Court of Justice the right to impose sanctions if the rule is not transposed properly.

The so-called fiscal compact, initially planned to be an amendment to the existing EU treaty, was vetoed by the UK in December, which forced other member states to draft it as a separate intergovernmental act. The Czech Republic also opted out in the end, with a formal signing ceremony at 25 - including Ireland - expected on Friday in Brussels.

"I am very confident that when the importance and merit are communicated to the Irish people that they will endorse it emphatically by voting yes to continuing economic stability and recovery," Kenny said.

EU-related votes have a sorry history in Ireland, where the Lisbon Treaty had to be put twice to a referendum, as voters in first said no to the EU legal text and only reluctantly agreed to it in 2010, amid worsening economic conditions and increased pressure from other member states and the EU commission to approve it.

Even as Ireland is currently being portrayed as a 'role model' for the way it has stuck to the austerity programme linked to the €90 billion bail-out it received at the end of 2010, popular anger is high as people see that the money was mostly used to bail out banks, not to create more employment and growth.

A Yes vote seems unlikely, especially since other euro-countries do not rely on Ireland to allow for the treaty to come into force.

A minimum of 12 out of eurozone's 17 member states have to ratify the text for it to come into force.

But if Ireland does not ratify the treaty, it will no longer be eligible for future bail-outs from the European Stability Mechanism - a permanent, €500 billion-strong fund to be set up in July.

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The drafters of the fiscal discipline treaty tried to ensure it would not trigger an Irish referendum but a fact beyond their control - that it was outside EU structures - means Irish people will get to vote on it.

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Opinion

Fiscal discipline rules in eurozone are devastating

New rules are needed that do not place the heaviest burdens on a few countries, but ensure that all countries benefit from the euro. Avoiding imbalances in trade between countries can do this.

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