Ireland says 'yes' to fiscal treaty in referendum
by Daniel Mason
European politicians have welcomed the 'yes' vote in Ireland's referendum on the fiscal treaty, saying it showed the country's "commitment" to Europe and that it had "taken its responsibilities seriously". Turnout during yesterday's vote was low but 60.3 per cent of people said 'yes' to ratification. The government, mainstream political parties and business leaders were among those who campaigned for a positive vote and in the end 38 of the country's 43 constituencies voted in favour of the treaty. Herman Van Rompuy, president of the European Council, said the Irish people had "given their endorsement and commitment to European integration", adding: "This result is an important step towards recovery and stability."
European Commission president JosÚ Manuel Barroso said the treaty was a "key component" of the European Union's response to the crisis and "restoring sustainability to public finances" remained a key objective. He said: "I know that many voiced their concerns about the need for growth during the campaign. The commission believes that stability and growth go together and that we cannot have one without the other." The treaty, agreed by all members of the EU except for the United Kingdom and the Czech Republic, imposes strict limits on debts and deficits in national law and has been strongly pushed by German chancellor Angela Merkel. If it had rejected the so-called fiscal compact, Ireland – already bailed-out to the tune of €85bn by the EU and International Monetary Fund and implementing tough austerity measures in return – would have lost access to the new eurozone rescue fund, the European Stability Mechanism.
Senior members of the European Parliament, on both the right and the left, moved quickly to welcome the outcome. Martin Schulz, the parliament's president, said: "The 'yes' vote sends an important signal of Ireland's commitment to the eurozone and to the EU more broadly. Yet, we must also listen to the concerns of those who voted 'no'. The EU is based in the principles of solidarity and responsibility, and the fiscal compact is part of that." He praised the Irish people and authorities for their "extraordinary capacity to deal with the difficult circumstances of the economic crisis", adding: "The Irish people have had to endure a number of very tough years and they still have some difficult budgets ahead. They need to have some cause for hope for the future."
"The citizens of Ireland have reaffirmed their commitment to a strong, unified Europe," said Joseph Daul, chairman of the centre-right European People's Party. "With a majority voting in favour of ratifying the treaty, they have said yes to stability, yes to debt reduction and yes to economic growth." He added that the result could act as a "significant confidence boost for Europe" by reassuring investors and policy-makers, and congratulated the Irish prime minister, Enda Kenny, for an "honourable and successful referendum campaign".
The leader of the Socialists and Democrats group, Hannes Swoboda, said the Irish had "taken their responsibilities towards Europe seriously while under strong pressure from the markets". However, echoing calls made by new French president Francois Hollande, he insisted that the fiscal treaty should be accompanied by a growth pact. "While the eurozone is facing recession and a record level of unemployment, we need investment to boost job creation across Europe." He said austerity had "led the EU on the wrong path" and expected leaders gathering for a summit this month to "change the direction of Europe towards more growth and employment".
Guy Verhofstadt, leader of the Alliance of Liberals and Democrats, said the Irish needed to be "reassured" that accepting the treaty would lead to economic growth. "Voting yes in this referendum was the right way forward and Ireland will see the benefits once the full effect of the corrective provisions of the new treaty will come into play." The treaty will come into effect when 12 of the 17 euro area countries complete the ratification process.
The positive message a 'yes' vote sent to markets meant the ratification of the treaty would be "good news for the future of the country", said IHS Global Insight's principal economist for Ireland, Sonia Pangusion. "Ireland's citizens have become progressively unhappier with the way the austerity measures are undermining their incomes, and apathy about the euro project has clearly risen, judging by the low turnout," she said. "Nevertheless, they appear to have understood that this was the best option of for the future of the country, mainly because the ratification of the treaty would maximise the funding options of the country in the future."
But, she warned that the country's problems were "far from over", with concerns remaining about how Ireland will fund basic services after its EU and IMF bail-out finishes at the end of 2013. "The shortfall in 2014 alone is estimated to be €18bn. Where will them money come from? The Irish government plans to start tapping longer-term market funding again in 2013. However, the continuation and worsening of the Greek saga and banking woes in Spain are lowering the probability of such an event." Noting that Ireland had made "significant progress" on fiscal consolidation and that it was an "unfavourable external environment" that could cause problems, she added: "The higher the probability of Greece leaving the euro, the higher the probability of Ireland having to ask for a second bail-out."
Good by Ireland. You have been bought and payed for.
green hackle - London, UK