Ireland will hold a public referendum on whether to join the European Union fiscal compact but will not revisit the issue at the polls if voters reject it, says Brendan Howlin, Ireland’s public expenditure minister. Even if the Irish reject the fiscal compact, it will take effect anyway if it gets enough support elsewhere.
Bloomberg reported Tuesday that Howlin said he expected the vote on the compact to be positive, because of what it represents for Ireland. He was quoted saying, “I think there will be a great deal of public support for it because it is an important part of our trajectory for an orderly exit from the support package which we’re on from the EU-IMF.” He added that it will also “ensure that when we return to the markets at the end of next year, there is that insurance there of access to the European Stability Mechanism.”
Nonetheless, the country does not plan to hold another referendum should voters say no. “This is not like other treaties,” Howlin said. “Other treaties required unanimity, so it’s a once-off selection for people to determine if they want to be part of this pact or not. The train is leaving the station, and it’s just a matter of determining how many countries want to be on board.”
The fiscal compact only requires that 12 of the 17 euro zone countries sign on. If Ireland were to reject it, it could cause problems for the country rather than the compact; the lack of access to the European Stability Mechanism could cause complications if Ireland’s economy does not improve and the country needs additional assistance. Ireland got a bailout of 67.5 billion euros ($89 billion) in 2010 when its property bubble collapsed.
Howlin said it was unlikely that Ireland would need further funds. But the former ECB board member Lorenzo Bini Smaghi was quoted in the Financial Times saying Ireland could need an additional 80 billion euros in aid. Howlin disagreed, saying in the Bloomberg report, “We don’t foresee that we will need any second bailout and talk of that, bluntly, is unhelpful.” He added that Ireland’s banks, too, were well capitalized.
Ireland is, however, seeking to win a reduction of the cost of its bank bailout, and if it fails to get it there is a possibility Irish anger could be reflected in the vote, which will be held after the decision on the bailout cost. A firm date has not yet been set for the referendum. However, Howlin said, “We see this as two completely separate and distinct issues. The stability treaty will stand or fall on its own merits and we are advocating people to support it on the basis that it is necessary for Ireland, and the euro zone and our common currency.”