Ireland’s referendum on the fiscal pact
Amidst all the grim news concerning prospects of Greece leaving the euro zone and Spain requiring an unprecedentedly large bailout, Ireland’s referendum last week might have seemed a rare bit of good news for the EU. Irish voters went to the polls to decide whether or not the country would accept the EU’s fiscal pact, which would give the European Commission greater authority to monitor member states’ finances and impose penalties on countries that allowed their budget deficits to grow too large. Ireland is the only EU member state to hold a referendum on the issue. Despite most pre-election polls showing that the “Yes” vote would carry the day, there was a bit of suspense, considering that Irish voters have twice rejected EU-sponsored treaties within the last decade. A rejection would likely not have killed the pact. Because of past referenda rejections over EU issues in Ireland and other countries, the agreement is designed to take effect after 12 countries ratify it, thus removing the need for unanimous consent. Nevertheless, it would have dealt a symbolic blow to the pact.
In the end, just over 60% of voters approved the treaty, with just under 40% opposed. The relatively convincing margin raises a couple of interesting questions. For one, why did so many vote “Yes,” considering the tendency of Irish voters to reject EU plans in past referenda? Second, it is interesting to compare the Irish referendum with the recent Greek election, in which avowedly anti-austerity parties won a plurality of votes. A couple of factors seem to have played a role in making the referendum a runaway (although one should hesitate to interpret the vote as a sign of overwhelming support for the treaty, considering that turnout was just barely over 50%).
First, unlike the Irish referendum on the Lisbon Treaty in 2008, the campaign prior to this referendum did not contain any “red herring” issues. Many blamed the rejection of Lisbon (it was later ratified by Irish voters in a second referendum) on several wedge issues, such as abortion, Ireland’s neutrality policy, and others topics that opponents raised even though they bore little connection to the content of the proposed treaty. Voters seemed to have a good understanding that the fiscal pact, like it or not, touched only on economic and financial issues. Second, voters may have been persuaded by Irish Prime Minister Enda Kenny’s warnings that a “No” vote would damage the country’s economy and make borrowing more expensive. He also warned that Ireland might lose access to the European Stability Mechanism, the proposed permanent bailout fund.
The contrast with Greece is instructive. In a recent Pew study, 78% of surveyed Greeks expressed opposition to further EU oversight of national budgets, making Greeks, along with Brits, the most opposed to the idea of all the surveyed nationalities. Then there was the Greek legislative election, which imperiled Greece’s very future in the euro zone and the EU. Ireland, in contrast, has liked to see itself as the one country among the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) that has most studiously implemented the advice of the IMF and European Central Bank and is furthest along the road to recovery. The establishment parties urged a “Yes” vote as the best means to ensure Ireland’s continuing economic recovery.
In an editorial for The Irish Times, Fintan O’Toole casts skepticism on this line of reasoning, portraying the “Yes” vote as “an expression of grim fatalism.” He sees contradictions in the notions that Ireland is on the road to recovery but that it very possibly might need access to a second bailout, access that might be denied in the instance of a “No” vote. Why would the country need an additional bailout if it is on the right track, the reasoning goes? And despite the outcome of the vote, Sinn Fein seems to have reaped the rewards of its stance as the only major party to oppose the pact and the larger pro-austerity agenda. Various polls have shown the party’s popularity to be at an all-time high, and a new generation of leaders has helped the party expand its constituency. It was among this constituency, particularly in working class neighborhoods in Dublin, that the “No” campaign had its greatest success, with some neighborhoods rejecting it up to 90%.
In any case, whatever solace the EU’s beleaguered leaders took from the Ireland vote quickly dissipated as news turned back to Greece and Spain. Whether or not the fiscal pact will be sufficient to bring about the sort of economic remedy the euro zone requires, however, it is one step closer to ratification.