Ross: Ask for debt reduction in return for passing treaty

Tuesday, February 28, 2012 - 07:10 PM

Ireland is to hold a referendum on whether to support strict new European fiscal rules and Independent TD Shane Ross has challenged the Taoiseach to ask for a debt write-down from Europe.

Taoiseach Enda Kenny said ratification of the contentious fiscal compact, which provides access to future bailout funds and enforces sanctions, is in the national interest.

“In this referendum, the Irish people can confirm our commitment to responsible budgeting and, in doing so, ensure that the reckless economic mismanagement that drove our country to the brink of bankruptcy will not be repeated by any future government,” he said.

The Government has yet to announce a date for the vote.

Mr Ross said the Taoiseach should ask for a reduction in Ireland's debt from Europe if the public accepts the new rules.

“What the Government should say is this: ’We promise the people that if they pass this, the debt will be reduced’.

“That’s the demand that should have been made in Europe before we signed up for this deal – that there will be a write-off for the Irish people as a minimum quid pro quo for this treaty which he is signing.”

The plan, known as a compact as it is backed by 25 of the 27 European Union states, is designed to prevent a repeat of the Greek debt crisis and contagion and prevent the potential collapse of the euro.

Most of the initiatives are already contained in EU law – sanctions for failing to abide by budget rules and a so-called debt brake to control public borrowing. The plan is regarded as a return to the original single currency rules to maintain financial harmony in the eurozone.

Asked what David Cameron thought of the referendum, the UK Prime Minister’s official spokesman said: “It is a judgment they have made based on the constitution of that country and their assessment of it, so it is a matter for them.”

The PM’s spokesman said the decision to go to the polls did not come as a surprise.

The agreement must be in force by January 2013 and will take effect once it is ratified by 12 of the 17 eurozone countries, regardless how the Irish electorate votes.

Mr Kenny will sign the fiscal compact at a summit of European leaders in Brussels on Friday, paving the way for it to be published and a referendum date set.

Irish voters cannot prevent the strict budget controls coming into force and a “No” vote would only leave the country unable to access future bailout pots under the European Stability Mechanism.

A referendum was called following legal advice from Attorney General Maire Whelan. A Government spokesman said there is no precedent for publishing the AG’s legal advice.

Fianna Fáil’s Micheal Martin said the Government should never have questioned the importance of holding a referendum.

“How can you honestly expect the people to be happy with a situation where a treaty is important enough to save the euro, but not important enough for them to have a say?” he asked.

Sinn Féin, which has successfully campaigned for “No” votes against European treaties, said the new rules are austerity measures designed to make the public pay for the mistakes of greedy bankers.

“It will not help to regenerate the economy,” party president Gerry Adams said.

“On the contrary, it will condemn the people here, particularly those people in lower and mid-income brackets, to this Government’s terrible policy of austerity.”

Under normal circumstances, legislation would be brought before the Dáil and Environment Minister Phil Hogan would order a Referendum Commission to publicly explain the issues and encourage voter turnout. The referendum bill will be drafted after this Friday’s summit.

While there is no obligation on the Government to establish such a body, the Taoiseach said the special advisory team will be established in coming weeks.

There is no set timeframe for a referendum but most recently – in one of the shortest run-in periods – the proposed legislation on Oireachtas (parliamentary) inquiries was only finalised five weeks before a referendum was held on it, at the same time as last year’s presidential election.

The Republic, which has a mixed record when it comes to referendums on Europe, will be the only EU state to vote.

On several occasions over the past decade, voters have been asked to return to the polls to vote on a treaty after initially refusing their support.

Voters rejected the Nice Treaty in a referendum in June 2001, but at the second time of asking the following year – with a bigger turnout – the deal was passed.

When the Lisbon Treaty was first put to the electorate in summer 2008, it was also rejected but again, on the second time of asking just over a year later, it passed. The Government claimed it had secured guarantees on contentious issues including corporation tax rates, neutrality and abortion.

Eurosceptics are likely to seize upon Ireland’s €70bn bank rescue, the European and International Monetary Fund €85bn bailout, 14% unemployment and austerity to call for a “No” vote.

Mr Adams, whose colleagues successfully supported “No” votes in Nice I and Lisbon I, said: “The question is whether the Government will accept the outcome.”Home