Europe fears decision will open ‘a Pandora’s box’

Ireland’s decision to hold a referendum was greeted with disbelief and dread in the EU among politicians and public servants, with the greatest fear being that it will open a Pandora’s box of other countries seeking a vote also.

Fears were voiced by some of the possible impact on Ireland’s economy and that it was unlikely that Germany in particular would agree to a deal over the Anglo promissory notes before the vote.

Officially, the only response from the EU was that each country must ratify the treaty according to its own rules.

The Taoiseach will formally sign the document on Friday in Brussels where he will attend a two-day summit, dedicated to expanding the EU’s bailout fund to at least €750bn, and discussing ways to hasten growth and create jobs.

After that, the 25 countries that are signing will have until the end of the year to ratify the treaty. However, from March next year, any country that has not implemented it and its debt break will not be able to avail of funding from the new ESM rescue fund.

The treaty only needs 12 countries to ratify it for it come into force. One commentator said, “Ireland is not essential to this”, as it was expected that at least a dozen countries would ratify it quickly.

However, countries including the Netherlands, Austria, Slovakia and Slovenia may now face strong demands for, if not a referendum, then a robust debate and vote on the compact in parliament.

“This could open up a Pandora’s box especially in the Dutch parliament,” said Piotr Kaczynski, EU expert with the Centre for European Policy Studies.

Economist Sony Kapoor of the Re-Define think tank said he believed markets would react negatively to a rejection of the treaty but the extent of this would depend on whether a way was found to continue lending to Ireland, contrary to the treaty.

“But there is no way the EU will agree to move on the promissory notes unless the referendum adopts the treaty and I expect Ireland will use the pending vote to bargain for a cut in interest rates, to extend the liquidity to the banks and the promissory notes,” he said.

The vote will also create a headache for Nicolas Sarkozy, the French president, who hoped to have the treaty ratified before he runs for re-election at the end of April. Now the treaty, which is not popular in France, will likely be one of the main issues he faces in his campaign.

German politicians’ initial reaction has been pessimism, believing the Irish will reject the treaty as they did with the first votes on Nice and Lisbon. Ordinary citizens are expected to welcome the Irish vote as a possibility that it will put a stop to what they see as German taxpayers bailing out profligate countries.

Greeks were happy with the Irish decision. “We were denied a referendum and what is happening us is terrible, so we are happy that some citizens, somewhere are able to vote on this,” said one Greek source.

Fine Gael MEP Jim Higgins said it was important the referendum debate focuses on the fact that the economic problems arise from the previous government’s mismanagement. “The reality is that without the intervention of the EU and the Troika there would have been a total economic collapse in Ireland”.

British Tory MEPs and eurosceptics in the European Parliament welcomed the Government’s decision.

Martin Callanan of the European Conservatives and Reformists said: “A nation’s economic destiny should be determined by the people through a ballot box, not political elites in a room in Brussels”.