Minister: No EU ‘yes’ vote without debt deal

A HIGH-STAKES diplomatic poker game between Dublin and the EU began last night as a minister warned Ireland needed a better bailout deal if it was to pass another referendum on Europe.

Junior Finance Minister Brian Hayes insisted the country would need a “significant reduction” in its debt burden before voters would endorse the new EU fiscal union in any poll.

“The idea that we could have a referendum without that agreement, on a substantial rearranging of our debt, wouldn’t fly,” he said.

“We would have to have that in place before we put the question, and that’s beginning to be understood at an EU level, which puts us in a stronger position.

“I think people would need to see there is a pathway out of the current difficulties that we are in, and a pathway to a more sustainable level of debt and a more positive view on investment. I think, if we can argue that position, people will back us,” Mr Hayes said.

Such a move would see Ireland repay some debt over a longer period, with lower interest rates.

Initial reaction to the idea from Brussels was hostile, while opposition parties in the Dáil said the move indicated a lack of Government strategy.

Influential German MEP Elmar Brok said the debt arrangements could not be linked to the proposed new fiscal union.

“This is a deal now and you cannot mix it up with other deals again.

“If everyone might make a condition then nothing would happen,” he said.

Sinn Féin warned that any new EU vote would still be rejected regardless of any “sweeteners” Brussels offers, while Fianna Fáil expressed concern that the Government had not made enough headway at EU level to forward Ireland’s position.

Final details of the new inter-governmental treaty between all EU states, with the exception of Britain, will emerge in March when the attorney general will have to rule whether the measures demand endorsement in a referendum.

While achieving a “yes” vote could provide a major headache for the Coalition, the threat of a “no” result holding up Europe’s attempts to address the single currency crisis could be Ireland’s best chance of squeezing better terms out of Brussels.

EU chiefs have already tried to neutralise an Irish “no” by stating that as long as a majority of the 17 eurozone states ratified the agreement, it would come into force for those countries that wanted it.

The European Central Bank has already refused Finance Minister Michael Noonan permission to “burn” senior bondholders at Anglo.

Taoiseach Enda Kenny used the last European crisis summit to plead for Ireland to be given a better deal on the money it owes after bailing out the banks, as this prevented a bigger crisis across the EU.

Mr Hayes said that the EU must recognise that Ireland needed a new deal.

“We’re going to pay back our debts — that’s a very important message. But we want a longer period of time to do it, to refloat the economy, and to get growth of 2%-3% a year,” he said.