Warnings of EU isolation if treaty vote fails

Taoiseach Enda Kenny faces a conflict with Joan Burton after he insisted voters would not be bribed into voting for the fiscal treaty in exchange for cuts to the Irish debt.

Ms Burton, the social protection minister, had claimed Ireland needed “relief” from some of its Anglo debt burden.

Finance Minister Michael Noonan warned that a no vote would isolate Ireland within the eurozone and leave the country without access to EU funds when it returns to the markets.

The referendum will not stall the work on agreeing a long-term cheap loan from the EU’s bailout fund to pay off the €32bn of Anglo Irish Bank promissory notes, the Taoiseach and Mr Noonan insisted.

Negotiations on the loan were “making progress”, according to Mr Noonan.

Germany said it would not discuss this until the second Greek bailout was concluded, which should happen next week. EU sources said if the details were agreed with the ECB, EU leaders could agree on it later.

Mr Kenny said: “The work the troika undertook to initiate is still ongoing, these are entirely separate matters — in other words, the Irish people are not going to be bribed by anybody.”

He said he wanted to discuss the treaty with the Irish people, “so everybody understands just how important their decision is in regards to Ireland’s future and our people’s future. That is what it is about”.

Agriculture Minister Simon Coveney said Ireland was in no position to “put a gun to anybody’s head” and demand sweeteners for a yes vote. He acknowledged that a cheaper deal could help to secure a yes vote, but stressed that the two are separate issues.

Ms Burton told the Financial Times: “People have made enormous sacrifices in terms of austerity ... Relief in relation to the promissory notes would underline and emphasise once again the solidarity that Ireland has received from the eurozone.”

While countries were taken by surprise by the Irish referendum decision, Mr Kenny received a warm reception at the EU summit in Brussels, though he described as “unhelpful” the leak by German parliament members of a European Commission document about Ireland’s progress.

The report warned that if growth slowed or tax revenue dropped, they might need to make bigger cuts to keep the budget deficit to 8.6% of GDP this year.

Mr Noonan appeared to rule out a mini-budget, saying: “All the authorities have agreed that we will achieve the 8.6% as our fiscal target, so it doesn’t arise that there will be further fiscal tightening.”

The report also said that the state would be taking insurance company, Irish Life, into state ownership, injecting €1.3bn into the company because the sale could not be completed by the end of 2011.


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