Labour could quit over vote on new bailout

The terms of a second troika bailout must be approved by Labour’s grassroots activists before the Government signs up to it, party chairman Colm Keaveney said.

Such a move would create tension within the Coalition — and could trigger a Labour exit from the Government — but Mr Keaveney warned his party would need a democratic mandate to push through a second austerity deal.

One senior Labour source said a ballot of the party’s 8,000 members on the issue would come down to an “in-out” decision on remaining in Government.

In remarks that will provoke fury among Coalition partners, the Labour chairman said Fine Gael took a “certain degree of comfort” in the policies imposed by the troika.

With most economists saying it is unlikely Ireland will be able to return to the markets to borrow money when the EU/ECB/IMF €67.5bn deal runs out at the end of next year, a second bailout will be the only way the country can continue to pay for day-to-day services in health, education, and welfare. The IMF, approving a €1.4bn disbursement, yesterday completed its sixth review of Ireland’s performance under the bailout, saying it had “once more” met all targets.

Mr Keaveney, who was elected chairman in April against the wishes of leader Eamon Gilmore, raised the bailout at a parliamentary party meeting yesterday, which Mr Gilmore did not attend as he was abroad. The absence meant the meeting was taken by Joan Burton, who many Labour TDs believe is positioning herself for a leadership challenge.

Mr Keaveney confirmed his intervention, saying: “I made a comment that, in the unlikely event of a second bailout, I don’t think we would have a political or moral right to proceed without a mandate from the members of the party.

“We need to learn from the mistakes of the previous government which did not consult with party or country before agreeing to something with highly detrimental social consequences.

“Such a vote would come at a critical juncture with events such as the conclusion of the Croke Park deal approaching. There is a certain degree of comfort within Fine Gael with policy aspects of the troika deal. Labour has had to do most of the heavy lifting in this regard and that has demonstrated itself in the polls.”

The dramatic call divided Labour TDs, with one saying: “It would be high-risk. If the membership rejects it we’d be straight into a general election.” Another deputy said: “It would reconnect the member with the Cabinet member.”

A Labour source present at the meeting said: “This will be an in-or-out of Government vote for the Labour Party and everybody knows that. We had no say in the referendum just held and got kicked all over the place by the likes of Sinn Féin.”