Keeping track of the deficit goalposts

The opposition parties will try to make the very most of Enda Kenny’s treaty change dilemma, writes Juno McEnroe

TAOISEACH Enda Kenny has a new headache. Not only is opposition mounting to EU control and austerity measures driven by Brussels and Frankfurt, but changes under another European referendum on the horizon will deeply divide opinion here.

Britain’s decision to veto treaty changes at last week’s summit is worrying for Ireland, the Taoiseach has already signalled. But imagine if Mr Kenny and his government were to lose any referendum vote on proposed changes to strengthen the stability of the euro. Ireland would neither be with Britain or the majority of the EU members but more isolated than ever.

A briefing Mr Kenny gave to opposition parties early yesterday morning seems to have done him more damage and, if anything, thrown up more questions than answers.

Both Fianna Fáil and Sinn Féin are preempting calls for a referendum here — ahead of any decision by the Government — insisting that the fiscal compact agreement allows for significant changes to our debt arrangements.

There’s no doubt though that the two main opposition parties will try and garner political gain from the dilemma for Mr Kenny if he must go to the polls. Indeed, there were clear signals from Micheál Martin and Gerry Adams yesterday that they could support a No vote if the Government is forced to hold a referendum next March.

So what are the issues in theEU’s latest rescue package that the opposition is opposed to?

Mr Martin went straight after the treaty changes at the weekend claiming the fiscal tightening measures in fact undermined institutions of the EU.

By yesterday, he told journalists that the Irish public was even more in the dark about the country’s future in Europe. Leaders at the summit had also failed to adequately address the key issue of refinancing sovereign debts, he argued.

“I do get the sense that this was a rushed summit. That was broken in the dead of night… People out on the streets are generally not being given enough information about the various options before the country, the various options before Europe.”

A referendum was needed, he added, especially because of a decision in the summit agreement to limit deficit levels for EU members to just 0.5% of GDP.

Ireland presently is signed up to its bailout programme until 2015 which agrees to cut our deficit down to 2.9% of GDP. This means that any tighter deficit restrictions on Ireland would and could not be accepted or even attempted until a few years after we leave the bailout programme, possibly even until 2017 at the earliest.

Mr Adams is adamant that changes to the deficit levels would just increase austerity measures for the country.

“We’re a state which has a written constitution. Clearly that has to go into the constitution. That clearly means that the people have to have their say and that requires a referendum.”

Mr Adams also questioned why no economic assessment has been ordered by the Mr Kenny or completed by the Department of Finance on the impact of the new EU agreement, which Ireland informally gave its backing to last week.

“You don’t agree to buy a house or a car or a dog or anything and the check for the price of it [afterwards].”

But the Sinn Féin leader dodged the question of whether he supported Britain’s decision to opt out of the new fiscal compact deal and if Ireland should do the same.

It is clear though that Sinn Féin will be at the forefront of opposition to any referendum forced on voters.

“The Irish Government should not have signed up for this deal,” Mr Adams added.

Sinn Féin also say clauses in the fiscal compact deal that members cannot write down any more of their debts means that Ireland will be forced to pay back every cent owed on bank debt.

“This means that all toxic-banking debts will be paid, including the €3.1bn due to be paid to Anglo Irish Bank next March and every year for more than a decade.”

Independent TD Catherine Murphy, representing the technical group, also seemed disillusioned after yesterday’s briefing with Mr Kenny. She said it seemed that there was “little mood” at European level to focus on individual country’s needs and issues.

We can expect sizeable opposition to any referendum and even a legal challenge if a vote is not put to the people.

To counter this, the Government will increasingly have to prove why it is worthwhile agreeing to the new fiscal compact deal, which also sets out a path for future budgets to be vetted in Brussels.

Mr Kenny told the Dáil that support to rebuild the country’s broken economy with EU help was the only way forward. He said:

“If we don’t fix the engine of our economy, then we’re not going to have a country.”

He was arguing to use the new bailout facility for member nations, the EFSF, to get better terms for the €63bn borrowed to pay off our bank debts.

Dangling the carrot of the upcoming EU budget, which will sign off on spending of over one trillion euro for states up until 2020 could also help entice voters.

But some will argue that any EU referendum will be almost impossible to win given the anger over cutbacks and stealth charges pushed on citizens by EU lenders.