Referendum test for EU budget pact after Irish PM agrees deal

Kenny at treaty signing on fiscal discipline in Brussels. Picture: Reuters
Kenny at treaty signing on fiscal discipline in Brussels. Picture: Reuters
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IRISH politicians have warned that prime minister Enda Kenny will struggle to implement the new European Union fiscal compact after he signed up to the deal in Brussels.

Mr Kenny was one of the 25 signatories to the new pact, which European Council president José Manuel Barroso said would shore up the under-pressure euro currency.

‘The treaty is an important part in our global strategy to restore stability in European public finances. As we have said before, stability is a prerequisite of confidence, and confidence is indispensable to sustainable growth,’ Mr Barroso said

The treaty enforces strict budgetary controls on EU governments, but the measures will not come into effect in Ireland without a successful referendum. Herman van Rompuy, who was elected for a second term as European Council president on Thursday, highlighted the need for EU leaders to sell the latest deal to an increasingly recalcitrant electorate. In Ireland, that is unlikely to be straightforward. Sinn Féin president Gerry Adams criticised the measures yesterday, saying his party would oppose the fiscal pact in the referendum, expected in May or June.

“Mr Kenny is allowing these institutions to impose economic policies on elected governments and to impose heavy fines where they believe these policies have not been adhered to,” he said.

Persuading Irish voters to back the deal will prove a stern test for Mr Kenny and his Fine Gael/Labour coalition.

The Irish government previously signed the Nice and Lisbon treaties but required two referendums before they were endorsed.

Mr Kenny is publicly confident of winning the vote but opposition to Europe-enforced austerity in Ireland is building.

Mr Adams is just one of a number of politicians who have raised concerns. Earlier this week Eamon O Cuiv resigned as deputy leader of Ireland’s chief opposition party, Fianna Fail. The grandson of party founder and the first taoiseach, Eamon De Valera, stood down after clashing with leader Micheál Martin over his party’s support for the treaty.

Yesterday Ireland’s deputy prime minister, Labour’s Eamon Gilmore, dismissed suggestions that the EU bailout of Anglo-Irish Bank could be restructured in return for support for the treaty in the referendum.

Mr Gilmore told the Dáil that the government was not going to “trade the constitutional rights of the Irish people with anybody or for anything”.

One issue that might play a role in the referendum is Ireland’s 12.5 per cent corporation tax rate, long a bugbear of French president Nicolas Sarkozy. Earlier this week Emmanuelle d’Achon, France’s ambassador to Ireland, said that EU-wide changes to the corporation tax system were required – a move opposed by most Irish parliamentarians.

PERSPECTIVE, PAGE 25