The Joplin Globe, Joplin, MO

Business

June 1, 2012

Irish voters approve EU deficit-fighting treaty

DUBLIN — Ireland’s voters have agreed to ratify the European Union’s deficit-fighting treaty with “yes” votes reaching 60 percent, substantial official results showed Friday. Leading Irish opponents of European austerity conceded defeat even before all ballots were counted.

The treaty’s approval, to be declared officially later Friday, relieves some pressure on EU financial chiefs as they battle to contain the eurozone’s debt crisis. But critics said the tougher deficit rules would do nothing to stimulate desperately needed growth in bailed-out Ireland, Portugal and Greece, nor stop Spain or Italy from requiring aid too.

“The ‘yes’ side is going to win,” said Joe Higgins, leader of Ireland’s Socialist Party, which opposed the treaty. “The question now is where will the jobs and the stability they have promised come from, against the backdrop of a continuing and deepening capitalist crisis within Europe? Their policies will only make the situation worse.”

Public rejection could have blocked Ireland from receiving new EU loans once its 2010 bailout money runs out next year. It also would have sent political shockwaves through other eurozone members, where anger against austerity and bank bailouts runs similarly high but citizens are denied the chance to vote on the treaty.

Official results from more than half of Ireland’s 43 constituencies demonstrated a decisive victory for the government of Prime Minister Enda Kenny, which courted unpopularity by insisting that Ireland — already four years into a brutal austerity program that has slashed 15 percent from many workers’ incomes — had no choice but to vote in support of yet more cuts and tax hikes.

Deputy Prime Minister Eamon Gilmore said he and other government officials did not consider the win a triumph, merely a relief. He said they encountered grave voter anger and worry while campaigning for a “yes,” and he was determined now to help steer Europe away from austerity and toward investment in growth and jobs.

Gilmore’s position puts Ireland on a renewed diplomatic collision course with Germany, which demanded the treaty’s tighter deficit rules and insists that Ireland’s nationalized banks repay their colossal debts in full.

Irish citizens “are frustrated with the pace of recovery. People want to see real recovery in their own lives. We have to proceed with a plan to stimulate the Irish economy and create jobs here,” Gilmore said. “And I believe we have to get a deal on the bank debt.’

Kenny and Gilmore planned a joint victory statement on the steps of their office around the same time that the official result was to be announced Friday night in Dublin Castle.

The pro-treaty side triumphed in 24 of the first 27 constituencies to declare, while the anti-treaty side won only in the toughest working-class quarters of Dublin and the northwest county of Donegal, a bastion of euro skepticism and a power base for the Irish nationalist Sinn Fein party.

Significantly for the national outcome, voter turnout was much higher in relatively affluent districts where pro-treaty sentiment ran strongest. Irish referendums are based on the total votes nationwide.

The highest “yes” vote, 75.8 percent, was recorded in suburban Dublin South, while the neighboring port of Dun Laoghaire managed 74.2 percent.

But Dublin Southwest, home to some of the capital’s worst property developments and welfare housing projects, the “no” side prevailed with 50.7 percent. Other pockets of working-class alienation were on course to record anti-treaty votes approaching 60 percent, but on lower turnout.

Overall, about half of Ireland’s 3.13 million registered voters participated in Thursday’s referendum, typical in an officially neutral country that is constitutionally required to hold a referendum on each European treaty.

The treaty, signed in February by leaders of 25 countries including Ireland, proposes that all members who ratify it should reduce their annual deficits to no more than 0.5 percent of gross domestic product. The current eurozone limit is 3 percent of GDP. Ireland is committed to cutting its way back to that level by 2015.

Opponents of the treaty argued that the new 0.5 percent deficit limit would force Ireland to keep cutting until perhaps 2020, when greater state investment to stimulate the economy was required. The government countered that much would depend on whether Ireland could keep growing its economy against the tide of austerity.

Ireland has recorded a faint pulse of growth over the past year thanks to strong exports by nearly 1,000 foreign high-tech companies based in Ireland. But the domestic economy, with unemployment stuck on 14.3 percent and hundreds of thousands of households mired in negative-equity mortgages, has shrunk for four straight years.

Ireland has posted the EU’s worst deficits since 2009, including an EU-record 32.4 percent in 2010 and 13.1 percent last year. Both figures were greatly inflated by the exceptional costs of Ireland’s decision to nationalize five of its six banks rather than see any collapse — a debt burden that pushed Ireland itself into the bailout zone in 2010. Repayments to international bondholders, central banks and interest on decades-long loans are expected to cost Ireland’s taxpayers (euro) 68 billion ($85 billion), equivalent to (euro) 19,000 ($23,500) for every man, woman and child.

 

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