Tuesday 27 June 2017

Cabinet to thwart the people on treaty vote

Three-quarters want a referendum, but Government to ignore will of the people

President Michael D Higgins may still refer the treaty to the Supreme Court to test whether a referendum is required; it is also open to any citizen to mount such a legal action.
Jody Corcoran

Jody Corcoran

THE Government believes it has ensured that the new European fiscal treaty will not require the support of the people by way of referendum, the Sunday Independent can reveal.



Ministers feel the treaty, a final draft of which is expected to be agreed at an EU council meeting tomorrow, has been sufficiently watered down so as to avoid the need to give voters a say.

The Government's approach is completely at odds with the wishes of the people as expressed in an opinion poll today which finds that almost three-quarters want a referendum.

A Red C poll for the Sunday Business Post shows 72 per cent want a referendum, 21 per cent do not and seven per cent have no opinion.

The disclosure that people will likely be deprived of an opportunity to vote on the treaty is expected to provoke a furious response from opponents who believe it will permanently surrender national sovereignty to Europe.

President Michael D Higgins may still refer the treaty to the Supreme Court to test whether a referendum is required; it is also open to any citizen to mount such a legal action.

The treaty has been described as the first foundation stone of full fiscal union in Europe.

Yesterday, the position of the Government remained that the final agreement would be forwarded to the Attorney General this week for advice on ratification.

A Government spokesman last night refused to be drawn on whether legal advice had been taken during the negotiation process so as to avoid the requirement for a referendum.

A spokesman for the Taoiseach, Enda Kenny, would only say: "The treaty . . . will be forwarded to the Attorney General for advice on ratification when it is signed off. It is expected and hoped that will happen tomorrow at the EU council meeting."

However, another Government source said: "The drafts were worked on by the Taoiseach's department, the Tanaiste and the AG. No other departments were consulted.

"Whether or not there was a requirement for a referendum would have influenced the thinking on recommending alternatives to the various drafts."

Yesterday, the economist Colm McCarthy said: "This has been a lawyers' exercise, especially in Brussels. The main emphasis has been on lawyers rather than economists because the priority seems to be to ensure it is not in conflict with any existing treaties."

As an outcome of this process, there is "quiet confidence" at Cabinet that the treaty will avoid the requirement for a referendum and will also survive a subsequent legal challenge should such a challenge be taken.

The decision to reopen the issue of EU treaty change was decided upon by German Chancellor Angela Merkel and French President Nicolas Sarkozy during a stroll along the promenade in the Normandy coastal resort of Deauville last October.

From the moment the plan was revealed, the Government has been in fear of a largely eurosceptic response, given the initial rejection of the most recent European referenda on the Nice and Lisbon treaties.

At one point the Finance Minister, Michael Noonan, stated that if a referendum was required as part of the ratification process, the outcome of the referendum would be interpreted as a vote on continued Irish membership of the euro.

As a further inducement for ratification, the fiscal treaty includes a clause that only EU member states that have ratified the treaty will be able to request emergency funding from the ESM.

This means that Ireland, Greece, Portugal and probably Cyprus, Italy and Spain will be required to ratify the treaty if they wish to continue receiving emergency loans from the euro area's monetary fund.

There are four key elements of note in the fiscal treaty:

- The establishment of a 'Golden Rule' to ensure budgetary discipline.

- The policing of the Golden Rule at national level through so-called 'debt brakes'.

- The policing of national budgetary control at supranational level through a stricter excessive deficit procedure, including legal penalties and control by the European Court of Justice.

- New institutional architecture for euro area governance.

A referendum would have been required if the Government decided to introduce a debt brake into the national Constitution.

The Golden Rule stipulates that a general government's structural deficit should not be greater than 0.5 per cent for countries that have a debt-to-GDP ratio of over 60 per cent, and not greater than 1.0 per cent for countries whose debt is below this mark.

However, the debt brake has been described as "the only real innovation" in the fiscal treaty, as it is the only provision that will lack an enforcement mechanism if the treaty is not ratified.

In order to prevent deliberate or careless drift away from the numerical benchmarks laid down in the treaty, states that ratify will be required to implement the 'debt brakes'.

Under the treaty, each state will have the option of whether the debt brake should be part of the constitution or whether it should be adopted in an act of parliament.

This 'option' was specifically designed to allow states such as Ireland and Finland to avoid complex constitutional amendment procedures.

The fiscal treaty is designed as an insurance policy for 'core' euro area states, and Germany in particular, on the loans provided to the 'periphery' states.

If the treaty is adopted and ratified by at least all euro area states, there is a chance that it may provide Germany with the political capital to consider crisis resolution measures.

Such measures include increasing the lending capacity of the European Monetary Fund, or issuing collectively guaranteed eurobonds, as proposed by IMF managing director Christine Lagarde.

Last week it was reported that Germany was pulling back from its demand for constitutional limits on debt and deficits, a move that will make it easier for the Government to avoid a referendum on the pact.

Sunday Independent

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