| 0.2°C Dublin

Referendum may not be necessary - treaty wording

THE NEW European fiscal compact or treaty may not prompt constitutional changes here, according to the terms of the document.

According to the treaty document, being agreed by European leaders in Brussels, it would be “preferable” that the new rules, designed to curb European Government’s spending and reduce deficits, would be enshrined in country’s constitutions although this is not essential.

While this does not rule out a referendum outright, it means that budgetary changes could be introduced without one.

However, it is expected that a Supreme Court challenge will be taken if the Government decided to try and introduced new rules without a referendum.

Earlier Taoiseach Enda Kenny insisted the Government is not afraid to hold a referendum on the EU fiscal compact if it were necessary.

"The Government has absolutely no fear of a referendum," said Mr Kenny.

The inter-governmental fiscal plan will include strict budgetary rules for member states and penalties for those who do not comply.

Mr Kenny said the new text would go before Ireland's Attorney General Maire Whelan who will determine whether a referendum will be required.

"When the text is finalised I will ask the Attorney General to present the Government with the Attorney General's response as to whether the agreed text as finalised by the politicians is in compliance with our constitution," he said.

"If it is in compliance, then there is no need for a referendum."

Mr Kenny's Fine Gael colleague Leo Varadkar sparked controversy over the weekend when he said he had concerns for a possible referendum.

The Transport Minister said he was not a fan of the system - which gives the public a say on significant political issues - saying he believed it to be undemocratic.

"I don't think referendums are very democratic," Mr Varadkar told RTE.

"By and large, referendum campaigns are never about what they are supposed to be about."

He said the main issues behind referendums get clouded by domestic political point scoring.

Meanwhile, a new Red C Survey for the Sunday Business Post showed that 72pc of the population is in favour of holding a referendum.

Some 40pc said they would vote in favour of the fiscal compact, 36pc said they would vote no and the rest were unsure.

Earlier, European Affairs Minister Lucinda Creighton has warned that if voters say no to the new fiscal treaty, Ireland would probably have to leave the eurozone.

She said a decision on whether a referendum is necessary will be decided within week after EU leaders agree the terms of the fiscal compact designed to introduce tighter fiscal discipline through stricter budget rules today.

“If we somehow decided to opt out of that and allowed the other 16 member of the eurozone to progress and try to find a solution without us, I think it would make it almost impossible for us to continue as part of the currency union,” she told RTE.

Meanwhile, Greece faces "the spectre of bankruptcy and all the dire consequences that entails", the Greek prime minister warned last night.

Lucas Papademos said that unless the country’s international backers agreed to a new bail-out, Greece would be unable to pay off its loans and be forced out of the eurozone.

EU leaders will meet in Brussels tonight amid growing concern that Greece will fail to implement the austerity measures its international backers are demanding as a condition of the latest package of financial support. Without that bail-out, Greece will be unable to repay billions of loans due in March.

Amid doubts about Greek willingness to cut spending and raise taxes, Germany has suggested that a European commissioner should take effective control of Greek fiscal policy to ensure the country accepts austerity. Evangelos Venizelos, the Greek finance minister, rejected that plan, saying it would undermine Greece’s “national identity and dignity”.

Philipp Rösler, the German economy minister, insisted that some external control over Greek policies had to be considered. “If the Greeks fail to do this themselves, the leadership and monitoring must come in a stronger way from outside, for example via the EU,” he said.

Stock markets and the euro fell today on fears the Greek talks would end without an agreement leading to a disorganised default.

There are also plans for €22bn in bond sales by European countries this week.