Tuesday, March 27, 2012

Ireland sets May 31 date for EU treaty referendum

From the AP:

Mar 27, 10:56 AM EDT

Ireland sets May 31 date for EU treaty referendum

DUBLIN (AP) -- Bailed-out Ireland will stage a referendum on the European fiscal treaty May 31 with the government poised to persuade debt-burdened voters to back the measure, the country's foreign minister announced Tuesday.
Foreign Minister Eamon Gilmore told lawmakers the government was confident of winning majority public support for the pact, which proposes tighter spending and deficit rules for the 17-nation eurozone. Rejection would block Ireland's access to future European bailout funds once its current credit line runs out next year.
"The government will put in place a comprehensive information campaign to ensure that voters are informed about the contents of the treaty, and ... a full debate about the decision that we as a country have to take," Gilmore told lawmakers following a Cabinet meeting to agree on a date for the vote.
Ireland is the only euro member subjecting the fiscal treaty to a national test of opinion after the country's attorney general ruled last month that Ireland's constitution required a referendum.
Euroskeptical Irish voters have complicated the passage of the European Union treaties before - in 2001 and 2008. The government overturned both results in replayed referendums a year later.
This time, anticipating a further Irish rebuff to EU plans, the fiscal treaty's designers decided the new rules will become binding for ratifying countries in early 2013 even if as few as 12 eurozone members approve the pact. Previous treaties required unanimous approval.
Two nations outside the eurozone, the United Kingdom and the Czech Republic, declined to support the fiscal treaty at its Brussels signing March 2. Irish Prime Minister Enda Kenny did sign, but noted that voters could render this null and void.
Should a majority of Irish voters reject the tougher rules, the Ireland will suffer a major impact.
The fiscal treaty specifies that dissenting governments will be blocked from tapping EU funds as part of any future bailout. Ireland's government currently relies on a (EURO)67.5 billion ($90 billion) European-International Monetary Fund credit line due to run out in 2013, and may require a second bailout agreement next year if it cannot resume borrowing on bond markets at affordable rates.
The treaty would bind ratifying members to deliver annual budgets no more than 0.5 percent in deficit versus their gross domestic product. The current much-violated eurozone rule is 3 percent of GDP. Ireland has overspent that limit every year since 2007 as its GDP and tax takes have plummeted.
The fiscal treaty does permit greater flexibility for those countries with national debts below 60 percent of GDP. They can run deficits as high as 1 percent. But Ireland's debt-to-GDP ratio is currently at 107 percent and forecast to keep rising.
The treaty creates new powers for the EU's executive branch, the European Commission, to sue deficit-breaching members in the European Court of Justice. Those found guilty could suffer a maximum fine equivalent to 0.1 percent of their GDP, adding to their deficit.
But the treaty provides many loopholes to avoid or delay punishment for exceeding deficit targets. Those countries already dependent on European-IMF funding - Ireland, Greece and Portugal - have their own deficit-reduction targets in place.
In Ireland's case, the EU and IMF expect its deficit to fall back below 3 percent of GDP only by 2016. Ireland's own government still hopes to hit that target a year sooner. Its 2011 deficit was 10 percent and its 2012 target is 8.6 percent.
© 2012 The Associated Press

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