Ben Tonra (posted by David Farrell, February 29 2012)
This referendum campaign will have a profoundly different dynamic to those that have gone before. The first point is that this is not an “EU Treaty”. As a result, and according to its own provisions, just 12 of the Eurozone member states need to ratify it before it comes into operation. Thus, unlike all previous European referenda, the rest of Europe does not depend on Irish ratification. We can say ‘no’ – 12 of the rest can say ‘yes’ and the treaty proceeds with Ireland simply left outside its provisions. In that respect, talk of European ‘sweetners’ or increased Irish bargaining power are dangerously misplaced. While they may wish to avoid the political embarrassment of an Irish ‘no’ and the market wobbles that might result, Ireland has no blackmail capacity over its European partners. To make that argument risks a serious disappointment to the electorate and makes the prospect of an ultimate ‘no’ vote even higher. In addition, because this is not a broad-based “EU treaty”, making the argument that a ‘no’ vote threatens our EU or euro membership is profoundly wrong-headed. Reduced influence in Europe? Certainly. Raising doubts in the markets and in the minds of potential investors about Ireland’s future trajectory in Europe? Perhaps. But Ireland will be an EU and eurozone member without an iota of change in Ireland’s rights under EU treaties. This, of course, is in part thanks to David Cameron’s veto.
The second point that makes this campaign different from past contests, is that the ground of the treaty is exceptionally narrow. There is little legitimate scope to invoke many of the shibboleths of past referenda, but, perhaps perversely, this may well benefit ‘no’ campaigners. If this campaign is just about the pact, with all of its associations to bailouts, troikas, austerity and cuts, then ‘yes’ campaigners will have a mountain to climb in crafting a persuasive argument to favour ratification. To date – less than 24 hours after the referendum announcement- ministerial calls on the electorate to endorse ‘stability’ and progress, to do our part in defending the euro and to endorse the rectitude of ‘balanced budgets’ are not themes to warm the popular heart.
The third point that makes this campaign different is that we have no clear understanding of what it might mean to be left outside the new European Stability Mechanism. Economists – who love to pretend to deal in absolutes – are at sixes and sevens over what the fiscal pact entails, what its long-run implications will be and even over basic definitional points arising from the treaty text. To my mind this is redolent of the fact that so much of the recent crisis has been a function of the (thus far failed) efforts of politicians to manufacture market confidence and the determination of markets to exploit uncertainty for profit. We have yet to hear from serious economists as to what exclusion from the ESM might mean. Would we be less likely to get back into the money markets on schedule? If we get back into those markets on time, would the state inevitably face higher international borrowing costs? Would our credit rating suffer? And, of course, the big issue: if we need a second bailout – or in the future need another bailout (because future political leaders would be free to spend us into another collapse) to whom would we turn? Without the ESM we would have to rely on the IMF – but would the IMF treat us better or worse than the ESM – even if they agreed to assist in the first place?
In sum, what appears to be on the horizon is a perfect political storm: a vote directly associated with profoundly unpopular themes and institutions, with no obvious incentives for a ‘yes’ vote, with contested or limited consequences of a ‘no’ vote, and an electorate feeling badly used and abused by those now asking for more.