Tánaiste says 'No' side playing with fire

IRELAND WILL be back in the eye of the storm if the EU fiscal treaty is rejected in the referendum, Tánaiste and Labour leader Eamon Gilmore has said.

Speaking in Dublin, at the formal launch of his party’s referendum campaign, he warned those who advocated a break with the euro that they were playing with fire. He repeatedly denied that any difficulty was caused for the Government by French president-elect François Hollande’s pledge to reopen talks on the treaty.

The fiscal compact treaty obliges member states to keep budget deficits and public debts within tight limits, in an attempt to prevent a repeat of the Greek debt crisis and protect the euro currency.

On the issue of ratifying the separate European Stability Mechanism treaty (ESM) in the Dáil if the fiscal treaty was rejected, he said it was the intention to proceed with that legislation. However, he added that if the No side was successful it would not be “business as usual” and “enormous consequences” for Ireland would follow.

The ESM pact paves the way for a permanent €500 billion European bailout fund.

When asked if the referendum should be postponed in light of Mr Hollande’s intention to reopen debate on the fiscal treaty, Mr Gilmore said: “If you look at what the new president of France is saying, he is not talking about reopening the text of the treaty that has been negotiated. What he is talking about is adding to the stability treaty and agenda for growth, investment and jobs.”

When asked if we would be better off returning to the pound, he said that that would be “playing with fire” as those who suggest that would be “sending us into the unknown”.

Mr Gilmore said the euro is “our currency now”.

“We are a country that probably more than most countries is dependent on the outside world. For example, we export 80 per cent of everything we produce. We are dependent for outside investment for foreign direct investment to create jobs and employment here. And of course we have in recent times become dependent on access to emergency funding to support the finances of the State.”

The Tánaiste was asked if, in the event of a No vote which would lock us out of the ESM fund, would he still ask the Dáil to ratify that pact next month?

“The legislation to give effect to the ESM treaty is being published. We have made it clear that we will make sure that that is available and is known to people prior to the referendum on the stability treaty. It is of course the Government’s intention to proceed with that legislation,” he replied.

Mr Gilmore added that it was important to be clear that if the fiscal pact is defeated, it will not be business as usual. He said a defeat of the treaty has enormous consequences for this country.

“First of all it will have a huge impact in undermining investor confidence in this country,” he said. “And of course also it will cut off access to emergency funding if we were to need it.”

The Tánaiste and Minister for Foreign Affairs continued: “It is our intention to ratify the ESM treaty, but if the [fiscal] treaty is defeated this country will be back in the eye of the storm on the first day of June.”

Commenting on publication of the European Stability Mechanism Bill on finance.gov.ie, Minister for Finance Michael Noonan said the establishment of the ESM will be of great importance to Ireland as an insurance policy and safety net.

“The ESM will come into force when the ESM treaty has been ratified by euro member states representing 90 per cent of the fund capital commitment. Ireland cannot veto the ESM as Ireland represents 1.59 per cent of the capital.”