Taoiseach cagey on referendum issue

 

TAOISEACH ENDA Kenny arrived at the summit with two priorities preying on his mind. Paradoxically, neither directly related to the core issue affecting the 17 euro zone countries – the Franco-German moves on tighter fiscal rules that could necessitate a perilous referendum in Ireland.

Mr Kenny was concerned about the more immediate threat of contagion and wanted the issue of a “firewall” – made up of hundreds of billions of euro – to be dealt with decisively. A firewall of a reputed €1 trillion had been agreed at the October summit, before it all unravelled just 24 hours later on the back of Greece’s extraordinary implosion. The Government did not want it to be wholly eclipsed by the bigger questions preying on the minds of the 27 leaders.

The second issue was of particular interest (or even self-interest) to Ireland. Mr Kenny floated a proposal at the dinner on Thursday night to ease Ireland’s debt burden. The State had taken out loans of €63 billion to recapitalise the banks before it entered the bailout programme in November 2010. The interest on the loans was levied at punitive rates. Mr Kenny asked Ireland to be allowed access to new mechanisms that were not available back then. They included lengthening the timeframe of the loans, making debt payments more sustainable.

Inevitably, though, it was the agreement of 26 of the 27 leaders to far-reaching budgetary rules that dominated Mr Kenny’s press conference yesterday afternoon, and the possible need of the treaty being put to a plebiscite in Ireland.

The Taoiseach would not be drawn on whether it would involve a sufficient transfer of national competence to trigger a referendum.

“The matter [of a referendum] is one that a lot of countries will have to consider. The Attorney General [Máire Whelan] will give legal advice to the Government in due course on the issues of substance that are in the language [of the agreement]. There is a great deal of technical and legal work that needs to be done. Ireland is not alone in that,” he said.

Despite repeated questions on the possibility of a referendum, he declined to give any view on the possibility.

“I would never presume to advise what the AG will advise. I would like to see the final text analysed and dealt with properly,” he said.

Mr Kenny appeared to adopt a more circumspect stance on a referendum than his Cabinet colleagues.

Earlier Minister of State for European Affairs Lucinda Creighton said there was a 50/50 chance of a referendum on closer fiscal union between the 17 euro zone States. Tánaiste Eamon Gilmore, speaking in the Dáil on Thursday, had also raised the possibility.

Giving his general reaction to the summit, Mr Kenny said it had been exhausting but he was “happy that Ireland’s economic interests were well protected and defended”.

Asked for reaction on Britain’s exclusion from the agreement, he said: “My preference was that meeting would have concluded with agreement of 27 leaders. That was not possible when David Cameron found himself unable to support the general principles laid down.”

On the “firewall” issue, Mr Kenny said it was his view that the agreement had achieved its goal of protecting and defending economic stability in the euro zone area. He referred to the acceleration of the enforcement of the European Stability Mechanism (the permanent bailout fund) from 2013 to May 2012; the agreement to give bilateral loans of €200 billion to the IMF; and increased firepower for the temporary bailout fund, the ESFS, which would secure and defend the stability of the euro zone.

Ireland will not contribute to the loan to the IMF but will contribute €250 million to the ESM, he said. He also said he had raised his opposition to controversial involvement of the private sector in the ESM.

“I have been calling for a long time for the introduction of a firewall to protect against contagion. I made a direct appeal to Angela Merkel and Nicolas Sarkozy at the meeting . . . about removing private-sector involvement. That is gone and that was very helpful,” he said.

Mr Kenny said that he had received a good hearing for his proposal that Ireland be allowed access to new mechanisms to ease debt repayments. Irish officials emphasised it is not being presented as a negotiating tool in return for backing the new treaty for euro zone members. They also said the Taoiseach had wanted to “start a conversation” on this matter and was not expecting any short-term outcome.