Cowen Loss on EU Vote Might Imperil Irish Growth, Budget Plans
Brian Cowen's first electoral test as Irish prime minister portends a rocky road ahead.
Cowen, 48, has spent the month since he succeeded Bertie Ahern focused on persuading voters to support a new European Union governing treaty in a referendum today. His efforts are falling short as opposition mounts and polls show the vote as a toss-up.
A rejection would mark an embarrassing setback at the outset and may blunt the former finance minister's efforts to counter a slowing economy and press Irish interests with his European counterparts. A defeat would kill the so-called Lisbon Treaty, which requires unanimous approval of all 27 EU nations.
“A `no' vote would be a big worry,'' said Rossa White, chief economist at Davy Stockbrokers in Dublin, who predicts Ireland will breach EU budget-deficit limits next year. “It would be very difficult to go to Brussels and argue your case for a moratorium on your deficit, because we won't get much sympathy.''
Signed in Lisbon last December, the treaty would create the post of president, give more power to the democratically elected European Parliament and downsize the European Commission, the EU executive agency. It will stand or fall with the Irish ballot because every other country is ratifying it in parliament. So far, 18 have approved it.
Polls open at 7:00 a.m. and counting is scheduled to begin tomorrow at 9:00 a.m.
Irish Taxes
Opponents comprise a range of groups including political parties Sinn Fein and the Socialists; Libertas, a privately funded group set up to fight the treaty, and Unite, the Irish arm of the U.K.'s biggest labor union.
They argue the treaty weakens Ireland's voice by failing to guarantee it a spot on the commission, undermines national control of taxes and removes a veto in agriculture and trade talks. Supporters call these claims misleading.
“It's very, very crucial that Ireland have a commissioner at all times at that table, especially as a small country,'' said Declan Ganley, chairman of Libertas. “The treaty also opens the door to interference in tax and other areas of key economic interest.''
Ireland's 12.5 percent corporation tax rate, around half the EU average, has lured investment by companies including Intel Corp. and Dell Inc. and helped gross domestic product double in a decade. Economic growth has averaged 7 percent a year since 1997, more than three times the euro-area average.
Opponents Gain
The treaty has the support of the three largest Irish political parties, representing around 80 percent of the electorate, business groups IBEC and the American Chamber of Commerce in Ireland, farmers' groups and the Irish Congress of Trade Unions direct payday loan cash advance.
“We need an EU that's effective now, not at some unspecified future,'' Cowen said on June 8. “None of our red lines were crossed. All of our positions have been accommodated. This is a decent and balanced and good deal for Ireland, and it's good for Europe.''
An Irish Times poll published on June 6 showed opponents leading advocates by 35 percent to 30 percent, the first to show the “no'' camp in front. A Sunday Business Post poll published June 8 gave supporters a lead of 3 percentage points, within the margin of error, down from 8 points in May.
“I will be voting `no,''' said Maureen Lacey, who declined to give her age while shopping on Dublin's Camden Street. “We should have been discussing it over the past year. They didn't give us enough information.''
Integration
Also at stake is the EU's ability to integrate potential new members, including Croatia and Turkey.
“Not only is the EU's internal working at stake, but also its promises to countries outside and its reputation in the world,'' said Jacki Davis, director of communications at the European Policy Centre in Brussels.
Working against the “yes'' campaign is an economy headed for its worst performance since 1993.
Construction is contracting at a record pace, house prices have lost a tenth of their value in a year and unemployment reached 5.4 percent in May, the highest in nine years. A loss of tax revenue left Ireland with a 3.6 billion-euro ($5.6 billion) budget deficit in the first five months.
Both sides have accused the other of scaremongering. Just 8 percent of people have a “good understanding'' of the treaty, according to the Irish Times poll. One anti-treaty poster uses a picture of Ireland's 1916 Proclamation of Independence, with the line: “People died for your freedom, don't throw it all away.''
“I don't think it is good enough to say, `I don't understand it, therefore I'm going to vote `no,''' said Finance Minister Brian Lenihan. “I'm not telling them what to do, I'm not threatening. They are in the driving seat, but they would want to be very careful what road they drive on.''
Filed under: finance by Wolf