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29 February 2012

WSJ: Irish put EU fiscal treaty up for a vote


The Irish government called a referendum on the new European Union budget discipline treaty, a vote that would have little impact on the pact's implementation but could cost Ireland access to future bailouts.

The timing of the vote isn't clear, but it could be held as soon as a few weeks from now. An opinion poll last month suggested a large majority of Irish voters wanted a vote, but only a small majority would approve the treaty. A rejection by Irish voters—who have said no to EU referendums in the past—wouldn't kill the fiscal compact, which requires the approval of only 12 of the 17 eurozone countries to come into force. The rest of the eurozone had hoped to avoid such a vote, which could signal to investors that the plan to bring more fiscal unity to Europe isn't well received by the people it is supposed to benefit.

Rejecting the treaty could have major ramifications for Ireland. The government's existing loans from the temporary European Financial Stability Facility wouldn't be affected if voters rejected the compact, and the government insists it will be able to meet its borrowing needs from the bond market after that facility expires next year. Refusal to participate in the fiscal compact would deny the Irish government access to financial help from the bloc's new and permanent bailout fund, the European Stability Mechanism, if another bailout were to be necessary.

Full article



© Wall Street Journal


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