Last week, Ireland voted ‘Yes’ to the European Fiscal Stability Treaty, despite some predictions that the country would vote No. Michael Courtney argues that Irish voters knew that voting Yes was the only way to secure future bailouts, should they be needed. A No vote was simply too risky

Courtney, Michael

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blogs.lse.ac.uk http://blogs.lse.ac.uk/europpblog/2012/06/06/ireland-yes-vote/A Yes vote for the Fiscal Treaty was the cheaper and saferoption for Ireland.Jun 6 2012Last week, Ireland voted ‘Yes’ to the European Fiscal Stability Treaty, despite somepredictions that the country would vote No. Michael Courtney argues that Irish voters knewthat voting Yes was the only way to secure future bailouts, should they be needed. A No votewas simply too risky.There are some intriguing aspects to Ireland’s referendum on the European Fiscal StabilityTreaty. There is immense anger among the electorate towards the Irish government anddecision-makers at the European level. There were a high number of undecided voters in thepolls preceding voting day and there was low voter turnout of about 50 per cent. ‘Second-order’ theories of voting, and past experience, would lead to the prediction that Ireland was highly likely to voteagainst the Treaty. But this was not the case. Why was a referendum necessary at all?  And why, contrary torecent experience, did Ireland vote in favour of an EU treaty without having to be asked twice? The shortanswer is that this EU referendum was a ‘first-order’ poll.Ever since a man named Raymond Crotty brought a legal challenge in the Irish Supreme Court in 1987against the government’s decision to ratify the Single European Act through the Dáil without reference to theelectorate in a referendum, a deliberative poll has been necessary for every major alteration to Ireland’srelationship to the European Union. This is on the basis that any transfer of sovereignty from the Irishgovernment to an external body must be directly sanctioned by the Irish electorate. This provision hasfrustrated European leaders who had to wait an additional year and through second referendums before theNice and Lisbon treaties could become law, and in case of the latter at a time when every other country in theunion has resolved to ratify EU treaties simply by an act of parliament.In terms of the substantive measures, the Fiscal Stability TreatyCredit: William Murphy (Creative CommonsBY SA)In terms of the substantive measures, the Fiscal Stability Treatywas little different from the provisions of the Stability and Growthpact which was implemented under the Maastricht criteria. So whywas a referendum necessary at all if it did not involve a significanttransfer of sovereignty? The answer is that the UK and the CzechRepublic vetoed the Treaty at the European Council level thusformally placing the Treaty outside of the European Unionstructures. Ireland was transferring sovereignty on fiscal rules toan inter-governmental body (the 25 remaining Treaty participants inthe council), albeit the same sovereignty that has already beentransferred the European Union, and a referendum process wasinitiated. This also neutralised Ireland’s ’veto’ similar to the Lisbonand Nice treaties, as unanimity was not required the other 24states can move ahead with implementation without Ireland, asthey are with the UK and the Czech Republic.The problem with European referendums in Ireland and elsewhere,such as the Dutch and French referendums on the ConstitutionalTreaty in 2005 is that they are typically ‘second-order’ polls. Votersuse the opportunity to vote, not to indicate their preference on thesubstantive measures on the ballot be they a Europeanreferendum or a local council election, but to send a message totheir national government that they are unhappy with theirperformance. Or voters end up voting on issues that were not partof the treaty. Misinformation campaigns such as those suggestingthe Lisbon treaty would threaten Ireland’s legal position on abortion,corporate taxation or military neutrality led voters to reject it onfalse premises in 2008.The dark clouds of second-order voting were on the horizon fromthe outset of this referendum campaign. The Irish government is in the process of introducing property andwater charges, which has caused much anger particularly at the Labour party, the junior coalition partner andPhil Hogan, the Fine Gael minister charged with implementing them. There is also the perception thatGermany is insisting on repayment of the entire Irish banking debt to protect the solvency of German banks.Some advocates on the ‘No’ side, such as businessman Declan Ganley were urging people to vote ‘No’ inorder to get a better deal on the bank debt. Thus the perception was that the blame and the burden of thecrisis are being unfairly shouldered by Ireland. From the outset any educated guess would be that the Irishwould vote ‘No’ initially and probably re-run the referendum later in the year subsequently voting ‘Yes’. Theclouds did not produce a storm. The referendum result returned a clear vote in favour of ratification. Thesimplest explanation for the prima facie separation of theory and practice is that the conditions of ‘second-order’ voting did not apply.Does this mean that Irish voters were clearly focused on and were in favour of the 3% deficit and 0.5%structural deficit rules, rather than their anger at property charges and Angela Merkel? This is unlikely. Therewas little engagement with the substantive measures of the treaty during the campaign, bar one. Thepreamble to the Treaty states that access to the EU’s new bailout fund, the European Stability Mechanism,will be conditional on ratification of the Treaty. This provision tipped the referendum from a ‘second-order’ to a‘first-order’ election. The framers of the Treaty linked ratification with voters’ pockets and the game changed.Under Ireland’s current bailout programme the state is funded until the end of 2013. At that time the decisionwill have to be taken whether to return the bond markets and raise funding for the state in the usual way, orapply to the EU and IMF for a second bailout programme. If Ireland can raise money at reasonable interestrates (below 7%) on the bond markets, it will not need a second bailout.This is how the vote became ‘first-order’. If Ireland voted ‘No’, the markets might have been jittery aboutIreland’s ability to fund itself, since it would then have been locked out ESM funding, and interest rates on newdebt would have been extremely high. If Ireland has access to the ESM, the markets will know there is ‘PlanB’, will lower the interest rate on Irish bonds and the country can return to them for funding and paradoxicallynot need a second bailout. A ‘Yes’ vote was the safer and cheaper option for the state and the Irish votedaccordingly.Also contrary to previous experience, low voter turnout favoured the ‘Yes’ side. This is  because many ‘No’and undecided- leaning-No voters felt that there was little point in turning out. If a ‘No’ prevailed Ireland wouldbe asked to vote again until eventually delivering a ‘Yes’. So apathy prevailed over anger on the ‘No’ side todampen turnout, giving the ‘Yes’ side a clear run. This raises the question of whether it may be time toreconsider the Crotty judgment and allow Irish governments to ratify European treaties simply by an act ofparliament.Please read our comments policy before commenting.Note:  This article gives the views of the author, and not the position of EUROPP – European Politics andPolicy, nor of the London School of Economics.Shortened URL for this post: http://bit.ly/KOUB89 _________________________________________About the authorMichael Courtney is a Government of Ireland Phd candidate in the Department of PoliticalScience, Trinity College Dublin. His research examines the impact of Irish MPs’ socialbackgrounds on their political attitudes. He holds a degree in Economics, Politics and Lawfrom Dublin City University.Related posts:1. A No vote in Ireland’s referendum on the Fiscal Treaty might contribute to the demise ofthe current mindset of austerity. (22.5)2. Ireland needs the legal guarantee of access to cash and credit that the Fiscal Compact Treaty willdeliver. (18.9)3. The Fiscal Compact Treaty disempowers national parliaments and undermines trust between thepeoples of Europe. (9.5)

A yes vote for the fiscal treaty was the cheaper and safer option for Ireland

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