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Ireland expected to approve fiscal pact

Date: Friday 01 Jun 2012

Ireland expected to approve fiscal pact

Votes are currently being counted and Ireland is expected to ratify its “fiscal compact” with the European Union (EU). Irish polls closed last night and the count, which began at 9AM, is expected to finalize sometime this afternoon, but government officials told Reuters that citizens voted in favor of the measure by a ratio of three to two.

The EU agreement places the country between a rock and a hard place as its 3.1m eligible voters had to choose between either implementing harsh austerity measures or losing access to the new bailout fund, the European Stability Mechanism (ESM). Without the approval via the referendum, Ireland would have lost its financial lifeline as it is still unable to raise funds in public debt markets.

Irish Prime Minister Enda Kenny had urged citizens to vote “yes” on the measure warning of the dangerous increase in borrowing costs that would occur without the financial backing of the EU.

Yet groups that are against the fiscal compact believed that a rejection would have allowed them the chance to get a better deal.

Even Nobel economics laureate Paul Krugman suggested that Ireland vote against the pact. He felt that it’s time somebody called the bluff that a country would be thrown out of the euro and denied access to emergency funds if it rejects the rules.

“At this point the Germans need to face the reality that this cannot work and that the Irish, who've been such good soldiers in this crisis, even if they say no, then that would actually send a helpful message,” explained Krugman who has long held the opinion that the harsh austerity measures are the wrong way to achieve a recovery in Europe.

In any case, if we believe Reuter’s sources, it all becomes a moot point. We’ll have the official word later in the day.

JM

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