Coalition needs to refocus after wobble on Yes drive

INSIDE POLITICS:After Bruton's gaffe and Noonan's glib comments, the Government ought to redouble its efforts

THE GOVERNMENT’S referendum campaign lurched off the rails with Richard Bruton’s baffling assertion on Thursday evening that a second vote may be the only option for the country if the fiscal stability treaty is rejected on May 31st.

Whether the episode can be consigned to the category of a political gaffe or whether it will do serious damage to the Yes campaign, only the outcome of the referendum will tell. One way or another it represents the first big wobble in the Government’s campaign.

While Bruton tried to repair his unforced effort, by retracting the comment before the Today FM debate hosted by Matt Cooper was finished, the No side naturally pounced on it as evidence of a sinister plan to ratify the treaty by hook or by crook.

The potential seriousness of the gaffe was illustrated by the speed with which the Government moved to disown Bruton’s remark. Not content with the Minister’s self-correction, Fine Gael director of elections Simon Coveney and Taoiseach Enda Kenny hammered home the message that the electorate would have one, and only one, shot at the treaty.

The upshot of the controversy is that the unlikely prospect of a second referendum on the treaty is now even more unlikely than it was before. All of the serious political forces on both the Yes and No sides are publicly committed to accepting the result on May 31st so it is difficult to see how a rerun of the referendum could come about.

The difference between this referendum and the earlier ones on the Nice and Lisbon treaties is that the result in Ireland will not prevent the treaty coming into force across the euro zone. The practical impact of the decision will be felt by ourselves alone and nobody else will be pressing us to have a rerun if we vote No.

How Ireland will borrow the money required to keep the State going and the price it will pay for whatever borrowing is available will be something the Irish political system will have to sort out for itself if there is a No vote. There will be no pressure on the other 24 countries that have signed up to the measure to change the treaty to suit us.

There is no doubt that a Yes vote would be warmly welcomed in Brussels and even Berlin and it might even be of some help in shoring up confidence in the euro. Amid the continuing storm generated by the crisis in Greece and the growing problems in Spain, an Irish Yes would be a little boost for the euro, but that is about as far as it goes.

Some form of addendum to the treaty emphasising the importance of growth is likely to be agreed by EU leaders next month, but that would hardly amount to an excuse to rerun the referendum in the event of a No.

The issue facing the electorate is clear and simple and voters appear to understand that. Essentially it boils down to two issues. One is the content of the treaty itself and the other is the consequences of a Yes or a No.

There is a serious argument among economists about whether the treaty can do what it purports to do and provide a stable set of rules that will enable the euro to survive as a viable currency. The proponents of the treaty argue that it can, while opponents claim it will simply enshrine a set of rules that will make economic recovery more difficult.

The Oireachtas Committee on European Affairs heard all of the arguments for and against from a variety of experts and campaigners in a series of hearings between February and April. One of the most interesting presentations was made by an economist with a high international reputation, Megan Greene, senior economist at Roubini Global Economics.

She argued quite trenchantly that the treaty would not deal with the crisis in the euro zone, which she described as a balance of payments or growth crisis rather than a fiscal crisis. Nonetheless she insisted that it was very much in Ireland’s interests to ratify the treaty. She gave two reasons for her view.

The first was her assessment that Ireland will need a second bailout, but that option will not be available if the country does not ratify the treaty as Ireland will be excluded from the European Stability Mechanism (ESM), which will come into operation after July next year.

She insisted there was no chance that the International Monetary Fund would lend to Ireland in those circumstances and borrowing from other sources might be impossible. In that event she predicted a “hard default” by the country in 2013 or 2014.

Greene’s second reason for voting Yes was that the euro zone crisis was about to come back in full force and, in that scenario, Ireland, as a country so dependent on international trade, needed to protect its relationship with the rest of the EU. A No vote would jeopardise that relationship with a knock-on impact on our economy and ability to attract foreign investment.

The issues identified by Greene have been at the heart of the referendum campaign to date but Bruton’s gaffe has distracted attention from them and given ammunition to frivolous campaigners like Declan Ganley and Nigel Farage of the UK Independence Party.

It would certainly be ironic if the absurd “Little England” mentality of Farage had an impact on the referendum but, given that his views chime with the innate anti-EU tendencies of the British tabloids which circulate so widely in this country, it would be foolish to underestimate his impact.

Next week will be critical to the outcome of the referendum as the continuing massive number of undecided voters begin to make up their minds. Distractions like Bruton’s gaffe or Michael Noonan’s glib and insulting references to Greece and feta cheese have raised doubts about the coherence of the Government’s campaign. The Coalition will need to refocus and redouble its efforts to persuade a majority to vote Yes.