ANALYSIS:THE TAOISEACH's announcement of a referendum on the ratification of the European Stability Treaty – which will be signed in Brussels tomorrow – caused surprise both in Leinster House and among Ireland's partner EU states.
The Irish legal system has again proven itself uniquely insistent among EU states on direct democracy when it comes to European developments – and correspondingly uniquely restrictive in the scope it gives its democratically elected government to pursue the national interest.
In consequence, the fiscal treaty, a measure of fairly limited impact which deals with relatively complex fiscal rules, is now likely to be the subject of a referendum in Ireland and nowhere else.
The surprise is all the greater since the draft treaty’s original ambitions have been considerably watered down. The draft treaty’s terms also make clear that – even if the treaty itself is intergovernmental – much of what it demands will ultimately actually be safely implemented in the form of legally unobjectionable EU rules (wherever this has not already been done). Famously, the original draft treaty’s requirement that its balanced budget rules be introduced in national binding provisions “of a constitutional or equivalent nature” – which would have guaranteed the need for an Irish referendum – was replaced by a more limited commitment to mere “provisions of binding force and permanent character, preferably constitutional”.
In terms of its substance, the fiscal treaty adds very little to rules which have already been adopted at EU level, or (to a more limited extent) are in the course of being adopted or planned. Thus, for example, debt reduction rules are already part of EU law. As regards its deficit rules, rapid convergence towards a country-specific medium-term objective with a lower limit of a 0.5 per cent structural deficit may not be part of existing law – but rapid progress towards a country-specific medium-term objective with a lower limit of a 1 per cent cyclically adjusted deficit is, having been built into the EU’s revised stability and growth pact since last December.
The treaty’s central aim seems to be largely to add the belt of domestic enforcement of fiscal rules to the already-extant braces of European-level enforcement: an aim of singular importance for the purposes of reassuring German taxpayers, but of relatively limited impact for other member states.
In the light of all of this, why are we having a referendum? Taoiseach Enda Kenny noted merely that Attorney General Máire Whelan had advised that “as this treaty is a unique instrument outside the EU treaty architecture, on balance” a referendum is required. This seems to indicate that David Cameron’s December veto of an EU-level treaty was key in her calculations, sidelining, as this action did, the normal protection for EU-level measures and treaties provided by article 29.4 of the Irish Constitution. Without that protection, Whelan apparently felt the danger of another provision of the Constitution being deployed by the courts to attack the fiscal treaty was too great. We are not told which constitutional provision. The breathtakingly-wide interpretation of the Constitution’s article 5 sovereignty clause in the Crotty case, however, probably makes that rule a prime suspect. The Attorney General’s view in this regard is conservative, but not unreasonable. An attempt to proceed without a referendum might well in any case have been challenged in the courts, and would have been successfully so challenged had the courts followed the approach adopted by the majority in Crotty.
The Crotty precedent has therefore struck again. That ruling may now be the least of the Government’s worries, however. The 1995 McKenna (No 2) ruling, which not merely limits but completely prohibits governmental financial support of the Yes campaign, without however any sufficient obstacle being posed by the legal system to massive private expenditure; and the 2000 Coughlan ruling, which amplifies the broadcast media voice of either side to equal volume completely, regardless of the electoral support the speaker enjoys, combine to make any referendum a uniquely difficult exercise for any government to win. It is those precedents we are about to see in action.
A referendum on ratifying the fiscal treaty now seems likely to be held in May or June, and to be held solely rather than in conjunction with any other referendum. Going by past experience with the Belfast Agreement, the International Criminal Court Statute and the Community Patents Convention, the relevant Bill will simply propose the insertion of a clause in the Constitution authorising ratification of the treaty.
For the reasons already outlined above, a Yes vote seems likely to have a limited impact. What are the likely consequences if Ireland votes No?
First, the other contracting states will undoubtedly go ahead without us: only 12 states need to ratify the fiscal treaty for it to enter into force on January 1st next.
Second, under provisions inserted in the preambles to the fiscal treaty and the European Stability Treaty, Ireland will not qualify for access to any second bailout programme under the European Stability Mechanism from March 1st, 2013, for as long as we fail to ratify.
This is a potentially serious matter because: a) it is not inconceivable that such a bailout programme may one day constitute the only obstacle between financially catastrophic default for the country (with all the implications that has for continued Irish membership of the euro); and b) even without that eventuality intervening, Irish sovereign debt would be rendered much less attractive for investors without the ESM safety net. Badly needed Irish re-entry to sovereign debt markets would be likely correspondingly delayed.
Even without such an explicit ban on access to new ESM programmes, refusal to sign up to the same fiscal regime as other member states would hardly constitute much of an incentive for financial solidarity on their part.
Third, Ireland would actually remain legally bound to much of the fiscal discipline required under the fiscal treaty even if we vote No to the treaty itself – for the very simple reason that we have already signed up to it under existing EU law, in force since last December.
Dr Gavin Barrett is a senior lecturer specialising in European law at the school of law, UCD