Minister for Finance Michael Noonan has said he would prefer not to hold a referendum in Ireland on a new treaty involving tougher rules for euro zone countries, warning that it will be seen by the world as a vote on whether the Irish want to stay part of the single currency.
Speaking in London, Mr Noonan said: “A lot of the Europeans don’t understand our constitutional position. I had to explain that if there is a change there has to be a referendum because we don’t have the facility that other countries have of changing their constitution either by simple, or weighted-majority in parliament.”
Lawyers are already working on the issue, he said. “All countries are represented and it is not clear yet whether it will require constitutional change in Ireland, or not. Of course, we will be participating and working to make sure that we have a satisfactory agreement that everybody can live with," he said.
“We don’t have any problem really with the provisions of the new governance regulations. As a programme country we have most of these in place already. I have a Fiscal Control Bill drafted already. It is at heads stage which in certain respects goes further than is required.”
Saying that he hoped a referendum would not be required, Mr Noonan continued: “So my personal wish is that it can be done without constitutional change. But if constitutional change is required [then] we will have a referendum, and we will put the case to the people, and it will come down to whether one wants to continue in the euro, or not.
“Because the nature of referendums - the issue itself might be complex, about new governance rules for the euro - [but] in the practical politics it will be dealt with in shorthand and the shorthand will be: ‘Do you want to maintain Ireland’s position as a euro zone country’."
Pressed on the point, Mr Noonan said: “It is too soon yet to say without seeing the draft that will be put to the people. I am not even convinced yet that there will have to be a referendum. We haven’t seen drafts yet. One theory is that there won’t be a referendum because there won’t be one required. But what I am saying is that in practical politics if there is a referendum the wider issue of Ireland’s future in the euro zone will become an issue, even though the actual question that will be put to the people will be about the governance rules for the euro.”
The holding of a referendum holds dangers for Ireland, he said. “I am saying that it makes our position difficult. I am saying that there are very serious issues if this has to go to a referendum and a referendum fails, but I am not going to make any predictions about what the future holds. It is obviously the policy of the government to work our way through the present difficulty and to get back into the markets and being back into the markets we will be a very strong euro zone country.”
Asked if his comments would be seen as a threat by the Irish public, the Minister said he had not brought the issue up during his interview with Bloomberg but was responding to a question from the interviewer.
“I am not using that language at all, I am replying to questions put to be by a person such as yourself and trying to predict what would happen if there is a referendum. But my preference is that there wouldn’t be a referendum and there is a strong weight of evidence that a referendum wouldn’t be required.”
Asked how a referendum could be avoided if Ireland is to sign up for permanent external supervision of budgets, the Minister for Finance said: “The legal people have not called it that way. They say it will depend on the text. And we will have an input into the formulation of the text. You can speculate but there is no certainty that the speculation is correct in terms of whether there is a referendum required, or not.
"But what is absolute is that if a constitutional change is necessary that a referendum is necessary because there is no other way of doing that in Ireland, but what is in doubt is whether a constitutional change is necessary to put the new rules in place,” Mr Noonan said.
Ireland already has to deal with EU and the International Monetary Fund over budgets running up to 2015, he said.
“There is external consultation already on the types of budgets that we put in place. For example, we have to reach agreement with the European authorities and the IMF – and have done so – on the level of deficit that we run in all budgets up to 2015.
"The Constitution never made a distinction between what could be done for a little while and what could be done for a long time, so I don't agree with your proposition," he told The Irish Times at the Irish embassy in London this evening.
Responding to questions at Bloomberg’s London headquarters earlier, Mr Noonan said: “I am confident about the future of the euro. The problem is not with the euro as a currency, it is with certain parts of Europe-land. If you look at the history of the currency when it was put in place 12 years ago it has gone up in value, it has increased inter-European trade by 50 per cent.
"It has been a better antidote to inflation than the German mark because inflation has stayed below 2 per cent for each of the 12 years. There are problems in the euro zone, many of them to do with fiscal imbalances. I suppose we had a fiscal union where everybody knew the rules until the declaration at Deauville. At Deauville, it seemed that new rules for a new fiscal union were being introduced, and they created great uncertainty," Mr Noonan said.
"One of the key features of what was agreed last week is that under the ESM which is being brought forward to July the private sector involvement element of the treaty is being dropped, and Europe is going back to the IMF rules. When the IMF regards a country as sustainable that is the position.
"The signature is again sacrosanct.What happened there is very significant, and I hope that the European countries will proceed now very quickly in drafting the framework for the IGC treaty which has been agreed. I know that work is proceeding as we speak.”
Questioned about Ireland’s attitude to a financial transaction tax, Mr Noonan made clear during the day that no such
proposal is currently on the table as part of the upcoming negotiations: “The Irish financial sector is very strong, particularly in Dublin. It contributes about 30,000 jobs. It is something that we are very conscious of and something that we want to move forward.
“There is no particular connection between what happened last week and the Irish financial sector. Obviously, we will watch everything as it moves forward. When you are a small country and you are one of 27 you are not a play-maker; usually, you are a receiver of mandates usually rather than making the mandates yourself.
"But I see no threat at present. I think that what the British government did was because they saw that as being in their interests. There is no immediate impact on Ireland, as far as I can see.”
He welcomed signals from London that it will not block the other 26 EU states from using the EU institutions to operate an inter-governmental agreement between them, saying: “Great Britain are our nearest neighbours, as well as being our biggest trading partners, so we want very good relationships.
"Over the years in Europe there have been issues when we have been together and allies and other issues where we took differences of approach. At the end of the day you follow your national interest, whether your national interest is immediate, or more long-term.
"We still have our set of interests. The UK has its own set of interests.Where they coincide we are allies. I don’t see any indication from the UK that they are going to inhibit the establishment of the IGC arrangements which are now in place. There is no sign of that, and I don’t see that happening,” Mr Noonan said.
"Pressed on British prime minister David Cameron’s decision to veto an EU-27 deal, he said: “The decision of sovereign governments are matters for sovereign governments. They act in the best interest of their country. David Cameron was speaking to the Taoiseach [Mr Enda Kenny] yesterday evening and had a very full and amicable discussion. We have a better idea of the British position now.
“There is an urgency about the talks, but I am confident that the UK will not inhibit that whatsoever. Quite frankly, we in Ireland would prefer if this was an agreement of the 27, but we are not saying that in any critical way of the UK. They make their decisions in the interests of the UK and we make our decisions in the interest of the Irish Republic.”
The Minister sought to put some distance between Ireland on one hand and Spain, Italy and Portugal on the other, saying that there has been ‘a lot of approval of the Irish story’ over recent months because of the tough action that has been taken and the transparency it displayed in dealing with the banking crisis.
“We are a northern European economy. We are more in line with the UK, The Netherlands and Germany in the way that our labour market works and the way in which we handle our affairs. We put the facts on the table and let people judge: it will rebound to our advantage. In 2011 we have restored a lot of credibility."
On the financial transaction tax proposal sought by the French, in particular, Mr Noonan said: “The best position from our point is that it would be introduced at a global level. That doesn’t look likely, so the next best option is that it would be an EU-27, rather than 17. We are prepared to talk about the tax on that basis. I don’t know how strongly it will be pushed now.
"Obviously, there will be disadvantages for Ireland if a tax applied in Dublin, but didn’t in London. But it would depend on what was covered. Within the principle there is a lot of detail to be covered. Our position always is never [to] reject something without seeing the detail. But if it is put on the table as a real proposition, and it hasn’t been put on the table yet we will examine it and we are very interested in the detail.”
While Mr Noonan was in London, Minister for European Affairs Lucinda Creighton was in Paris warning that Ireland had "a very deep concern" about the plans for 26 countries to go ahead without Britain.
Mr Kenny had a telephone conversation with Mr Cameron last night amid growing concern about the impact on this country of Britain’s isolation in Europe. Government sources said the two leaders conducted a review of events at last week’s EU summit.
Mr Kenny yesterday briefed Cabinet colleagues on the events of the summit and earlier he gave a briefing to Opposition parties.
Speaking after his briefing, Fianna Fáil leader Micheál Martin called for a referendum and said there was no reason for the Government to wait before making a decision. He said he was surprised the Government was not prepared to give a commitment to hold a referendum.
“I did ask the Taoiseach why Ireland did not consider supporting the British view that there was no need for a new treaty and that what is being proposed could have been dealt with through changes to existing treaties,” Mr Martin said. “Ireland is not best served by having one less ally in the discussions,” he said.
Sinn Féin president Gerry Adams, whose party also wants a referendum on the treaty, said after the meeting with the Taoiseach that the deal on a new treaty was bad for Irish citizens and the citizens of the EU.
Additional reporting: Agencies
