While the equity markets remain stupified by the growing list of things that can go wrong in Europe over the next few weeks/months, like the classic deer in the headlights, the rest of us look on and sigh. Today’s “unexpected’ news came from Ireland, where the Attorney General and Irish Premier announced a public referendum would be held on the EU’s “fiscal compact treaty”. As a reminder, that is the one and only thing that was allegedly achieved at last year’s November Summit to end the Euro crisis once and for all.
As expected by everyone here at TAE at that time, though, even that weak, long-term “solution” was dependent on a variety of unlikely things happening in a short amount of time, before economc events and tensions in Europe overwhelmed the political sensibilities of member states and their populations. Henry McDonald reports for the Guardian:
The fate and future of the eurozone is once again in the hands of Irish voters after Ireland’s attorney general recommended that a referendum be held on the EU’s latest fiscal compact treaty.
Irish premier Enda Kenny told the Dail this afternoon that on the advice of the Republic’s chief law officer “on balance” a referendum should be held.
The taoiseach said he and his deputy prime minister Eamon Gilmore were confident the Irish people would endorse the EU treaty as this is in the country’s interest.
Arrangements for organising the referendum would be made in the coming weeks, Kenny told the parliament.
The Labour leader who also serves as foreign minister, Eamon Gilmore, said the referendum would come down to a vote for Ireland’s economic stability and recovery.
Irish voters threw the entire EU reform programme into chaos when they first rejected the Lisbon treaty although after a series of amendments the Republic’s electorate later endorsed a second treaty.
There are fears within the Fine Gael/Labour coalition in Dublin that voters might use the next referendum to punish the government over its domestic policies such as the continuing cost-cutting austerity programme and the continued recession with more than 14% of the Irish workforce unemployed.
In Political Theater Will Kill the Status Quo, I noted how the run-up to elections in Greece, France, Spain and the U.S. could destabilize many of the best laid plans of the status quo elites, along with bond and equity markets, in the near future. We can also add to that list the Parliamentary votes in Finland and the Netherlands on whether to accept the latest bailout package for Greece in its current form, which is riddled with holes. Let’s throw the Irish referendum into this pot of boiling water too, because, although a negative outcome for the Eurocrats would not kill the fiscal treaty by itself, it will certainly add to the uncertainty surrounding the capacity of Europe to backstop the periphery, at a time when most believe it can’t even backstop Greece for much longer. Morgan Stanley explains (via ZeroHedge):
The Irish Prime Minister Enda Kenny just announced that his country will hold a referendum on the fiscal compact that 25 EU member states had agreed on last month. This decision was taken after the Prime Minister had sought advice from his state’s lawyer on whether a vote was necessary. The arrangements for the referendum will be finalized in the coming weeks.
For the fiscal compact, the intergovernmental treaty between the member states on fiscal discipline, to come into force however, the Irish signature is unlikely to be a deal breaker, since the support of 12 contracting parties from the euro area will be sufficient. The Irish referendum will be another crucial risk event to follow, especially since an approval of the fiscal compact is one of the conditions to receive new aid from the ESM (which enters into force in July 2012), should Ireland require an additional programmme in the future.
So, all in all, it’s just another entirely predictable day in the life of an increasingly helpless Eurocrat.