Irish Say Yes to EU Pact, Now Seek EU Growth Deal

By SHAWN POGATCHNIK Associated Press

DUBLIN June 1, 2012 (AP)

Ireland's voters have agreed to ratify the European Union's deficit-fighting treaty with a resounding 60.3 percent "yes," results Friday showed, but government leaders and pro-treaty campaigners alike expressed relief rather than joy because of the stark economic challenges ahead.

The treaty's approval, after weeks of nervousness in Dublin and Brussels, relieves some pressure on EU financial chiefs as they battle to contain the eurozone's debt crisis.

But critics said the tougher deficit rules would do nothing to stimulate desperately needed growth in bailed-out Ireland, Portugal and Greece, nor stop Spain or Italy from requiring aid too.

Prime Minister Enda Kenny agreed, stressing in his stern-faced victory speech that the Irish voters' verdict would strengthen his hand as he seeks, with many other European nations, to shift Germany's opposition to boosting growth through government spending.

"I have consistently argued that budget rules alone will not be enough to overcome the economic crisis that faces Europe. They must go hand in hand with a real and concrete growth program for Europe," Kenny said in a nationally televised press conference on the steps of his central Dublin office.

AP

Electoral workers count votes in the European... View Full Caption

Kenny said EU and European Central Bank chiefs must agree on a European-wide new system for managing the toxic banking debts that brought Ireland to the edge of bankruptcy in 2010 and now threaten to do the same to Spain. Ireland long has pressed EU partners, particularly Germany, in vain to permit write-downs of Irish banking debts that could ultimately cost Irish taxpayers €68 billion ($85 billion) and have already given Ireland the worst deficits in Europe.

Kenny spoke by telephone with German Chancellor Angela Merkel, Europe's leading champion of austerity. In a statement afterward Merkel welcomed Ireland's willingness to vote yes to more cuts as an outcome that "deserves particular recognition and respect."

And Merkel mirrored the language, if not the detail, of Kenny's call for new growth initiatives. She said debt and deficit reduction across the 17-nation eurozone "must go hand in hand with the strengthening of forces for growth and competitiveness." She didn't elaborate, but in recent comments has stressed that those forces needed to be boosting efficiency and competition, not funding state investment through increased debt.

German Foreign Minister Guido Westerwelle said all EU nations should follow Ireland's example and speedily ratify the treaty, which 25 nations signed in February and which is supposed to come into force by early 2013. Ireland is the only signatory that required public approval before its ratification; the rest require support only from their own parliaments and heads of state.

"The fiscal compact stands for long-term financial policy good sense. If all of Europe decisively commits itself to this course, we will be rewarded with new confidence," Westerwelle said.

The result of Thursday's referendum represented a surprisingly strong victory for Kenny, who courted unpopularity by insisting that Ireland — already four years into a brutal austerity program that has slashed 15 percent from many workers' incomes — had no choice but to vote in support of yet more cuts and tax hikes.

And when the official result was announced in Dublin Castle, victorious campaign officials engaged in few of the cheers, shouts and hugs normally associated with the occasion.

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Emitte lucem et veritatem

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