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European Union, United Kingdom

Clarke’s pro-Europe tone highlights referendum risk to UK Tories from the center

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Longtime senior Conservative Party grandee — and former chancellor of the exchequer — Kenneth Clarke (pictured above) in no uncertain terms yesterday said that a British exit from the European Union would be a disaster.United Kingdom Flag IconEuropean_Union

That Clarke is pro-Europe is certainly not a surprise.

As former prime minister John Major’s chancellor from 1993 until the fall of the Tory government in the 1997 Labour electoral landslide, Clarke was the most prominent pro-European in Major’s government — at one point, Clarke was even in favor of the United Kingdom joining the eurozone.  When Major’s government irreparably fractured over divisons on the UK’s role with respect to Europe, Clarke was most certainly the top general of the pro-European faction.

So it’s not a shock to see Clarke joining forces with Peter Mandelson, the former Labour veteran, and others for a cross-party effort to boost the United Kingdom’s continued presence in the European Union:

“There’s a broad range of opinion inside the [Conservative] party. The number of people who actually want to leave the European Union; it’s quite tiny. They get a disproportionate amount of attention. My guess is that there are about 30 who want to leave and when we first joined the European Community I think there was slightly more than that.”

He warned that it would be “pretty catastrophic” if Britain left the EU and said he was now resigned to fighting a referendum on the issue if the Conservatives win the next election.

“The background climate in this county has become … unremittingly hostile. I think somebody has got to make the positive case again. The climate of public opinion just needs to be reminded how essential it is if we really want the UK to play a part in the modern world,” he said.

But it’s another headache for UK prime minister David Cameron, who announced in a widely anticipated speech last week that he would seek to renegotiate the United Kingdom’s role in the EU and, thereupon, call a referendum on the UK’s continued membership by 2017 (obviously depending on the reelection of the Tories in the 2015 general election).

Clarke’s outspoken support shows just how difficult Cameron’s balancing act on Europe has become — and it will only be more difficult as a potential referendum approaches. Continue reading Clarke’s pro-Europe tone highlights referendum risk to UK Tories from the center →

Ireland

Ireland votes ‘yes’ to fiscal compact in referendum

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The count is underway, but it looks certain that the fiscal compact will pass yesterday’s Irish referendum — by around a 60-40 margin:

According to results received at the central count centre in Dublin Castle to date, 57.6 per cent voted Yes, while 42.4 per cent voted No, when spoiled or invalid votes are excluded. Turnout is in the region of 50 per cent.

Of the 15 constituencies to submit full results, 12 have recorded a Yes vote. Full constituency-by-constituency results are available here.

Earlier this week, I looked at some of the reasons why Irish voters seemed more inclined to accept this treaty on the first vote, after rejecting the Treaty of Nice in 2001 and the Lisbon Treaty in 2008: in no insignificant terms, a ‘no’ vote would have perhaps caused international investors to flee Ireland and maybe has caused Ireland to be unable to access the European Stability Mechanism.  Also, given that the treaty need not be unanimously ratified, Ireland would have had no ability to reject the treaty in favor of additional concessions from Brussels.
At a time when anti-austerity forces are gathering momentum across Europe, the treaty vote in the tiny country, hamstrung by a European bailout, is not going to stem that momentum.  But it is a significant victory for the mainstream Irish political parties (who have finally won a pro-EU vote for the first time since 1997) and for Irish Taoiseach Enda Kenny and his government: the message Irish voters are sending today, both to European leaders and the markets seems to be, “Not to worry, Ireland’s not Greece.”
It is a defeat for Gerry Adams and Sinn Féin — Adams’s vocal opposition to the treaty did not convince Irish voters in the face of such strong arguments (some might say blackmail) from the markets and from mainstream politicians.

Ireland

Irish set to approve fiscal compact in Thursday referendum

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Ireland’s feisty voters, which have developed an art form out of defeating European Union treaties, still seem likely to support the fiscal compact treaty in Thursday’s referendum:

Polls show the ‘yes’ vote in the lead — the latest Irish Times poll shows 39% in favor, 30% opposed, with 22% undecided and 9% not voting.  Other polls have shown even strong support for the ‘yes’ camp.

After the Sturm und Drang of May 2012’s electoral wave, which has seen voters support anti-austerity politicians from Germany to Greece, the fiscal compact seems to have less momentum than ever.

So it would be a plucky twist of fate if Ireland, which has become the bête noire of EU treaty making — its constitution provides that a EU treaty is an amendment of the Irish constitution and, consequently, must be approved in a referendum — gives a thumbs-up to a fiscal compact that might never go into law EU-wide and would result in a loss of Irish sovereignty with respect to its own fiscal policymaking.

Furthermore, over the course of Ireland’s four decades in the EU, Irish voters have voted on six treaties, and in each case, the initial pro-treaty vote has decreased for each new treaty:

In each of the last two efforts, for the Treaty of Nice in 2001 and the Treaty of Lisbon in 2008, Irish voters initially defeated the treaty, Irish negotiators worked to attain new concessions from the EU and each treaty was subsequently ratified in a second referendum.

The fiscal compact, cobbled together by Merkel and then-French president Nicolas Sarkozy in December 2011 amid soaring bond prices for Spanish and Italian debt, would limit each EU member state to a structural budget deficit of just 0.5% of GDP.  That target seemed unrealistic in November, but seems even more so today, with many European economies still stagnant (or in recession).  Newly elected French president François Hollande has called for revisiting the terms of the fiscal compact during and after his election.

So the final ratification of the fiscal compact is far from certain, with or without Ireland.  As the UK and the Czech Republic opted out of the fiscal compact, the fiscal compact is not, as a technical matter, a formal EU treaty.  Accordingly, it needs ratification from just 12 eurozone members before January 1, 2013 to go into effect.

As of today, it has received just three conditional ratifications. In Slovenia and Portugal, national parliaments have approved the fiscal compact, but the ratifications are not formally complete without presidential approval.  The only other country to ratify the fiscal compact is Greece, whose May parliamentary elections were so inconclusive that the country must hold a second set in June, which could very well result in electing Europe’s most anti-austerity government.

So why, in the face of so many reasons to junk the fiscal compact, which may not even be ratified by the rest of Europe, are Ireland’s voters set to approve it on Thursday? Continue reading Irish set to approve fiscal compact in Thursday referendum →

Ireland

Pro-referendum forces maintain momentum in Ireland

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For me, one of the key questions about the recent French and Greek elections has been how those results would play in Ireland — would a firm anti-austerity wave across the continent make Irish voters more or less likely, in the upcoming May 31 referendum, to endorse the December fiscal compact agreed among all of the European Union members (except the United Kingdom and the Czech Republic)?

Surprisingly, perhaps, given the increasingly cynical response of Irish voters in these EU treaty referenda, the “Yes” vote camp still seems to be maintaining (or even strengthening) its lead over the “No” vote.  The latest poll shows 53% in favor of the treaty (an increase of 6% over the prior poll), with only 31% opposed.

The momentum comes even as German chancellor Angela Merkel finds herself increasingly on the defense against an emergent pro-growth (and anti-austerity) wing from both the periphery — e.g. Greece — and the heart — e.g. France, North Rhine-Westphalia — of the EU.

Say what you will about the current Eurocrisis, it is fascinating to watch the increasingly interlinked politics among the EU member states.  For the first time in EU history, notwithstanding decades of (politically meaningless?) European parliamentary elections, a bona fide European politics has emerged in the austerity/growth debate.  It transcends the traditional right/left axis of national politics and the very existential debate of federalism vs. intergovernmentalism.

Yesterday, Irish finance minister Michael Noonan argued that supporting the fiscal compact would send a message to the EU that Ireland is serious:

Mr Noonan said adopting the treaty will send a signal out to Europe that the Irish are serious, committed people, and committed to the repair job required for the economy.

If we vote No, he said, Europe will move on and we will be left with less than full membership of the eurozone.

To laughter from the audience at an economic summit organised by Bloomberg in Dublin this morning, Mr Noonan said he does not want Ireland to be a pavilion member of the eurozone “where you are allowed drink in the bar, but not play the course”. Continue reading Pro-referendum forces maintain momentum in Ireland →

Ireland

One strategy for the Irish vote: blackmail

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The economists have spoken: Irish voters should vote “yes” on the fiscal compact later this spring or else.

From a report from Ireland’s largest stockbroker comes the following:

A No vote would cast doubt over Ireland’s commitment to the euro and could trigger a ratings downgrade which would destroy our chances of returning to the bond market for the foreseeable future, he added. Yields on Irish bonds are likely to rise ahead of the vote, which will be held some time this year.  Bond yields would rise sharply if the people were to vote No but fall if the people were to vote Yes.

The gauntlet has been laid down — I expect this refrain to become a steady drumbeat in advance of the referendum.

 

Ireland

Kenny to target Irish referendum in late May

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Irish Taoiseach Enda Kenny is eyeing late May for a referendum to approve December’s European Union-wide fiscal compact — although we may not know the exact date until later this month, per The Irish Times.

Timing is crucial — right now, polls show Irish voters in favor of the treaty, but two months is a long time for opponents to foment opprobrium against a treaty that would place a fiscal straightjacket on national finance ministries by limiting signatories to an annual budget deficit of just 0.5% of nominal GDP.

So the sooner that the referendum is held, it is thought, the better for treaty supporters.  If held in late May, the vote would follow both rounds of the French presidential election, where François Hollande — an avowed opponent of austerity who has called for renegotiation of the terms of the fiscal compact — currently leads polls, as well as tentative Greek legislative elections planned for April.

An outcome that would jeopardize European unity in any of the three could spook European investors.

Although the fiscal compact — not technically an EU treaty after the UK and the Czech Republic opted out — will go into effect with the approval of just twelve countries, Europe will still pay nervous attention to the vote.  The Irish referendum will be the only opportunity for a popular vote on the treaty across the EU, and so a stingingly public defeat would give other nations an excuse to opt out, or at least think twice about the treaty.  Ireland itself, already under the constraints of IMF- and EU-imposed fiscal austerity, is the recipient of bailout money to support its public debt.  An Irish defeat could jeopardize future bailout money and spark an investor crisis throughout the eurozone. Continue reading Kenny to target Irish referendum in late May →