Ireland warned not to reject Lisbon treaty
(FINANCIAL TIMES) Charlie McCreevy, Ireland’s European commissioner, who joked during last year’s Lisbon treaty referendum that he had not read the document and “no sane person would,” on Friday warned a second rejection by Ireland next month could turn a “very serious economic problem for Dublin into a full blown economic crisis”.
In a strongly worded speech to a business lunch in Dublin, the commissioner warned that there was an unacceptably high risk that “international investors would take fright” following a second ‘No’ “at a time when our government, our banks, and our businesses need to raise more international capital than ever.”
He said his own scepticism about certain aspects of the EU is no secret, adding he had “never been prepared to swallow the Europhiles agenda whole”. But Mr McCreevy, who is an internal market commissioner, said a ‘No’ vote now would send a “negative signal to international money and bond markets, making it harder and dearer for the government to raise capital, to fund our exchequer deficit and for our banks to fund credit for businesses that create jobs and growth”.
Mr McCreevy caused consternation in Brussels earlier this year when he said that the treaty – which seeks to bolster the EU’s global role and improve the workings of the enlarged union – was so complicated that 95 per cent of Europeans would probably vote ‘No’, if they were given the chance to vote – a comment now featuring in posters of the ‘No’ camp.
But his latest intervention echoes comments in recent days by senior Irish ministers spelling out the economic cost of a second ‘No’ vote – a tactic they were reluctant to deploy during last year’s referendum campaign for fear of being seen as scaremongering.
Mr McCreevy said that interest rates on Irish government bonds were now higher than those for any eurozone member, although he argued this was a reflection of negative perceptions about the Irish economy rather than economic fundamentals.
He partly blamed this on unflattering international media coverage of the Irish economic crisis. “It has been there in black and white – and often in black and pink. Be in no doubt, those sections of the international media whose audience is predominantly large international investors would use a ‘No’ vote on October 2 to stir up speculation about this country being forced out – or being forced to the margins – of the European Union – with no role, no influence and no voice that is listened to.
“And be in no doubt either, that they would use this to highlight the risks for international investment in this country.”
Ireland’s debt rating has actually improved in recent months in reaction to various economic initiatives, with the spread between Irish and German debt narrowing in recent months from a peak of 288 basis points in mid-March to around 160 basis points. But Ireland’s government has to finance a ballooning budget deficit officially put at €18bn debt this year, pushing its debt up from 43.2 per cent of gross domestic product to 59 per cent by the end of this year.
Alan McQuaid, chief economist and bond analyst at Bloxhams stockbrokers, said that when Ireland rejected the treaty in June 2008 the price of Irish debt remained unaffected. “But we’re in a completely world today. I would agree with the commissioner – that a ‘No’ vote would be seen as giving the proverbial two fingers to Europe.”