DUBLIN – Ireland's voters have agreed to ratify the European Union'sdeficit-fighting treaty with a resounding 60.3 percent "yes," votefinal referendum results Friday showed, but government leaders andpro-treaty campaigners alike expressed relief rather than joybecause of the stark economic challenges ahead. The treaty's approval, after weeks of nervousness in Dublin andBrussels, relieves some pressure on EU financial chiefs as theybattle to contain the eurozone's debt crisis. But critics said thetougher deficit rules would do nothing to stimulate desperatelyneeded growth in bailed-out Ireland, Portugal and Greece, nor stopSpain or Italy from requiring aid too. And a stern-faced Irish Prime Minister Enda Kenny agreed, stressingin his victory speech that Ireland's decision would strengthen hishand as he seeks, with many other European nations, to shiftGermany in its stubborn resistance to more aggressive measures toboost growth through government spending. "I have consistently argued that budget rules alone will not beenough to overcome the economic crisis that faces Europe.
They mustgo hand in hand with a real and concrete growth program forEurope," Kenny said in a nationally televised press conference onthe steps of his central Dublin office. Kenny said EU and European Central Bank chiefs must agree on aEuropean-wide new system for managing the toxic banking debts thatbrought Ireland to the edge of bankruptcy in 2010 and now threatento do the same to Spain. Ireland long has pressed EU partners,particularly Germany, in vain to permit partial writedowns of Irishbanking debts that could ultimately cost Irish taxpayers anestimated 68 billion ($85 billion) and have already given Irelandthe worst deficits in Europe. Kenny later spoke with German Chancellor Angela Merkel, Europe'sleading champion of austerity. Merkel welcomed Ireland'swillingness to vote yes to more cuts as an outcome that "deservesparticular recognition and respect." And she mirrored Kenny's callfor new growth initiatives, saying debt and deficit reduction "mustgo hand in hand with the strengthening of forces for growth andcompetitiveness in the economies of the eurozone." German Foreign Minister Guido Westerwelle said all EU nationsshould follow Ireland's example and speedily ratify the treaty,which 25 nations signed in February and which is supposed to comeinto force by early 2013.
"The fiscal compact stands for long-term financial policy goodsense. If all of Europe decisively commits itself to this course,we will be rewarded with new confidence," he said. The result of Thursday's referendum represented a surprisinglystrong victory for Kenny, who courted unpopularity by insistingthat Ireland — already four years into a brutal austerityprogram that has slashed 15 percent from many workers' incomes— had no choice but to vote in support of yet more cuts andtax hikes. And when the official result was announced in Dublin Castle,victorious campaign officials engaged in none of the cheers, shoutsand hugs normally associated with the occasion.
"There was nobody from the 'yes' camp jumping up and down,"observed Gerry Adams, leader of the Irish nationalist Sinn Feinparty, which campaigned against the deal. Government ministers emphasized that voters' anxiety about theparlous state of the economy — with unemployment stuck on14.3 percent and hundreds of thousands of households trapped innegative equity — colored their every step on the campaigntrail. "The astonishing thing about this campaign was that lots of peoplevoted yes with a heavy heart, and many voted no with a heavy heart.Both sides were really concerned about growth and employment," saidIreland's minister for social protection, Joan Burton, who hasoverseen cuts in many welfare payments. Overall, about half of Ireland's 3.13 million registered votersparticipated in Thursday's referendum, a typical turnout in anofficially neutral country that is constitutionally required tohold a referendum on each European treaty.
Public rejection could have blocked Ireland from receiving new EUloans once its 2010 bailout money runs out next year. It also wouldhave sent political shockwaves through other eurozone members,where anger against austerity and bank bailouts runs similarly highbut citizens are denied the chance to vote on the treaty. The other24 signatories are ratifying it through their parliaments. During the campaign, Kenny warned that rejection would mean evenworse austerity, because Ireland would suffer more creditdowngrades and lose its key EU source of funding. The treaty proposes that all members who ratify it should reducetheir annual deficits to no more than 0.5 percent of gross domesticproduct.
The current eurozone limit is 3 percent of GDP. Ireland iscommitted to cutting its way back to that level by 2015. Opponents of the treaty argued that the new 0.5 percent deficitlimit would force Ireland to keep cutting until perhaps 2020, whengreater state investment to stimulate the economy was required. Thegovernment countered that much would depend on whether Irelandcould keep growing its economy against the tide of austerity.
Ireland, unlike much of Europe, has recorded a faint pulse ofgrowth over the past year thanks to strong exports by nearly 1,000foreign high-tech companies based in Ireland. But the domesticeconomy — with consumers reducing their own debts and saltingaway savings after a decade of Celtic Tiger extravagance —has shrunk for four straight years. Ireland has posted the EU's worst deficits since 2009, including anEU-record 32.4 percent in 2010 and 13.1 percent last year. Bothfigures were greatly inflated by the exceptional costs of Ireland'sdecision to nationalize five of its six banks rather than see anycollapse.
That debt burden overwhelmed Ireland's national financesand pushed the nation into the bailout zone in 2010. Ireland'sexpected repayments to international bondholders and central banks,plus decades of related interest charges, represent 19,000($23,500) for every man, woman and child. ___ Associated Press writer Geir Moulson in Berlin contributed to thisreport.
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