Irish voters head to the polls Thursday to vote on the new European treaty – but with substantial numbers of undecided voters, the result is far from a foregone conclusion and could isolate the country from the rest of the European Union.
While most political parties and business groups are behind the Yes campaign, the voices of the naysayers are getting increasingly louder.
“In contending that the fiscal treaty will solve our dilemma, the European Commission and European Central Bankare pissing down Ireland’s back and telling us it’s raining,” David McWilliams, one of the country’s best-known economists, wrote in the Financial Times Tuesday.
Recent polls suggest that the Yes vote will carry the day – but around 20 percent of voters are still undecided.
Sinn Fein, formerly best known for its connections to the Irish Republican Army, is trying to increase its foothold in Ireland outside the six counties which make up the North. The nominally left-wing party has seized on the opportunity to be seen as more than a single-issue group.
Michael O’Leary, the irascible chief executive of Ryanair, branded No campaigners “lunatics” on CNBC earlier this month.
Barry O’Leary, chief executive of IDA Ireland, which is responsible for attracting international investment to the country, told CNBC.com there was a danger of becoming complacent about the outcome of the referendum.
“What will happen on the day is that the people who are against it will come out to vote. There’s no room for complacency. The ship could have sailed if you need a second referendum. The government needs to campaign right down to the last minute,” he said.
Taoiseach (Prime Minister) Enda Kenny hasn’t been campaigning particularly enthusiastically – indeed, he made a speech on national television at the weekend only after Sinn Fein leader Gerry Adams made a high-profile speech calling for a No vote.
He wrote in the Irish Times Monday: “Exactly how is austerity going to disappear magically if we vote No, when in 2012 we’re spending 13 billion euros ($16.3 billion) more than we are raising? How are our gardaí (police) our Defence Forces, our schools, our hospitals and our social protection going to be paid?”
The coalition government’s honeymoon with voters has been resoundingly brought to a close with recent disputes over water charges and property tax. There are worries that voter disaffection with the government and with austerity will deal the referendum a blow which voters really want to give to the government.
A No vote could be catastrophic for Ireland’s position within the European Union.
“Ireland has been nicknamed the ‘posterboy for austerity’ for its success in implementing 25 billion euros in austerity measures since the economic crisis began in 2008, but all this could be lost if the situation in the euro zone gets further out of hand,” warned analysts at Danske Bank, who have been consistently bullish on Ireland’s future.
All the signs are pointing to the markets punishing Irish voters for a No. Ireland’s 10-year bond yields have crept above 8 percent this week – and 7 percent is the level which starts to cause alarm.
The biggest fear for the medium term is that the troika which has bailed out the country could withdraw its support.
“The outcome of a rejection of the referendum would be unpleasant at the very least for Irish risk sentiment and bond prices, with huge uncertainty as to what backstop facility would be available to the Irish government in 2014 in the event it is unable to regain full market access by that point,” Danske Bank analysts warned.
“While the Troika would be unlikely to leave Ireland without financial support so long as the existing program was continuing to be implemented as agreed, the nature of that support would be uncertain, as would the Troika's stance on PSI (private sector involvement) at that juncture.”