by Hugo Brady

The financial crisis is challenging many of our assumptions about the course of politics and world affairs. Gordon Brown – only weeks ago portrayed as nearing the end of his time as UK prime minister – has been elevated to European, even global leadership status. After years of pan-European financial integration, the EU is heading back to national banking systems, with heavy state involvement. And the French desire for a different kind of globalisation – considered either hopelessly vague or a form of Gallic envy a short time ago – might well be realised in the coming months. Cliché or not, these are interesting times indeed.

The crisis may have another unlikely outcome: it may save the Lisbon treaty, rejected by Ireland in a referendum last June. The French government, and many others, want the Irish to hold a second referendum, preferably next spring. But they greatly under-estimate just how difficult reversing the June decision is going to be. (In fact, the chances of a second referendum before next autumn are very slim, despite the difficulties this poses for the 2009 European Parliament elections and the appointment of a new European Commission.) They also believe – rightly in a sense – that the current government of Brian Cowen, Ireland’s taoiseach, is part of the problem, not the solution.

Ireland is faring worse than most other countries in the current economic turmoil. Burst housing and credit bubbles have placed incredible strain on public finances. The approval ratings of the current coalition – led by Cowen's Fianna Fáil party – are in free fall after it unveiled a hugely unpopular budget that includes the removal of free medical benefits for the elderly. The opposition accuses the government of punishing the vulnerable for the bankers’ mistakes. With only a thin majority to rely on, the collapse of the government is a possibility.

In a previous CER Insight, I wrote about how challenging it was for the Irish government back in 2002 to hold and win a second referendum on the Nice treaty.
See: Tough choices to avoid euro-paralysis [2], June 2008. One important – and overlooked – component was the general election held between the two votes. Though the Nice treaty issue was not prominent in the campaign, the change of government wiped the political slate clean and provided some legitimacy for the previous decision to be re-visited.

The chances of this happening in the case of the Lisbon treaty have suddenly increased. If the present government falls, there will be three options. There may be a general election. Or Fianna Fáil may form a new coalition with new partners. More probable is the formation of an alternative government, led by the largest opposition party, Fine Gael, backed up by the Irish Labour party and others.

A Fine Gael-led coalition government would still have a mountain to climb to convince the Irish electorate to say yes to Lisbon. First the new government would have to find a way to make clear to voters that sticking with the Nice treaty means Ireland is about to lose its automatic right to be ‘represented’ on the European Commission. Second, it would have to give more power to the Oireachtas – the Irish Houses of Parliament – to decide how EU policy is decided at home. (One idea is to include a special ‘EU auditor’ post in the Irish constitution as a watchdog on European matters.) Third, the government would probably have to secure revamped promises on old bugbears in Ireland’s relationship with the EU such as abortion and defence, as well as new ones like tax harmonisation and, possibly, the Charter of Fundamental Rights.

I have argued that all such guarantees should be consolidated into one protocol on ‘Ireland in Europe’ to make them more visible to the public. The Irish government may also propose a clause to be added to the state’s constitution that no Irish citizen may be conscripted in the army of a foreign power, to address a spurious but widely believed claim from the June campaign. These would appear as separate questions on the ballot in a second referendum. Lastly, the new coalition should bring home a promise, probably from the June 2009 European Council, that the slimming down of the European Commission (as foreseen in the Nice and Lisbon treaties) will not happen. There will be more opposition to this concession from other member-states than the Irish imagine, but the difficulty in securing it should give extra impetus to any new campaign at home.

The course of Ireland’s EU debate would depend on all these things happening at the right time. Even then, there would be no certainty of success. The current leader of the pro-European Fine Gael, Enda Kenny, seems a poor alternative to lead the government. And the more impressive leader of the Labour Party, Eamon Gilmore, has grave misgivings about voting on the same treaty a second time. If they manage to agree, the government will still have to find positive arguments to make the main text of the treaty acceptable to voters.

Ironically, the events of the past few months may help to build such a case. The Georgian war and financial crisis have shown the EU needs capable, coherent leadership more than ever. The treaty’s reforms to the presidency system – to make leadership of the EU longer-term and more stable – would go some way towards achieving this. Second, and more importantly, the crisis has underlined Ireland’s reliance on its membership of the EU and the eurozone; outside the euro, Ireland would have faced a run on its currency. Even though the country cannot be forced to leave the Union, a second referendum will inevitably raise questions over its future in the EU. On the other hand, a yes vote could presage a speedier economic recovery and a return to the good times.

Hugo Brady is a research fellow at the Centre for European Reform.