Prof. Terrence McDonough ( School of Business and Economics,  NUI Galway) made a presentation to the Joint Committee on European Affairs on the Intergovernmental Treaty on Stability, Coordination and Governance in the Economic and Monetary Union regarding Ireland’s many options if there was a NO vote on Fiscal Treaty Referendum.

There is a strong chance Ireland will need a 2nd bailout. As many suspect (and hasn’t been denied by Irish government), the Treaty was changed at Irish Government’s request so that Ireland would not be able to access the ESM for funding if it voted NO. This measure was brought in so the Irish Government could force the electorate to pass the referendum (they knew full well one was required). Below are options that Ireland has to deal with the eventuality of needed funds. In fact Constantin Gurdgiev said a NO vote is Ireland’s trump card.

In fact, Ireland will have a number of options in this event.  First, Ireland is small but scary. A disorderly Irish default would threaten the stability of the European banking system.  A European Central Bank intervention to restabilize the system would be considerably more expensive than a second bailout of a comparatively small country. It is highly unlikely that Europe would ignore its self-interest in order to spite the Irish electorate.  Funds would be  found outside of the ESM.

Secondly, Ireland also has the option of borrowing from the IMF rather than the European institutions.

A third possibility is to set about closing the budget deficit.  Irish tax take as a  percentage of GDP is well below the EU average.  Taxes on wealth and high incomes are  considerably underexploited.

A fourth possibility is the restructuring of debt.  The Anglo-Irish promissory note  payments alone constitute 3 billion in any given year.

A fifth under-discussed possibility is the issuance of innovative debt instruments.  It would be possible to make Irish bonds acceptable in payment of taxes in the event of any  default.  This should eliminate the risk premium which makes it difficult for Ireland to re- enter the markets at this time.

Any one of these options alone has the potential to substantially address the budget gap in the event of a second bailout and a failure to access ESM funding.  A judicious  combination of these strategies would easily finance the resulting gap with little disruption.

The sky will not fall in the event of no vote.

If a no vote will not lead to disaster, are there positive reasons to vote yes?

Many pro-treaty arguments are primarily intended to be calming and reassuring in  nature, telling the electorate that a yes vote is the safe and conservative course.  In fact such a  pact is historically unprecedented and a dangerous experiment.


Paul Sommerville who was on the Vincent Browne show said that there is no chance Ireland would be left without funding.

“There is absolutely no chance that the ESM will not fund us no matter what way we vote, zero chance…”.

Goto 29mins 15 secs into interview at