The agreement, already signed by the leaders of Ireland and 24 other EU nations, is designed to promote greater confidence in the eurozone by creating new deficit limits for each ratifying nation. Automatic spending cuts would be imposed on those deemed guilty of violating them. Germany, the eurozone heavyweight facing most pressure to keep bailing out its weaker neighbours, is the treaty's key backer but almost all Irish political parties have campaigned for its passage too.
All opinion polls in the past month's campaigning suggest that a majority will vote for the tougher budget discipline, but similar polls were proved wrong when Ireland voted to reject the EU's last two treaties in 2001 and 2008. Ireland is the only nation among the 25 requiring a national vote for ratification, although the treaty does not require Irish approval to proceed elsewhere. Results come Friday.
A "yes" verdict would have no immediate impact on Irish austerity policies, because Ireland already is committed to a severe program of cuts, tax hikes and asset selloffs as part of its 2010 EU-International Monetary Fund bailout.
A "no" could do most damage to Ireland itself, because its existing loans will run dry by the end of 2013 — and the treaty restricts future access to the EU's rescue fund to those nations that accept the new budget rules. But analysts agree it also would send political shockwaves across a eurozone already doubtful that it can confine its debt crisis to the three bailed-out countries of Ireland, Greece and Portugal.
The key goal of Ireland's 2010 bailout is to get the nation's deficit back below 3 per cent of gross domestic product, the eurozone's existing and much-violated limit. Ireland has posted the worst deficits in the EU for the past three years — 14.3 per cent in 2009, an EU-record 32.4 per cent in 2010 and 13.1 per cent last year — and expects to return to the 3 per cent level only in 2015 or 2016. The appalling figures chiefly reflect Ireland's much-rued decision to try to stop Europe's worst banking crisis by nationalizing tens of billions' worth of toxic property debts. The costs proved too great for Ireland, savaging its credit ratings and forcing the EU-IMF to intervene.
Only when Ireland gets its deficit back down below 3 per cent would the new treaty's tougher limit of 0.5 per cent of GDP come into play and, potentially, extend Irish austerity to the end of the decade.
The government says Ireland has no choice but to follow this course if it wants to repair its credit rating by next year and resume borrowing normally on bond markets at affordable rates. Prime Minister Enda Kenny has warned that a "no" outcome would lead to further Irish credit-risk downgrades, make a second IMF-led bailout in 2013 all but inevitable, and require even harsher austerity moves because Ireland no longer would be able to borrow from the EU.
Treaty opponents, emphasizing European divisions over the wisdom of relentless austerity, urged voters to throw the treaty back in the EU's face. They forecast that the gambit would end not in Ireland's exclusion from future funding, but in Germany's isolation and a renegotiation of the bloc's entire fiscal strategy.
The anti-treaty forces long have demanded write-downs on the remaining debt liabilities of Ireland's six banks, five of which have been nationalized and seen their biggest toxic debts transferred to two new state-run "bad banks." State-guaranteed repayments to international bondholders of Ireland's most recklessly managed lender, the defunct Anglo Irish Bank, are expected to cost taxpayers €47 billion ($59 billion) by the time the last IOU is cleared in 2031.
Several voters interviewed outside two Dublin polling stations said they had voted no, because they want Ireland's government to demand a better EU-IMF deal that involves greater write-offs of state-owned bank debt.
"Banks in Germany and Britain and elsewhere were just as responsible for the mess we're in. We're sick to the back teeth of being told it's all our own fault," said one anti-treaty voter, Gerard Cunningham, 50, after casting his ballot in a Catholic Church converted to a polling station for the day. "We've already bankrupted the country to try to pay back these foreign speculators. We were foolish to give back as much as we did, because we never could afford the bill."
But a few blocks away, at an elementary school gymnasium converted to a polling station for the day, 42-year-old Bridget Connolly said she'd voted yes with no enthusiasm.
"The treaty will solve nothing, but we're facing massive cutbacks and charges no matter what Europe says anyway. And voting no would just create more problems for us," she said. "We're going to need European money next year, plain and simple. We can't afford to be thumbing our noses at Europe right now."
Anti-treaty Irish pressure group, http://www.libertas.ie/
Pro-treaty Irish think-tank , http://bit.ly/JwWvVOSuggest a correction