Irish opposition buoyed by Greek, French elections

Dublin: Irish opponents of Europe's fiscal treaty are drawing inspiration from Athens and Paris as voters across Europe rebel against austerity.

The Irish hold a referendum on the treaty on May 31, after Greek and French voters rejected candidates promoting budget cuts to help solve the euro-region debt crisis.

While opinion polls show the "yes" side ahead, that was also the case before previous unsuccessful plebiscites in Ireland.

The French and Greek elections "allow the treaty's opponents to argue the tide is going out on austerity," said Eoin Fahy, an economist at Kleinwort Benson Investors in Dublin.

"The results are damaging for the ‘yes' camp. Just how damaging remains to be seen."

A "no" vote by Ireland, which has pushed through every measure asked of it since its 2010 rescue, would deal a further blow to a German-led bloc in Europe that says budget cuts are essential to tackle the root cause of the two-and-a-half-year crisis.

Hollande victory

In France, Francois Hollande became the first Socialist to win the presidency in 17 years as he defeated Nicolas Sarkozy on Sunday. In Greece, Syriza, which has vowed to renegotiate the terms of international aid, is trying to form a government.

"The people of France, the people of Greece are against the policies of austerity and it is now a moment for Ireland to add our voice to that," Mary Lou McDonald, deputy leader of Sinn Fein, the largest party opposing the treaty, told reporters in Dublin on Monday.

"The best way we can do that is by delivering a resounding ‘no' vote." Ireland must hold a referendum should a treaty alter the country's constitution.

Irish voters rejected changes to the European treaty in 2001 and 2008, before the proposals were passed in re-runs.

The yield on Ireland's October 2020 bonds, regarded as the benchmark, rose 2 basis points to 6.90 per cent yesterday as Greek and French borrowing costs also rose.

Syriza, a coalition of left-leaning Greek parties, came second in Sunday's election as New Democracy and the socialist Pasok party, which support the bailout plan, fell two seats short of the 151 seats needed for a majority.

Mandate

Syriza was handed the mandate on Tuesday to form a government after New Democracy's Antonis Samaras failed to forged a coalition agreement.

Hollande is preparing to take office after his anti-austerity campaign helped him unseat a sitting French president for the first time in more than 30 years.

Hollande has vowed to reopen the fiscal treaty, complicating the Irish government's push to win support for the accord.

The developments "provide the ‘no' side with the ammunition to highlight increased opposition to austerity in Europe", fixed-income firm Glas Securities said in a note.

Polls indicate the "yes" side leads in Ireland. The most recent opinion poll conducted by market research firm Red C shows that 47 per cent of voters back the treaty, while 35 per cent oppose it.

Eighteen per cent of the electorate were undecided in a survey carried out between April 23 and April 25 for the Dublin-based Sunday Business Post.