Enda Kenny, the prime minister of Ireland, has announced that Ireland will hold a referendum on Europe’s new fiscal treaty. Ireland was one of twenty-five countries to agree to a treaty that calls for more fiscal discipline. Mr. Kenny himself believes that the treaty is worth ratifying, but the Irish Attorney General has said that a referendum in necessary.

Ireland has a far from perfect relationship to pan-European referenda. In 2008, Ireland’s public voted to reject the Lisbon Treaty, a result that the European establishment refused to accept. Legislatures of countries like Germany and the Netherlands have approved the new fiscal treaty while rejecting the possibility of a referendum, with less than impressive majorities. The UK has withdrawn from the process altogether.

The fact that referenda are being rejected across Europe is another indication of the undemocratic nature of European institutions. Despite what effect a referendum will have, it will be interesting to see how the Irish vote on the proposed treaty, and how damaging an indecisive vote will be to the multinational response to the Euro crisis. Whatever the outcome, Ireland will need to make sure that renegotiation with the EU happens soon, in order to avoid the mistakes of the past.

While Ireland does have a history of rejecting EU referendums there is good reason to think that the Irish will vote to ratify the new fiscal treaty. Ireland needs the euro to be a strong currency in the short term, and it is doubtful that the country would be able to survive in the current economic climate without some reliance on the EU. What will be telling is how many decide to vote against integration, and how many eligible voters will stay at home.

I do not think that the Irish will vote heavily in favor of the treaty. While Ireland is now in a position where it cannot afford for the euro to fail, the history between the EU and Ireland is not one without entangling complications. Many of Ireland’s infrastructure projects were funded with EU money. Today in Ireland, it is common to see at the beginning of large roads or bridges signs that indicate that the project was paid for by the taxpayers of other EU members. This contribution to infrastructure and the adoption of the euro are part of the reason why Ireland is still in such need of a close relationship with the EU. Yet the European Central Bank was responsible for keeping interest rates low during the booming “Celtic Years”, contributing to the Irish housing bubble that plunged the Irish economy into recession in 2008. Ireland is now is a position where its most generous lender is largely responsible for its economic collapse.

The same European Central bank was also recently involved in a huge credit expansion, providing 530bn euros to 800 banks across Europe in an attempt to help improve liquidity. While investor might be happy with this development at the moment, in the long term it is hard to see such a huge expansion being beneficial for the long term economic security of Europe.

It is a shame that small countries like Ireland are now too irremovably connected to the behemoth that is the European Union. A quick but painful divorce is what Ireland needs from Europe, but at the moment it seems like the Irish are not ready for economic independence.

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