By James Saft
(Reuters) – Ireland’s decision to hold a popular vote on Europe’s new fiscal treaty adds some unpredictable and much-needed risk to the seemingly inevitable course of the euro bailout steamroller.
While turkeys have on occasion voted for Thanksgiving, especially if told a “no” vote will only bring the feast day forward, Irish voters have reason to be furious and also have a strong track record of rejecting euro zone initiatives.
Ireland can’t by itself block the treaty, which will come into force if adopted by a quorum of 12 European Union states, but a rejection can, and just might, serve as a rallying point for those disaffected by the crisis resolution process.
Ireland would, however, find itself unable to access support from the European Stability Mechanism, a sort of permanent euro zone bailout fund that comes into effect in 2014. As Ireland is now receiving aid from the existing fund, such a vote would massively raise the risks of holding Irish debt.
“We expect Ireland to face challenges regaining market access in 2013 and it will likely need to rely on the ESM, at least partially, when the current support program expires,” Moody’s credit rating analysts Dietmar Hornung and Matt Robinson wrote in an analysis following the announcement.