Next Irish PM to carry weight of EU's treaty hopes

DUBLIN (Reuters) - Ireland's finance minister Brian Cowen is the leading contender to take over from Bertie Ahern as prime minister, but any new leader will face a tough test with a looming referendum on the European Union's reform treaty.

Ahern said on Wednesday he will step down as Ireland's prime minister on May 6, to fight allegations of corruption that have dogged his final term in office. He has denied any wrongdoing.

His departure comes ahead of a June referendum on the EU treaty when a "no" vote from one of Europe's smallest countries would topple the entire project designed to replace a constitution rejected by French and Dutch voters in 2005.

Ahern said last year that Cowen, who is also Ireland's deputy prime minister, was his "obvious successor" to lead the Fianna Fail party, and by extension the government.

Fianna Fail secured an historic third consecutive election victory last year and is the biggest party in the ruling coalition administration.

Cowen, 48, is seen by many in his party and by analysts as a safe pair of hands to take Ireland forward after an end to the country's decade-long property boom put the brakes on years of rapid growth which led to it being dubbed the "Celtic Tiger".

"There are issues we are facing, international concerns are increasing and domestic concerns," said Dermot O'Leary, chief economist with Goodbody Stockbrokers. "So it's a challenging environment for a new Taoiseach (prime minister)."

Cowen declined to say if he was ready to lead his party. A leadership contest is expected to begin in the coming days.

"The unity of our party is strong, remains strong and we will do our business with same measure of dignity and discipline that he (Ahern) has displayed today," Cowen told RTE.

Others in his party urged a speedy conclusion to any leadership race. "I am very anxious to ensure the party will agree on a successor," Justice Minister Brian Lenihan said.

While Cowen is the clear favorite, analysts expect other candidates to enter the fray. "It may be a more intense fight than could be desired by the Taoiseach," said Roger Jupp, managing director with pollsters Lansdowne Market Research.

"I suspect we will find more than one runner. I don't think Brian Cowen will get a straight run or a unanimous endorsement."

EU TREATY VOTE CRUCIAL

Either way it will need to be resolved quickly after Ahern said on Wednesday he believed June 12 was the most "appropriate date" for Ireland's EU treaty referendum.

"He (Ahern) believes we have to refocus our energies on the important poll," Lenihan said.

Ireland is the only one of the EU's 27 member states planning a referendum on the treaty, and a rejection by Irish voters could topple the whole project designed to end years of wrangling over reform of the bloc's institutions.

The government has yet to formally set a date and deputies still need to debate and approve changes to the country's constitution that will clear the way for the referendum.

"I suspect we will have a fairly involved process of discussion which will not especially be helpful in terms of running up to the treaty," said Lansdowne's Jupp.

Analysts said the coalition government was likely to rebuff opposition calls for a general election after Ahern's departure.

"Although some of the opposition figures are calling for an election, I don't think it destabilizes the government in any way at all," said Richard Sinnott, professor of political science at University College Dublin.

(Editing by Philippa Fletcher)