EU, euro saved Ireland from Iceland fate -Irish PM

BRUSSELS, Oct 16 (Reuters) - Ireland’s prime minister said European Union membership saved his country from a financial meltdown similar to Iceland’s and the credit crisis had shown Irish voters the merits of the bloc’s reform treaty.

Normally pro-EU Ireland cast the European Union into limbo in June when Irish voters rejected the Lisbon Treaty in a referendum. All 27 nations must ratify the treaty, aimed at giving the bloc stronger leadership, before it comes into force.

Irish Prime Minister Brian Cowen said EU membership, and being part of the euro zone of 15 nations that have the euro as a common currency, had shielded Dublin from much of the fall-out from the global economic downturn.

“On the financial front, Ireland would have been in a far worse position had it not been for our membership of the EU, the euro and the role the European Central Bank played in recent weeks and months,” Cowen told reporters on Thursday.

Without EU membership, he said, Ireland could have ended up in a similar position to beleaguered Iceland where a crisis stemming from huge debts taken on by its main lenders has brought down the banking system and made the local currency virtually untradeable.

“Thankfully it is a hypothetical situation, I wouldn’t like to think what the situation would be if we ended up like them (Iceland) with our own currency,” he said.

“The access to the resources of the ECB far outweighs the resources of the Irish central bank or Iceland’s central bank. You only have to work that out for yourself to see.”


Cowen was speaking after a two-day EU summit during which he told other leaders of his intention to present a plan in December on how Ireland would overcome rejection of the treaty.

Twenty-four national parliaments have approved the treaty so far -- all expect Ireland, the Czech Republic and Sweden -- and 18 of those countries have completed ratification, according to the European Commission.

The treaty would create a more powerful foreign policy chief and a long-term president of the European Council of EU leaders, the bloc’s highest political body. It would also reform the decision-making system, giving more voting power to countries with the largest population.

Some diplomats say Ireland might hold a second referendum after winning EU assurances that the charter would not force the country to change its laws on abortion or military neutrality, and that all countries would keep a member of the Commission.

Cowen would not be drawn on the issue of a second poll. But said the EU’s response to the financial turmoil of recent months could cause a re-think by the Irish public about the treaty.

“People can reflect had we not been in the EU or in the single currency and had we our own currency and given the limited resources, whether we would have been able to withstand the financial problems of recent weeks and months,” Cowen said.

“I think it is a matter for objective assessment. But I think the evidence is clear that there is far better chance to survive if you are in a zone of stability than on our own, especially if you look at those countries contending on their own and the appalling consequences that have ensued.” (Editing by Richard Balmforth)