The latest opinion polls suggest that the Irish electorate may be about to vote Yes in this Thursday's referendum on the European Fiscal Treaty, but that the high number of undecided voters continues to lend some uncertainty to the result as the campaign enters its final days.

An Irish Times/Ipsos MRBI poll published on Saturday last found that 39% would vote Yes as against 30% in the No camp. However, 22% said they did not yet know, which suggests that undecided voters may hold the outcome in their hands. Yes campaigners remain confident, citing rapidly improving polling numbers over the past week as evidence that momentum is in their direction. Ireland is alone of the 25 signatory states to the Treaty to hold a referendum as its constitution requires any international agreement which impinges upon the Republic's sovereignty to be placed directly before the electorate.

New Fiscal Rules

The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union is the centerpiece of Chancellor Merkel's response to the ongoing euro crisis, and was agreed upon as a voluntary arrangement between 25 eurozone states last December outwith the formal legal structures of the EU after the UK vetoed an official EU treaty. It is referred to in Germany as the Fiskalpakt, by the Irish government and its supporters advocating a Yes vote as the "Stability Treaty", and by those in the Irish No camp as the "Austerity Treaty". Among its provisions are a requirement that eurozone states write a "balanced budget" amendment - defined as a structural deficit of no more than 0.5% of GDP - into their constitutions, and automatic sanctions for any country whose cyclical deficit exceeds 3% of GDP. Most controversially, the Treaty grants supervisory powers to European authorities over national budgets, and requires states in violation of the excessive deficit rule to submit their budgets for approval and possible revision. Critics of the arrangements argue that this has serious implications for national sovereignty and democratic accountability.

Irish No campaigners also argue that the new rules entrench permanent austerity at a time when such policies are widely seen to have failed. In an oftentimes heated campaign debate, some have argued that the treaty effectively elevates a partisan political model - a free market "small state" philosophy - above political debate and raises it to the level of an unchallengeable constitutional principle. The Irish Yes camp has countered this by arguing that there is little new in the treaty and that it simply represents a more rigorous enforcement of rules already in existence. The Maastricht Treaty of 1992, which paved the way for the introduction of the euro a decade later, required members of the new shared currency zone to integrate their economies by accepting common budgetary and deficit rules. These rules were breached by some member states in the years following Maastricht, however - and Irish No campaigners never tire of pointing out that Germany in particular and also France were persistent violators in this period at a time when Ireland consistently operated within the rules.

The Rocky Road to Dublin

The background to the campaign debate in Ireland is the ongoing economic and social pain endured by the country after it became the second eurozone member after Greece to enter the EU/ECB/IMF bailout programme in November 2010. Ireland had enjoyed a period of unprecedented prosperity in the boom years of the last decade, but this rapidly turned to bust after the banking crisis of 2008 spread from Wall Street and London to Dublin. The much vaunted "Celtic Tiger" era had been permitted to turn into a property bubble by an Irish government that ignored all warnings from economic experts that the country's property market was becoming dangerously inflated. In recent years, a small publishing industry has grown in Ireland consisting of books such as Ship of Fools by Fintan O'Toole which document a complacent culture of cronyism and economic mismanagement in the ruling Fianna Fail government of that period (since sent to electoral oblivion by Irish voters).

The crisis arrived in September 2008 in the days following the collapse of Lehman Brothers in the US, when the Irish government was confronted with a run on the nation's banks and came under pressure from the European Central Bank (ECB) not to permit any bank to fail. In the small hours of 30th September 2008, panicking Irish ministers took what is perhaps the most fatal decision in the Republic's history: they issued a blanket government guarantee for all deposits in Irish banks, and did so in the absence of full and accurate information from the banking sector as to what the full scale of potential losses were. With a stroke of a ministerial pen, tens of billions of euros of private debt was socialised, and Irish citizens who had gone to bed the previous night as residents of a state that had enjoyed one of the healthiest budgetary positions in the EU woke up the next morning in one of the world's most indebted countries.

The next two years witnessed evermore desperate and ultimately failed attempts by a beleaguered government to retain the confidence of international investors. This finally came to an end in November 2010 when the Irish government was forced to admit that it could no longer remain in the sovereign bond markets, and entered a bailout programme jointly administered by the EU, the ECB and the IMF - referred to in Dublin derisively as "the Troika".

The shadow of a second bailout

The swingeing austerity cuts that continue to be imposed as a condition of the bailout deal remain the dominant fact which colours all political debate in Ireland today. The debate will be familiar to anyone who has knowledge of Irish politics. On the one hand, those who accept the cuts as a necessary if painful process by which the country must restore its tarnished reputation; on the other, those who argue that the cuts imposed by the Troika are curtailing the very economic recovery the nation needs in order to repay its debts to the same Troika. Overshadowing all of this is the fear that a second bailout may be needed in the near future.

Uncertainty as to what the future holds has somewhat complicated the referendum debate in that much of the discussion has focused, not on the specific details of the Fiscal Treaty itself, but on those of a separate document - the terms of the European Stability Mechanism (ESM), the EUR700 billion rescue fund for troubled eurozone economies which comes into force this July. A late amendment to this inserted a clause to the effect that any member state which does not ratify the Fiscal Treaty will be denied access to rescue funds. This is referred to by the Irish No camp as the "blackmail clause". Many in the Yes camp advocate that the Fiscal Treaty be ratified, not so much because of any inherent virtues in the treaty itself, but because failure to ratify could have catastrophic consequences should the country require a second bailout in the future and be refused one as punishment for having voted No.

Whatever the outcome of Thursday's vote, this has been an EU referendum campaign fought in a very different atmosphere from previous occasions when EU treaties were enthusiastically endorsed by the Irish electorate. In the past, the Irish distinguished themselves from their neighbours in the UK by the extent to which they embraced the EU project. Today, it seems that even many who plan to vote Yes do so more out of a fatalistic sense of inevitability rather than any optimism for the future direction of Europe. The same opinion poll which recorded a likely victory for the Yes camp also found that 69% of Irish citizens believe that EU has come to be dominated by Germany.