Irish Prime Minister Enda Kenny speaks to the media at goverment buildings, Dublin, Ireland, June 1, 2012 (AP).
Irish Prime Minister Enda Kenny speaks to the media at goverment buildings, Dublin, Ireland, June 1, 2012 (AP).
DUBLIN - People in the Republic of Ireland have voted to ratify the European Union's Fiscal Pact in a referendum that sets strict limits for countries' budget deficits.  Sixty percent of Irish voted in favor - more than forecast in opinion polls.  Irish Prime Minister Enda Kenny expressed relief at the decision, but says his country must now work with EU partners to build a plan to boost growth.  

A cafe in the center of Dublin at lunchtime.  As is usual, it is raining, and workers and students are sheltering from the wet, buying coffee and sandwiches.  But the day is unusual in another way.  The Irish are voting in a referendum - whether they should allow Ireland to sign up to a treaty that makes the country legally obligated to keep their government spending within set limits, and punishes the country with big fines if they do not obey those rules.  College students Robin Celligan and Ronan O'Reilly are about to make their choice.

"I'm voting yes because it's definitely a step in the right direction in the future, and this is going to come in anyway, whether we vote yes or no, or not, and I think it is the right decision for Ireland at the moment," said Celligan.

Ronan O’Reilly, also a college student, says he does not support the referendum.

"A few reasons - I think it is the wrong question, I think we are dealing with the problem in the wrong way," said O’Reilly. "I think that we need to call Germany's bluff.  The treaty is in German oligarchical interests.  It's not in the Irish public interest.  It's not in the European interest.  I think we need to call their bluff."

There were two conflicting emotions during the campaign.  Anger - at how successive Irish governments had allowed property developers and banks to run up tens of billions of dollars of debts that the Irish are now paying back.  And fear - because if Ireland had voted no, it would not have been able to make use of further emergency money from the EU and the International Monetary Fund when their current loans have to be paid back next year.

In the end, fear won out.  By a large majority, the Irish voted to join the other European governments who had already ratified the treaty.  Prime Minister Kenny spoke of his relief at the result.

"In doing so, the Irish people have sent a powerful signal around the world that this is a country that is serious about overcoming its economic challenges," said Kenny. "As I said throughout the campaign, this treaty will not solve all of this country's problems, but it is one of the many foundation stones that we need to put in place to ensure that our economic position stands on firm ground for the future."

A yes vote gives Ireland access to more bailout money if the country needs it after 2013.  However, it also requires Ireland to carry on implementing billions of dollars worth of tax increases and spending cuts.  Unemployment is high.  Young people are emigrating, often as far as Australia, to find work.  Stories of parents seeing all four children boarding a plane to find work are common.

Speaking before Friday’s result, Irish-based economist Lorcan Roche Kelly thinks a yes vote is worth the price.

“Because the market expects a yes vote, a no vote would be a surprise, and an adverse surprise considering how fragile the international economy is," said Kelly. "People looking to invest in Ireland...we have Google here, we have Facebook here, we have Yahoo, all the big Internet companies here, people looking to invest in Ireland would maybe think twice about furthering their investment.”

Ireland provided the answer the markets had hoped for. But as it happens, the U.S. stock markets dropped sharply Friday on the news the U.S. economy created far fewer jobs in May than had been hoped for.  In today’s environment, no sooner than one hurdle has been cleared, another can come up on the horizon.