Gerry Adams
Gerry Adams Reuters

At the end of the month, Ireland goes to a referendum on the European Stability Pact. As Ireland is the beneficiary of a bailout, rejection of the pact would mean terminating the EU credit that spared Dublin the need to test the financial markets.

That consideration, together with the notion that Ireland had always been a loyal member of the EU - despite rejecting some treaties before they were modified to secure voter approval in a revote - seemed to ensure that the referendum would be passed smoothly. Another factor is the support for the treaty from both the government and the main opposition.

This prognosis has been undermined by the election of Francois Hollande and the Greek elections of last Sunday. The Sinn Fein, party led by Gerry Adams, is now accusing the government of trying to act as the European Union poster child to the detriment of the Irish people.

It was now the turn of the Irish, argued Adams, to join the French and Greeks in rejecting austerity. Sinn Fein pelted the government in parliament with questions over whether the Prime Minister believes that" public spending targets or welfare rates should be set in Brussels or Berlin" - as opposed to Dublin - and whether it supported "the abandonment of economic sovereignty".

According to the polls, the perception of a growing momentum against EU austerity policy, together with the repercussions of austerity at home, have narrowed the gap and a "no" victory, that would have been deemed impossible a short while ago, has advanced to the realm of the hypothetical.

As opposed to previous treaties that the Irish initially rejected, the European Stability treaty does not require unanimous approval to go into effect, but merely ratification by 12 countries.

Opposition leader Michael Martin. whose Fianna Fail party signed the bailout agreement and was soundly trounced in the subsequent election. made the case for the yes vote. If Ireland detached itself from the EU financial system. it would have difficulty mobilizing €18 billion worth of capital due to investor skepticism. This would mean that the country would have to expend billions in extra interest payments and economic misery would be worse than the present austerity.

The proponents of the yes votes claimed that Ireland would not lose by signing off on the current arrangements, because an evolving European position, signaled by the French elections, would also extend to Ireland. Ireland was best advised to place its confidence on the European Union's ability to work things out ultimately rather than going it alone.

Investors are already spooked and the yields of Irish government bonds climbed upwards, given the apprehension that Gerry Adams' call for rebellion against Brussels and Berlin could fall on receptive ears.