IRISH DEPUTY PRIME MINISTER ASSESSES LISBON TREATY

C O N F I D E N T I A L SECTION 01 OF 02 DUBLIN 000431 SIPDIS E.O. 12958: DECL: 07/23/2018 TAGS: PGOV PREL ECON EFIN ETRD EUN PINR EI SUBJECT: IRISH DEPUTY PRIME MINISTER ASSESSES LISBON TREATY AND IRELAND'S ECONOMIC SLUMP REF: A. DUBLIN 416 ¶B. DUBLIN 389 DUBLIN 00000431 001.2 OF 002 Classified By: Ambassador Thomas C. Foley; Reasons 1.4 (B) and (D). -------------- Summary -------------- ¶1. (C) On July 15, 2008 Deputy Prime Minister (Tanaiste) and Minister for Enterprise, Trade and Employment Mary Coughlan told the Ambassador that it was "not possible" for the Irish Government to be ready by mid-October to propose a way forward to the European Council following the unexpected defeat of the Lisbon Treaty referendum on June 12. She said that Ireland needs to maintain a sharp focus on exports and competitiveness to overcome the current economic slump, and that the trade unions, employers, and Government would all need to cooperate and compromise during the ongoing "Social Partnership" negotiations if the economy is to be righted. Bright and capable, Coughlan will be a valuable asset as the Irish Government seeks to come to grips with the Lisbon Treaty fallout and its current economic problems. End summary. -------------- Lisbon Treaty -------------- ¶2. (C) Noting that she had just come from a Cabinet meeting on the Lisbon Treaty, Coughlan stated that it was "not possible" for the Irish Government to be ready by mid-October to propose a way forward to the European Council following the defeat of the Lisbon Treaty referendum by the Irish electorate on June 12 (Ref B). She cited the need for extensive public consultation, which will be delayed by the traditional Irish shut-down during the summer holidays. She also said that a Department of Foreign Affairs-funded research project into the reasons for the defeat ) a key element in determining how to proceed ) would not be ready until late September. Fundamentally, she said, the Irish people had made their wishes known and the Government would have to respect their decision. She called the way forward "uncharted waters." ¶3. (C) Coughlan referred to French President (and President of the European Council) Nicolas Sarkozy,s remarks on July 15 that the Irish would have to vote again on the Lisbon Treaty as an inappropriate attempt to appeal directly to the Irish people ahead of his scheduled July 21 visit to Dublin. -------------- Enterprise and the "Social Partnership" -------------- ¶4. (C) Turning to the economy, Coughlan said that the economic downturn in Ireland (Ref A) had little to do with the rejection of the Treaty and everything to do with the U.S. and global economies, the price of oil, the shortage of credit, and the sub-prime problem. She noted that Ireland had been particularly hard hit by a sharp decline in the construction industry. Stating that Ireland needed to maintain a sharp focus on exports and competitiveness to weather the storm, she said she fully supported Finance Minister Brian Lenihan,s decision to hold the line on current expenditures, including a reduction of the public service by three percent. ¶5. (C) As the Minister responsible for negotiating the "Social Partnership" (the triennial agreement between the government, employers, and the trade unions on matters such as wage rates, benefits, and taxes, which has underpinned economic stability and growth since 1987) (Ref A),Coughlan said that everyone must cooperate and compromise to become part of the solution to the economic slump. She indicated she was particularly worried that the trade unions might adopt aggressive tactics, which could deter prospective foreign investors. The ongoing negotiations were particularly difficult she said. -------------- Northern Ireland -------------- ¶6. (C) Coughlan praised the U.S.-supported investment conference in Northern Ireland in May 2008, saying that she fully supported cross-border economic and other initiatives and believed that the development of an "all-island" economy is extremely important. (Note: Coughlan comes from County Donegal, the northeastern-most corner of Ireland, which has much to gain from cross-border economic cooperation with DUBLIN 00000431 002.2 OF 002 Northern Ireland. End note.) -------------- Comment -------------- ¶7. (C) Coughlan is an intelligent, young, and energetic Irish leader. She clearly understands the issues and appears able to hold her own in the rough-and-tumble world of labor, business enterprise, and trade. Coughlan will be a valuable asset as the Irish Government seeks to come to grips with the Lisbon Treaty fallout and the current economic slump. FOLEY