Minster for Finance Brian Lenihan has warned that a second No vote in the Lisbon Treaty referendum would “shatter” international confidence in Ireland and lead to a rise in the cost of borrowing for the State.
Speaking at a pro-Lisbon press conference in Dublin today, Mr Lenihan said a No vote would signal to the rest of the world that Ireland has “retreated into economic isolation”.
He said the choice the country faces in three weeks could not be starker, warning that a rejection of the Treaty would lead to a “continued scarcity of funding for banks”.
Mr Lenihan denied that he was engaged in the politics of fear by making this warning, saying that he has the responsibility for managing the country's finances and he has to state the facts as they appear to him.
"That is not the politics of fear, that is my job," he said.
Mr Lenihan said a Yes vote was important in generating goodwill for Ireland and that the country could not operate in isolation.
The Minister said he did not expect the vote on Lisbon to be end up being a vote on the Government's Nama "bad bank" plan to fix the banking sector. He said that debate on Nama will begin next week and will be adjourned until after the Lisbon vote on October 2nd and that the Dáil will vote on Nama after the poll on the treaty.
"I really don't see a connection between them and I don't think that connection is being drawn at all," he said.
The Minister said he "very much" welcomed the courts' decision to reject applications by Liam Carroll's Zoe Group to appoint an examiner to put in place a survival plan.
"They have clarified the law for us and they have certainly removed a substantial obstacle to the implementation of Nama," he said.
Mr Lenihan said that Nama would not bail out developers and that some developers will become insolvent.
"The implications of this for the banks and the wider economy have to be addressed - that is what Nama is about," he said.
Asked whether the changes introduced in the Nama (National Asset Management Agency) bill published this week could be perceived as providing major concessions to Greens ahead of the party's debate on the issue, Mr Lenihan said he was "not too worried about optics" but was more concerned about Ireland and the state of the banking system.
"If I am gone in eight weeks' time, someone else will have to appear and develop a Bama (Banking Asset Management Agency) instead of Nama (National Asset Management Agency) because it isn't as if there are huge choices facing this country on this issue," he said.
"It is very important that we realise that in the tone of this debate. I am not really worried about kudos or amendments. I am worried about the country getting this issue sorted out."
The Minister said the Government was working the ECB and the European Commission to repair and reform the Irish banking system. He said the ECB would support the by swapping Government bonds for cash.
“This injection of cash by the ECB and world markets into our banking system will provide a powerful stimulus to our economy.
"Just to spell this out: as businesses and household up and down this country are experiencing the most intense credit squeeze in our history, it is the EU that has come to our rescue providing real and tangible support in the form of cash and the most favourable interest rates possible,” he said.
Mr Lenihan warned the vote would define Ireland’s relationship with its European partners for years to come.
“It is not a cost-free choice. We need Europe in order to overcome our shared problems,” he said. "We need the reforms contained in the Lisbon Treaty in order to tackle those shared problems. A Yes vote is a vote for economic recovery,” he added.