June 14 (Bloomberg) -- Ireland's rejection of the European Union's proposed governing treaty is set to plunge the EU into gridlock, torpedoing plans to parlay Europe's economic strength into more clout in world affairs.
Irish voters shot down the Lisbon Treaty in a referendum two days ago by 53.4 percent to 46.6 percent, vetoing a deal that required approval by all 27 EU countries, according to results announced yesterday in Dublin. The rebuff turns next week's EU summit in Brussels into a crisis-management exercise, overshadowing efforts to tackle soaring food and energy costs.
``This vote doesn't resolve any of the European problems, it almost makes every European problem bigger,'' Luxembourg Prime Minister Jean-Claude Juncker told reporters in Luxembourg. ``It was a bad choice for Europe. There's no Plan B.''
European leaders vowed to press on with ratification of the 277-page rulebook, which is intended to streamline the bloc's decision-making machinery, while conceding they were in ``uncharted territory.''
A week after French fishermen battled riot police in Brussels in a protest over high fuel prices, the commission's head, Jose Barroso, urged EU leaders not to ``fall again into depression and forget that we have other important issues to address.''
Signed in the Portuguese capital in December, the agreement would create the post of president, strengthen the foreign-policy chief, give more power to the democratically elected European Parliament and shrink the European Commission, the EU's executive agency. It was drafted to replace a proposed constitution that was spiked by French and Dutch voters in 2005.
``We must make sure that this Irish setback does not become crisis,'' French President Nicolas Sarkozy, who takes over the EU's rotating presidency July 1, said today in Paris after meeting U.S. President George W. Bush. EU leaders have to deal with the ``political reality'' and push on with the process of ratifying the treaty, Sarkozy said.
The EU has stitched together the world's biggest economic bloc, created a currency to rival the dollar, and expanded from a western European core to embrace 495 million people on Europe's Mediterranean flanks, the British isles, Scandinavia and the ex- communist countries of eastern Europe.
Eighteen countries have ratified the treaty so far. Britain, Spain, the Netherlands, Italy, Belgium and Sweden said they'd go on with ratification. The Czech Republic will decide after next week's Brussels summit, Prime Minister Mirek Topolanek said. The other country that hasn't completed the process, Cyprus, had no immediate comment.
`Fear and Uncertainty'
``Citizens are transmitting signals of fear and uncertainty,'' Italian Finance Minister Giulio Tremonti said at a meeting of economy ministers from the Group of Eight nations today in Osaka, Japan. ``You can say that this isn't rational, but we are getting the message, and we need to react because they are signs of difficulties with the democratic process.''
Ireland and the EU have been down this road before, when Irish voters in 2001 rejected the Nice Treaty, the EU's current, more limited governing treaty, fearing it would end Ireland's military neutrality. The EU offered assurances to the contrary, helping the ``yes'' side to victory in a second referendum a year later.
Irish opponents argued that the new treaty -- the latest revamp to the EU's governing articles dating back to the founding Treaty of Rome in 1957 -- would cede too much power to unelected officials in Brussels, the EU's headquarters, and put at risk Ireland's 12.5 percent business-tax rate.
After failing his first electoral test a month after taking office, Irish Prime Minister Brian Cowen said there is ``no quick fix'' and looked ahead to next week's summit to find a path out of ``uncharted territory.''
In theory, one option is for the rest of the EU to form a ``union within a union'' that sets policies based on the new treaty, then asks Ireland to go along or stand aside, said Peter Ludlow, a historian and chairman of EuroComment, a Brussels-based publisher.
Europe's political establishment has ``invested an enormous amount of political capital in this treaty, and I don't think they're going to sit idly by and see it thrown into the dustbin by 40 percent of the Irish electorate,'' Ludlow said.
The collapse in 2005 of a proposed constitution led the EU to produce the latest scaled-down treaty.
`Single Phone Number'
The EU stripped out references to symbols such as the bloc's 12-starred flag or anthem that give it the trappings of a state and retained the post of president, the constitution's key innovation.
Serving a 2 1/2-year term, the president would organize and run meetings of national leaders and seek to give Europe the ``single phone number'' that Henry Kissinger famously asked for in the 1970s.
The appointment was to be made in December, with European media touting the potential candidacies of figures such as Juncker, former U.K. Prime Minister Tony Blair and Danish Prime Minister Anders Fogh Rasmussen.
Ireland's veto had immediate consequences for Denmark, with Rasmussen saying that the ``new situation'' may delay a planned Danish referendum over whether to adopt the euro currency. Danes said no to the euro once before, in September 2000.
The defeat of the treaty also threatened to set back further EU expansion, since the current treaties cap the bloc at 27 countries. The first victim would be Croatia, which aims to join by 2011, and Turkey, which is on a slower track.
EU governments normally ratify treaties in their national legislatures, as with trade or arms-control accords in the U.S. Ireland is the exception to that rule, required by its constitution to put EU treaties to a direct vote of citizens.
"May those who love us, love us and those that don't, may God turn their hearts. If he doesn't turn their hearts may He turn their ankles so we'll know them by their limping."