Ireland's Varadkar Faces Election Threat as Brexit Crunch Looms

(Bloomberg) -- Ireland’s government pledged to stand by its embattled deputy leader, raising the stakes in a stand-off which could lead to a surprise general election just as Brexit negotiations hurtle toward a crunch point.

Prime Minister Leo Varadkar won’t “abandon” his deputy, Frances Fitzgerald, Irish Foreign Minister Simon Coveney said in a RTE radio interview on Friday after opposition political forces on Thursday demanded she resign over her handling of a whistle blower controversy.

Fitzgerald faces a no-confidence vote next week which could pull down the minority government.

The affair comes at a delicate time for the government, as it moves toward a decision on the Brexit process. Avoiding a hard border in Ireland is one of three key issues requiring “sufficient progress” before the European Union will allow efforts to move on to Britain’s future relationship with the bloc.

“The timing is an issue when considering the crucial December meeting, where Ireland will require a strong leader to deal with possible political pressure regarding the progress of Brexit talks,” said Ryan McGrath, head of fixed-income strategy at Cantor Fitzgerald LP in Dublin. “Having Varadkar attend as a lame duck could potentially be very disadvantageous for Ireland.”

Fianna Fail, the biggest opposition party, called on Fitzgerald to step down over how lawyers planned to aggressively question a police whistle blower while she was justice minister. Fitzgerald maintains she did nothing wrong.

Fitzgerald stepping down “is the only way to avoid a general election,” Fianna Fail leader Micheal Martin in an interview with RTE radio on Friday, adding he was open to further talks in an effort to resolve the issue.

Break Logjam

Martin said if the government fell, an election would have to be held before Christmas. Still, he said he wasn’t trying to undermine the government in Brexit talks, as parliament was united behind the “core principle” of keeping the Irish border open.

U.K. officials tried to accelerate Brexit negotiations by suggesting that rather than wielding its veto next month, Ireland could hold fire and block a final accord if it wished, three people familiar with the talks said. European officials said while such an approach could eventually be part of the solution, it won’t be enough to break the logjam next month.

After the U.K. leaves the union, Ireland’s 310-mile (500-kilometer) border running from near Derry in the north to Dundalk in the south will form the EU’s land border with Britain.

Stand Firm

Varadkar has pledged to stand firm in the face of any pressure to move talks on without enough progress on the border question.

It’s the biggest political crisis to hit Varadkar since he took over as premier from Enda Kenny in June. Last year, Kenny’s coalition drew about 35 percent of votes, slumping from 55 percent five years earlier. That result left him at the mercy of his main rival, Fianna Fail.

“If there is no confidence and supply agreement in place, I don’t see how we can have a government that can function, ” said Coveney. “That is why the actions that Fianna Fail are taking today are so reckless at a time when the country does not need an election.”

--With assistance from Peter Flanagan

To contact the reporter on this story: Dara Doyle in Dublin at ddoyle1@bloomberg.net.

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net.

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