May 2012        

A No vote would open up a golden opportunity

Prof. Terrence McDonough of the School of Business and Economics at NUI, Galway, described the lunacy of the economic thinking behind the “Treaty on Stability, Coordination and Governance in the Economic and Monetary Union” when he made a presentation recently to the Oireachtas Joint Committee on European Affairs.
     The treaty would require a change in the Constitution to impose a maximum public deficit of 0.5 per cent and a permanent balanced budget on Governments for the indefinite future. It is this treaty that we are being urged to vote Yes to in the referendum on 31 May.
     Prof. McDonough told the committee: “Take a country at the bottom of a depression. Force it to run budget cuts and tax increases year after year. Force this same policy on its neighbours and trading partners. Run this into the foreseeable future and hope that it results in stability, confidence, and recovery. This is emphatically not a safe option. This is a dangerous experiment, completely without historical precedent.”
     But the madness gets even worse. The main argument put forward for voting for the treaty is that a Yes vote is necessary to enable member-states of the euro zone to obtain access to a permanent loan fund, the European Stability Mechanism. But this fund does not exist. The treaty that would establish it is quite separate and distinct from the Fiscal Treaty, and has not been ratified by Ireland or the other euro-zone states.
     Even more significant is the fact that to set up the new institution all twenty-seven member states of the EU must agree to an amendment to one of the existing EU treaties; and Ireland has a veto on this, because before the amendment can come into force it must be approved by all twenty-seven states “in accordance with their constitutional requirements.”
     A referendum is required because compliance with the ESM Treaty means a significant surrender of state sovereignty beyond the original “licence” that the Irish people gave the state in earlier referendums to join a developing European Community or Union.
     The necessity of holding a referendum on the ESM would put the state in a powerful position to demand concessions on the national debt, on the Anglo-Irish promissory notes, and on the terms of the memorandum of understanding with the Troika in order to persuade voters to agree the necessary measures.
     The Government has been at such great pains to try to hide this significant fact from public scrutiny, as well as the full contents of the treaty, that the few people who are aware of this treaty and its significance call it the “secret treaty.” It has been faithfully assisted in this subterfuge by the media. The Government has been determined at all costs to avoid holding a referendum on the ESM Treaty and has declared that it will ratify it in June after the referendum on 31 May.
     Everything seemed to be going all right with this tactic; then along came a number of constitutional challenges to the treaty, in Estonia, in Germany, and now in Ireland.
     The Donegal independent TD Thomas Pringle is challenging the constitutionality of the ESM Treaty, and if he is successful this might force the Government to hold a referendum on it. It is very important that people are made aware of these developments and that the wall of silence is broken down.
     The Fiscal Compact and ESM Treaties proclaim themselves to be “complementary,” and so it is bizarre that the Government believed it could get away with pushing through the ESM Treaty without having to face a constitutional challenge.
     And it is not just questions of EU law that are involved. Ireland will have to commit €11 billion of various types of callable capital to the ESM when it is established, with €1.6 billion of that “up front.” This commitment must be made “irrevocably and unconditionally.”
     And it doesn’t stop there. Amounts required from euro-zone states may be increased—without limit—simply by majority decision of the ESM’s Board of Governors.
     The treaty also provides for extraordinary levels of outside interference in member-states’ budgets and an unprecedented degree of personal legal immunity for the bureaucratic elite running the show.
     So a No vote does not mean “turning our back on a framework of European co-operation,” as claimed by the governor of the Central Bank, Patrick Honohan, when he improperly called for a Yes vote in the referendum: rather the No position represents a defence of the integrity of the EU treaties as they stand against changes that would radically alter the EU for the worse.
     The two treaties must be seen as being “complementary” and represent an attempt by the larger EU states to transform that “framework” in a profoundly undemocratic and anti-social direction.
     Success for the No campaign would open up a golden opportunity for the adoption by the euro-zone states of more rational and effective policies for dealing with the area’s financial crisis, with more emphasis on stimulating economic growth and demand throughout the area, to the common good of Ireland and the other European countries.
     It could represent a real new beginning.

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