The South East Region of People’s Movement, which is a non party political organisation will be campaigning for a No vote in the referendum on 31st May next.
The grandly titled “Treaty on Stability, Coordination and Governance in the Economic and Monetary Union” is supposedly about “stability” in the Eurozone. Yet the treaty warns us that money from the new permanent European Stability Mechanism bailout fiund will only be given to States that have ratified it.
The Economic and Monetary Union which Ireland signed up to under the 1992 Maastricht and 2009 Lisbon Treaties assumed that the 3% and 60% of GDP deficit rules for every Eurozone State would be abided by and enforced by means of the sanctions - warnings, special deposits, fines etc. - which are set out in those treaties.
If they had been and if the rules of the EU treaties had been enforced for all, there would have been no sovereign debt crisis in the Eurozone and no need for any Eurozone bailout fund. When Germany and France broke the rules of the EMU by running big government deficits in 2003, the EU treaty sanctions to enforce the 3% and 60% deficit rules were not applied against them, and they were thereafter effectively dropped for everyone else.
Ireland did not break these excessive deficit rules, yet now is being threatened that unless it votes to permanently hands over virtually the whole area of budgetary policy to the Eurozone we will not be able to access funding from the European Stability Mechanism should we require it in 2013. We have a gun to our head or so the supporters of the treaty would want us to believe.
In fact Ireland would have a number of options in this event: -
- regardless of the Treaty vote, Ireland is guaranteed funding under the current programme as long as it meets its targets. A No vote will not change this;
- there is no legal basis for punishing a state that doesn’t ratify, and to try to do so would damage the very Euro that the pact is supposed to defend;
- if we adhere to the existing Treaties we cannot be excluded from their benefits. As Mr. Michael Noonan, Minister of Finance said after the last EU Summit, ‘There is a commitment that if countries continue to fulfil the conditions of their programme the European authorities will continue to supply them with money even when the programme is concluded … The commitment is now written in that if we are not back in the markets the European authorities will give us money until we get back in the markets.”;
- Ireland, if it should need a second bailout, could have access to funding sources such as the IMF, as well as our existing rights with Europe. This is the same insurance or back-stop that all EU countries are entitled to as members of the IMF. More EU countries have accessed IMF support than EU support in the last decade. These include Latvia, Lithuania, Poland, Bulgaria, Romania, Hungary, and Estonia.
Most economists regard a permanent balanced budget rule as absurdly inflexible. Governments need to run deficits on occasion to stimulate their economies and expand economic demand when that slumps heavily in their domestic or foreign markets.
In considering the possible implications of all this it is worth bearing in mind that in 2014, just two years time, under the Lisbon Treaty Germany’s vote in making EU laws will double from its present 8% of total Council votes to 16%, while France’s and Italy’s vote will go from their present 8% each to 12% each, and Ireland’s vote will halve to 1 %.This would be the context in which we had surrendered much of the stuff of national decision making and normal party politics from the arena of democratic consideration and debate.
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