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The new EU Fiscal Treaty referendum in Ireland. May the 31st, 2012
by Christos Mouzeviris
2012-05-29 08:40:08
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In exactly 2 days the Irish electorate will be called to vote on yet another EU Treaty Referendum. This time on the EU's Fiscal Treaty, or the "Stability Treaty" as the Irish Government has put it in its campaign. Ireland's constitution requires a referendum each time there are going to be changes on it, to be approved by the electorate with a YES or NO vote. It is not very easy to get a clear answer with a yes or a no, especially when the question can not be presented to the people in a format that will require just two answers. The hardest thing will be to persuade the Irish voters to vote for something that only the Irish political elite understands its importance!

But how is the debate in Ireland faring? So far the YES side has an advantage, yet there is a large undecided portion of the electorate that could swing the result either way. About a third of Irish people are still undecided. So the debate is heating up for the past two weeks, in an effort to influence the public opinion. The result of the referendum won't have any immediate impact to the rest of the EU states or the Treaty's implementation, since the Treaty requires 12 out 17 eurozone states to ratify it in order to be implemented. So even if Ireland votes NO, the Treaty can still be ratified if the majority of the other EU states approve it. This Treaty is very important for the economic future of Ireland, but that of Europe too.

Though Ireland's decision can not be decisive this time like in the case of the Lisbon Treaty referendum, nevertheless the "Eurosceptic" groups have already landed on Ireland to push for a NO vote. Mr. Nigel Farage MEP, a well known British eurosceptic but also Mr. Declan Ganley, founder of the eurosceptic group "Libertas" are already here to help defeat the Treaty. Understandably though, all eyes of Europe are on Greece and France at the moment. Because of the recent developments and huge changes that happened there after the recent elections in both countries.

Some are calling for a postponing of the referendum in Ireland, on the grounds that Ireland should not vote and expose itself if the vote is NO, in case of a formation of a Greek anti-austerity government that might lead to the country's exit from the eurozone. Or if Mr. Hollande, France's new President, manages to end or losen the German led austerity policies in EU. The effects of either developments though, won't be known for months to come and Ireland's Taoiseach Mr. Enda Kenny TD has declined any calls to postpone the referendum. Besides, even if Hollande and the Greeks manage to convince the rest of Europe and especially Germany on a growth pact for EU, this Treaty won't be renegotiated.

The Irish Government and many other political groups supporting the Treaty, have launched a "myth debunking" to counterpart the NO supporter's  claims that link this Treaty with austerity. The NO side has linked every austerity measure approved by the Government, like the new household and water charges to the Treaty in order to gain support. I generally disagree with the NO campaigners' stance, though I totally understand their reservations. But by trying to exploit the current economic crisis and the public's disapproval of the austerity measures in order to gain support, they are in danger of failure.

This Treaty is not an EU Treaty, rather an intergovernmental agreement, a promise of one state to each other in keeping their books in order. Now why this hasn't been happening until now and we need this Treaty to bind our leaders to do the "right thing," keeping some budgetary discipline that the eurozone membership requires, is something that I do not understand. Our leaders seem to behave like children that do not trust each other and need to put in place different treaties to make sure no one cheats. If the Czech Republic and Britain had agreed to be part of this Treaty, then it would be an EU Treaty. There are plans and hopes though that this Treaty will be incorporated into EU law in 5 years time. In this case the Irish might be called to vote again anyway.

The Treaty has nothing to do with the recent water and household charges, and it won't increase those charges if it comes into effect. The Treaty does allow some policy flexibility in exceptional circumstances, like a severe economic downturn. It does not affect Ireland's taxation system and its corporation tax rate remains untouched. But Ireland won't be able to get a bailout or any funds from the ESM (European Stability Mechanism), the EU’s new bailout mechanism if it votes NO. Other suggested sources for future funding are heavily disputed.

In a nutshell, we do need to control our finances and how much debt we can afford to accumulate. Since we share the same currency such move only makes sense. I do not understand why something like this was not happening until now. Huge levels of unsustainable debt is one of the reasons why Europe is in the grip of this recession. So any treaty that controls our debt and provides with a safety net from which we could draw funds to deal with any future crisis makes sense.

The only argument that I will give to the NO campaigners, is that if we examine the current pro-austerity policies that most European elites seem to follow, then it is clear from where our governments will be keen to cut funds in order to keep their country's debt low; from the social welfare, the salaries and benefits of the workers. Now in some cases a reform is necessary and long overdue. But as we have seen in the case of Greece, harsh austerity without growth initiatives simply do not work. So what I would really like to hear from our governments, is what policies are they willing to create in order to keep their country's debt in check, in order for me to support fully the Treaty.

Yes, it is fair for the creditor countries to get safeguards that other countries won't act irresponsible, and we got to accept that when in the eurozone, you can not have full fiscal independence anyway. We got to prevent countries of borrowing too much. But punishing the countries that break the rules did not always worked in the past, so what make us believe that it will this time. This Treaty is only part of the solution to the eurozone crisis. Growth initiatives, the eurobonds and other measures must also be included and promoted in the revival of the eurozone.

Austerity was accepted by signing the IMF/EU bail outs deals; can we avoid austerity by voting NO now? Can we reverse the austerity packages and annul what our previous governments have signed to already? In Greece the Syriza party and its leader Mr. Tsipras believe so. It only remains to be seen how they are going to achieve such thing.

But this Treaty is not only about austerity. It will allow Ireland to have access to funds, a benefit that with this Treaty now is linked to its ratification; there was not such obligation in the Stability and Growth Pact 2011. Other differences of this Treaty with the Growth Pact are that the structural deficit target is subject to enforcement and that the targets must be incorporated into national legislation. Thus they are far more binding.

Ireland will be contributing to the stability of the euro currency and  show a sign of good will to foreign investors that the country is committed to the euro and continue to invest in the country, by voting YES. A member state is still free to reach balanced budgets by their own policies, provided the targets are reached. Coordination of economic policies are encouraged, but not harmonization.

The European Commission and Council will monitor a state's progress and a member state can submit its observations on the Commission's report. The Commission may then recommend to the Council that action must be taken and refer the matter to the European Court of Justice. If another member feels a state is in breach of the terms of the Treaty, it may bring the matter to the European Court of Justice.

 In other words, each state is not only responsible for its own finances, but it can take action against those who do not comply by the rules. No wonder then Britain and other "Eurosceptic" states are against the Treaty. They just want to keep the perks of fostering the markets' manipulators and big bankers and so they are trying hard to stop this Treaty.

So what will the Irish people eventually vote for? I have to say that this campaign is far more organized than the Lisbon Treaty referendum, and it gives far more information to the issues that matter the most. But as in the Lisbon referendum, the promised stability and job creating did not really arrived, even after the Irish voters ratified it. There are a lot of weaknesses in the eurozone and the "European Project" that need to be addressed and solved first, before we can promise the European population long lasting stability. Can we expect now the Irish voters to trust their political elites this time? Will the Stability Treaty bring the much needed stability in Europe and if yes, for how long? Perhaps until the next crisis?


Christos Mouzeviris is the writer of the blog: The Eblana European Democratic Movement 


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