Two Steps to a Fiscal Union for the Eurozone… & A Third Step to Distract Attention from the First Two

The Urgent Need at a Minimum For a Government White Paper

“It would be tragic and fatal if we were to lose democracy on the road to saving the euro”

- Dr Andreas Vosskuhle, President of the German Constitutional Court, 2011

“There are 27 of us. Clearly, down the line, we will have to include the Balkans. There will be 32, 33 or 34 of us. No one thinks that federalism, total integration, will be possible with 33, 34, or 35 States. Clearly there will be a two-speed Europe: one speed that moves towards a Federation for the Eurozone and one speed for a Confederation within the European Union.”

- French President Sarkozy, 8 Nov. 2011

BACKGROUND:

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, either temporary or permanent.

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 however.

Now - to deal with the dire consequences for millions of people of this failure to enforce the rules of the original EMU, while at the same time increasing their own political sway over the Eurozone -  Germany and France, supported by the Brussels Commission, are seeking to change the whole basis of the Economic and Monetary Union which Ireland signed up to. They are doing this by establishing a permanent  €500 billion ESM bailout fund which is to be surrounded by a whole panoply of controls over national budgetary policy, including the permanent balanced budget rule (0.5% deficit rule) proposed in the “Fiscal Compact Treaty” that German Chancellor Merkel insisted on over Christmas.

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%. Similar proportional changes will be made in voting within the Eurozone.

The temporary Eurozone bailout fund, the European Stability Facility (EFSF), which was established to lend money to Greece in May 2010, and from which Portugal and Ireland subsequently got bailouts, was established under Art.122 TFEU of the EU Treaties. This Article permits Union financial assistance to be granted when a Member State is in “severe difficulties caused by natural disasters or exceptional occurrences beyond its control”. Excessive budget deficits built up over long periods of time are scarcely what this Article was meant to cover, so the very questionable legal basis, to say the least, of the temporary fund has led to this Article being now abandoned and replaced by an entirely new EU Treaty provision, an amendment to Article 136 TFEU, to give a long-term legal basis in European law to the permanent €500 billion bailout fund which the Eurozone States want to set up from this July. Ireland commits itself to making an €11 billion contribution to this fund in various forms of capital by means of the European Stability Mechanism (ESM) Treaty which can be concluded amongst the 17 Eurozone countries once the EU 27 have amended Art.136 TFEU so as to give permission for it in European law.

The Government wants the Dáil and Seanad to approve this hugely important Article 136 TFEU amendment to the EU treaties during the current Dail term without any referendum of the Irish people even though this amendment and its legal/political consequences would mark a qualitative change in the direction of the EU and in the character, scope and objectives of the Economic and Monetary Union which the Irish people signed up to when they approved by referendum the 1992 Maastricht and the 2009 Lisbon Treaties. The amendment to Article 136 would extend the scope of the existing EU treaties significantly and bears a huge weight of legal/political consequences. It reads: “The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.”

Approval or non-approval by Ireland of the authorization by the 27 EU States of this permanent bailout fund for the Eurozone is the only thing on which the State still has a veto – unless the Dáil and Seanad throw that veto away by failing to insist on it being used. That is why the media and opinion-formers should urge the Government to exercise it. If the Government is too afraid of the wrath of “Merkozy” and the Brussels Commission to do that, our media and public opinion should call on some public-spirited party or individual to challenge that failure before the Courts.

For if a referendum on approval of the European Council Decision to adopt the Art.136 EU amendment were found to be constitutionally necessary in Ireland, it would put the State in a powerful position to exact major concessions on the national debt, on the Anglo-Irish promissory notes and on the terms of the Troika’s Memorandum of Understanding in order to persuade Irish voters to agree by referendum to the Art.136 amendment of the EU Treaties permitting a permanent Eurozone bailout fund to be established. Why should the Government throw away Ireland’s best bargaining card in this way? Why should it be afraid to take the only course which offers hope of rapid radical relief to the people’s current dire straits?

Such a constitutional challenge, if it were to be taken, would need to show that the Article 136 TFEU amendment to the EU Treaties is a claim to, and an assertion of, a significant extension of EU powers, scope and competences which cannot legally be brought into force in Ireland by the “simplifed” EU treaty revision procedure of Art.48(6) TEU that was used to adopt the amendment,  whatever may be the constitutional position in the other EU States … And that therefore approving it in Ireland requires prior permission from voters in a referendum, as a significant surrender of Irish State sovereignty would be involved.  

It is not just issues of EU law that are at stake here. It is widely recognised among economists that the proposed ESM Treaty and the permanent funding mechanism it would establish for the Eurozone, with their accompanying apparatus of controls of national budgets, go nowhere near to solving the current financial crisis of the euro area. A challenge to the constitutionality of the Government’s proposed mode of approval of the Art.136 TFEU amendment would open a valuable opportunity for the adoption by the Eurozone Member States of a more rational and effective scheme for dealing with the area’s financial crisis, with more emphasis on stimulating economic growth and demand across the area, to the benefit of the common good of Ireland and the other Eurozone countries.

STEP 1 TO THE NEW EMU:



The  27-MEMBER EUROPEAN COUNCIL “DECISION” TO MAKE THE ART.136 TFEU AMENDMENT TO THE EU TREATIES

This “Decision” of the European Council of 27 Prime Ministers and Presidents was made in March 2011 (Decision 2011/199/EU) and gives permission under EU law to the 17 Eurozone Member States to set up a permanent bailout fund for the Eurozone.  Ireland has a veto on this Decision, for before it can come into force it must be approved by all 27 EU Member States “in accordance with their respective constitutional requirements”. This means that in Ireland the European Council “Decision” to make this Art.136 amendment requires approval either by the Oireachtas or by the people in a referendum. It calls for the latter if the amendment – despite the implicit claim of those deciding on it that it does not extend EU powers – does in fact extend them, and does in effect entail a surrender of State sovereignty which goes beyond the original “license” which the Irish people gave the State in earlier referendums to join a “developing” European Community/Union.

In other words, approving the “Decision” of the European Council to amend the EU Treaties requires a referendum in Ireland if it can be shown to widen the scope and objectives of the present EU treaties by significantly increasing the powers of the EU. Under the so-called “self-amending” Article 48(6) TEU which was inserted in the EU treaties by the Treaty of Lisbon, the 27-Member European Council of Prime Ministers and Presidents can take decisions to amend most provisions in the policy areas of the EU treaties as long as such amendment does not increase the Union’s powers/competences. For the European Council to purport to authorise under EU law the setting up of a permanent bail-out fund for a sub-group of EU States can arguably be said to be a significant claim to, and assertion of, increased powers for the EU as a whole, as up to now the EU treaties provided for no such fund or mechanism in the Monetary Union either directly or indirectly. The treaties provided rather for an EU Monetary Union which would not require or permit cross-national “bailouts” under any circumstances and would be run on quite different principles to what is being now proposed.

If the Eurozone can set up a Stability Mechanism “intergovernmentally” amongst its 17 Member States, why is any amendment to the EU Treaties by the 27 to permit that needed? It seems plausible to contend therefore that this Art.136 TFEU amendment would put the Economic and Monetary Union which Ireland signed up to when the people ratified the Maastricht and Lisbon Treaties on a quite new and different basis. This new basis would entail a significant move towards a Fiscal Union for the 17 Eurozone States in addition to the Monetary Union, as well as an Irish commitment to a panoply of accompanying supranational controls over national budgetary policy. Therefore it arguably would be unconstitutional for the Oireachtas to attempt to give the necessary approval of such a European Council Decision without an Irish referendum.



STEP 2 TO THE NEW EMU:



THE EUROPEAN STABILITY MECHANISM TREATY (ESM) BETWEEN THE 17 EUROZONE STATES

The European Stability Mechanism Treaty sets up the European Stability Mechanism, an entity with legal personality of which Ireland would become a member. It sets out the institutional structure and rights and privileges of this “ Mechanism”. The Mechanism will include a permanent €500 billion bailout fund and the treaty stipulates the contributions which each of the 17 Eurozone Members must make to it in accordance with a “contribution key” annexed to it. The ESM Treaty provides that the fund may be increased later by agreement and there is already talk of increasing it. Ireland must contribute €11 billion to it “irrevocably and unconditionally” in various forms of capital.  The ESM Treaty was signed by EU ambassadors on 2 February 2012 – replacing an earlier ESM Treaty which was signed by Minister Michael Noonan and other Eurozone Finance Ministers in July last year but which was never sent around for ratification. The 17 Eurozone States have agreed that this ESM Treaty No.2 will be ratified so that it can to come into force by July this year. The Government has in mind to bring it before the Oireachtas for approval in this session, so it is likely to be introduced to the Dáil on Tuesday or Wednesday of next week.

A Dáil motion to approve the ratification of the ESM Treaty for the 17 will presumably be taken at the same time as the motion to approve the “Decision” of the European Council of 27 Prime Ministers and Presidents to insert the Art.136 amendment into the EU Treaties by means of the  “simplified” amendment procedure of Art.48(6) TEU.   There will presumably also be an accompanying European Communities Amendment Bill to implement the Art.136 TFEU amendment and the provisions of the consequential ESM Treaty in Irish domestic law.

The ESM Treaty is to come into force once it is ratified by signatories representing 90% of the initial capital of the fund, so that Ireland has no veto on it.

The preamble to the ESM Treaty states (Recital 5) that it is agreed that money from the permanent ESM fund will only be given to Eurozone States which have ratified the later “Fiscal Compact Treaty” and its permanent balanced budget rule or “debt brake” and that the two treaties are complementary.

In 2011 Attorney-General, Mr Paul Gallagher SC advised the then Fianna Fail Government that there would be no constitutional problem in Ireland with the European Council “Decision” to make the Article 136 TFEU amendment to the EU treaties because, he advised, authorizing a sub-group of 17 Eurozone States to set up a permanent bailout fund for the Euro area does not extend the competences of the EU. Mr Gallagher had previously advised Messrs Cowen and Lenihan on the night of the September 2008 blanket guarantee for the Irish banks. He also advised that the ESM Treaty for the Eurozone which would be authorized by the Art.136 TFEU amendment to the EU treaties would not raise constitutional problems here either. That advice was given however in relation to ESM Treaty No. 1 which was later signed by Finance Minister Michael Noonan and the other Eurozone Finance Ministers but was never sent around for ratification. Mr Gallagher was not dealing with the agreement amongst the Eurozone States in ESM Treaty No. 2 that any money from the permanent bailout fund when that was set up would only be given to States which had inserted a ”debt brake” into their national Constitutions or the equivalent under the provisions of the Fiscal Compact Treaty, for Chancellor Mertkel had not yet even mooted that.

It is desirable that the advice of Attorney-General Máire Whelan SC on the constitutionality of the Art.136 TFEU amendment to the EU treaties and the ESM Treaty No.2 which follows from that, should be made available to the public, preferably through the medium of a Government White Paper.

[N.B. It is unusual for an EU-related treaty to be signed by anyone other than EU Prime Ministers and Presidents. In the case of the ESM Treaty (No. 2) it was signed by Eurozone ambassadors to the EU on 2 February 2012. Was this meant to minimize public attention to its signing?]

A THIRD STEP THAT HAS DISTRACTED ATTENTION IN IRELAND FROM THE FIRST TWO…

THE “FISCAL COMPACT TREATY” (TREATY ON STABILITY, COORDINATION AND GOVERNANCE IN THE ECONOMIC AND MONETARY UNION)

The Fiscal Compact Treaty, properly titled the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG), was insisted on by German Chancellor Angela Merkel over winter 2011, essentially as a gesture towards German public opinion. When the Deutschmark was being abolished in 1999 the German people were not told that they would be committed to an EU Monetary Union with a huge permanent bailout fund to which they would be expected to be the principal net contributors. Rather they were told instead that the “no-bailout clause” of the EU treaties, Art.125 TFEU, guaranteed that there would be no bailouts by the others for any Member State using the single currency which did not abide by the excessive deficit rules. Germans are naturally indignant at the radical change in the EMU that is now being proposed. Chancellor Merkel’s insistence on a permanent balance budget provision /”debt brake” being inserted into national Constitutions by means of the Fiscal Compact Treaty, as was done in Germany two years ago, is meant to reassure her voting public that in budgetary matters the other 16 Member States of the Eurozone, including Ireland, will henceforth behave like Germans! Yet most economists regard a permanent balanced budget rule as absurdly inflexible, for Governments do need to run deficits on occasion in order to stimulate their economies and expand economic demand when that slumps heavily in their domestic or foreign markets.

Approving the European Council Decision to insert the Art.136 amendment into the EU treaties, ratifying the subsequent ESM Treaty with its strict budgetary rules in early March and ratifying what is stated to be the “complementary” Fiscal Compact Treaty towards the end of this year will have the effect of removing virtually the whole area of budgetary policy from the national to the supranational level of the Eurozone – without a referendum in Ireland or even a Government White Paper on the implications of that. It should be noted that the additional wording of Art.136, which is being asked to carry a heavy burden of subsequent changes, does not amend or even refer to the “no bailout clause” of Art.125 TFEU.

These developments would remove much of the stuff of national decision-making and normal party politics from the arena of democratic consideration and debate in this country.

The provisions of the Fiscal Compact Treaty were agreed at the EU summit on 30 January but they will not be put into proper treaty form and signed  by the 17 Eurozone States until March – probably at the EU/Eurozone summit meeting on next Friday. They need not be ratified until the end of this year. This treaty provides for a permanent balanced budget rule or “debt brake” of 0.5% of GDP in any one year to be inserted in Eurozone national Constitutions or the equivalent.  All 17 Eurozone States must ratify this treaty, but it comes into force once it is ratified by 12 of them, so that Ireland does not have a veto on it.

The preamble to the Fiscal Compact Treaty refers to the fact that money from the new permanent bailout fund (the ESM fund) will only be given to States which have ratified it. As treaties for the 17-Member Eurozone, both the ESM Treaty and the Fiscal Compact Treaty derive from the 27-Member amendment to the EU Treaties referred to in Step 1 above. Most of the provisions of the Fiscal Compact Treaty overlap with the so-called “Six Pack” of EU regulations and a directive which constitutes the “Reinforced Stability and Growth Pact”, and which were put into EU law last December.



It is important to note that the European Stability Mechanism Treaty and the Fiscal Compact Treaty are not EU treaties binding in EU law, but are rather “intergovernmental treaties” amongst the 17 Member States of the Eurozone, although they provide for the full involvement of the EU Commission and the European Court of Justice in their day-to-day implementation. 



The Government has invited public submissions on this Fiscal Compact Treaty to be made to an Oireachtas Committee over the coming months, which is a most unusual development. Presumably this is meant to distract media and public attention from the implications of approving the Art.136 amendment to the EU Treaties, on which Ireland has a veto, without a referendum, and ratifying the ESM Treaty which derives from that. 

These are clear moves towards a fiscal union for the Eurozone, and the Oireachtas is being invited to approve them in the next couple of weeks without any significant public discussion, at least to judge by the virtual total silence on them to date. At a minimum the Irish public deserves a White Paper on these hugely important developments before Ireland’s last EU veto of significance is abandoned and it becomes too late to save further large areas of our national democracy.



Issued for public information by the
National Platform EU Research and Information Centre

February 27, 2012
janthonycoughlan at gmail dot com
24 Crawford Ave. Dublin 9 01-8305792
First published online @ http://www.indymedia.ie/article/101440

There is still a little time left for Ireland to foil this power grab by the Eurozone elite

“Ireland entered the euro in 1999 and lost control of the two vital monetary instruments: setting interest rates and setting currency exchange rates. Had Ireland remained outside the euro, its bankers would not have gained access to the euro zone’s vast and low interest borrowing opportunities. Without the outlandish credit available within the euro zone, the building bubble, the resultant government tax windfalls and Ahern’s, McCreevy’s and Cowen’s spending splurge would have been impossible. The country would not now be in receivership . . . For Ireland there has not been a shared and equitable European solution. The banks, mainly German, which lent rashly, are receiving a 100 per cent bailout. Not from those who borrowed, but from the Irish tax payer. Apart altogether from the unfairness of the imposed solution, it will not work, because it cannot.”
- Professor Edward Walsh, founding President, University of Limerick, Beal na mBlath oration, Irish Times, 22-8-2011

We need a public enquiry into the sheer civic irresponsibility and governmental incompetence of the politicians and senior bureaucrats who pushed the Irish State into the Euro area in 1999:

  • an area whose one-size-fits-all interest rate policy was set to suit Germany and France and had the effect of turning the “Celtic Tiger” boom into a bubble;
  • an area with which we did little more than one-third of our foreign trade, so that the subsequent falls in the dollar and sterling exchange rates have greatly added to our economic uncompetitiveness;
  • an area whose banking policy is decided by the European Central Bank, which told Messrs Cowen and Lenihan at the time of the blanket bank guarantee in September 2008 that no Irish bank must be let fail, so that the €30 billion debts of insolvent Anglo-Irish would be imposed on Irish taxpayers and the German, British and French banks which had recklessly lent to Anglo and the other Irish banks to stoke our property bubble would get their money back.

British Chancellor George Osborne stated in early August that the Eurozone should move towards a fiscal union, with supranational control on budgets, taxes and public spending in order to shore up the euro-currency, but that the UK would not be joining that.

This marks an important change in UK Government policy, which has sought since 1961 to be at the heart of the EU, sharing basic EU policy-making with Germany and France.

If the Irish State goes along with moves towards a Eurozone fiscal union, while the North stays with sterling in the UK, it must profoundly deepen the political-economic gulf between North and South in Ireland.

The Coalition Government in Dublin is now preparing to ratify the European Stability Mechanism Treaty for the Eurozone which Finance Minister Michael Noonan signed on 11 July, as well as the Article 136 TFEU amendment to the EU Treaties which permits that, without a constitutional referendum.

The ESM Treaty commits Ireland “irreversibly and unconditionally” to contributing €11 billion in various forms of capital to the ESM Fund from 2013, with provision for regular capital increases thereafter.

This mechanism is seen by Germany and France as the way to establish a two-tier EU, with themselves effectively running an inner-core Eurozone, and the Irish State, if it remains with the Euro-currency, effectively reduced to being a permanent financial fiefdom of Germany and its allies.

This ESM Treaty is the first use of the “self-amending” Article 48.6 TEU of the EU Treaties which was inserted by the Treaty of Lisbon.

It is seen by the Fine Gael-Labour Government, as well as by its Fianna Fail predecessor, as a way round the restrictions on ratifying new EU Treaties without constitutional referendums here which were laid down by the Supreme Court in its 1987 Crotty judgement.

There is still a little time left for Ireland to foil this power grab by the Eurozone elite if our political leaders can summon the courage to serve the Irish people rather than themselves.

- Anthony Coughlan, Director, The National Platform for EU Research & Information. First published on Indymedia.ie

The Crisis of the Euro: “Apart from that, Mrs Lincoln, did you enjoy the play?”

“The member states whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.”
- Amendment to Article 136 of the EU Treaties (TFEU) which was decided on by the 27 EU Member States at the March European Council summit and which licensed the 17 Eurozone States to sign the European Stability Mechanism Treaty on yesterday week, 11 July.
This ESM Treaty would establish a permanent EU bailout fund from 2013. The ESM Treaty and the Art.136 EU Treaty amendment which authorises it now go around for ratification by the Member States. The Government has decided not to put it to referendum here even though it means more power to the EU. The ESM Treaty can be downloaded from the internet.

The Irish Coalition Government, supported by Fianna Fail, intends in the autumn to get the Oireachtas to approve the decision to make the above amendment to the EU Treaties and then to ratify the consequential ESM Treaty for the 17 Eurozone countries.

They do not intend to hold a constitutional referendum, even though the wording of the Art.136 TFEU amendment and the ESM Treaty that derives from it would formally subordinate Ireland’s interests to those of “the stability of the euro area as a whole” … Even though there are no Treaty limits laid down as regards the “strict conditionality” which can be imposed on recipients of financial bailouts from the permanent ESM Fund envisaged … And even though Ireland will be required to contribute some €11 billion in paid-up and callable capital and guarantees once this Fund is set up in 2013.

The Irish Government thereby hopes to circumvent the 1987 Crotty judgement of the Supreme Court that new EU Treaties which extend the scope and powers of the EU and entail further surrenders of Irish sovereignty to Brussels/Frankfort, can only be made if the Irish people agree to them in a constitutional referendum. It is only the sovereign people themselves can decide on further significant surrenders of sovereignty to the EU – not our politicians or our TDs and Senators.

On 12 July Irish Finance Minister Michael Noonan said on RTE that were it not for Spain and Italy he would have been “euphoric” about what happened at the meeting of EU Finance Ministers the day before, when they spoke about the possibility of lowering the penal 6% interest rate being charged for the giant EU/IMF loan that was pushed on Dublin last November.

That was a bit like saying “Apart from that, Mrs Lincoln, did you enjoy the play?” The reason Minister Noonan was (almost) euphoric was because (as he said) the euro crisis is no longer about Ireland, Greece or Portugal but about core Europe.

The ultra-Europhiles in Ireland’s Establishment do not care what happens to Ireland, the euro or the EU, as long as they are not blamed.

The lack of self-confidence on the part of Ireland’s “Federalistas” is astonishing.

The powers-that-be bang on about the loss of Irish “economic sovereignty”, but they all want to have the euro debt federalized so that they can brandish an interest rate reduction on the current EU/IMF loan as a superlative political achievement.

Federalizing the debt means the end of the State’s 12.5% Corporation Profits Tax, which is crucial for attracting foreign investment in the Irish economy, and a lot more besides, as Berlin takes over permanently Ireland’s detailed budget decision-taking under the permanent EMS Treaty.

The Irish State is caught between a rock and a hard place, so far as Ireland’s “Federalistas” are concerned. It is bye-bye euro or bye-bye to what is left of Irish sovereignty.

On 16 July the Irish Times called for an EU fiscal and political union in its lead editorial. “This has always been the project’s ultimate end-point,” it stated.

But there was no mention of that being the “ultimate end-point” as Ireland’s paper of record championed passionately and uncritically every step of EU integration down the decades.

What a catastrophe the Eurofanaticism of Ireland’s “Federalistas” has brought down upon the Irish people:

* Pushing us in 1999 to join a monetary union with an area with which we did only one-third of our trade…

* Leading us to adopt totally unsuitable low interest rates in the early 2000s because these suited Germany at the time, so making our “Celtic Tiger” boom “boomier”, as Bertie Ahern put it, and inflating the property bubble…

* And since 2008 turning us into debt peons of the European Central Bank, whose Jean-Claude Trichet told Messrs Cowen and Lenihan at the time of the infamous blanket bank guarantee of 29 September 2008 that Anglo-Irish Bank must on no account be let go bust and that the foreign creditors/bondholders of the Irish banks must be paid every cent in full.

Which EU country had the highest economic growth rate last year? It was Sweden, at 5.5% . . . In the EU but happily outside the Eurozone. Its people sensibly rejected Eurozone membership in 2003 in a referendum vote of 56% to 44%, even though most of that country’s politicians supported abolishing the Swedish kroner at the time.

Angela Merkel now has to find a way of telling her own people that Germany is about to achieve the ambitions for which they fought and lost two World Wars, but that it will cost them money.

She also has to find a way of saying that without the rest of us noticing! And the other Heads of Government have to find a way of telling their electorates that the price of a continuing Eurozone of 17 is permanent German hegemony plus an austerity economic regime with all that that entails.

The only longterm solution of the current crisis is either federalizing the euro sovereign debt or the break-up of the Eurozone of 17. There are now likely to be moves to try to federalize some of the debts. There will be developments pointing to Trichet’s hoped-for EU Finance Ministry and much else besides, but one wishes that the proponents of the EU developing into a United States of Europe would ask themselves what happens after that. Such a logical end-point of the “great EU integration project” would not be the end of European history.

* Do the Euro-federalists really think that the many peoples of the EU would submit to effective German-French economic rule for the indefinite future?

* Do they really believe that they can institute a European democracy without a European “demos”? …

* Or that the latter can somehow be artificially created? …

* Or that people will submit indefinitely to administration by Brussels-Frankfurt technocrats, fronting for Berlin, no matter how benevolent these regard their own intentions?

These quite unrealistic assumptions have been subscribed to by the EU integrationists from the start. These people are now being exposed for the arrogant blunderers and fantasists they are, but millions are suffering terribly, and will suffer further, as they seek to impose ever more austerity on the PIIGS countries in the hope of saving their grand euro-currency “project”.

History has many examples of failed currency unions even though they were also fiscal and political unions.

The Irish State left the British monetary union after a century of membership. An independent Irish currency was seen by successive generations of Irish nationalists as an indispensable part of an independent Irish State.

Where now is the USSR rouble, the Yugoslav dinar, the Czechoslovak crown or the Austro-Hungarian thaler – all currencies of multinational federations that were monetary, fiscal and political unions for three-quarters of a century or longer, and all now vanished into history along with their creators?

Europe is a Europe of the Nations and the States or it is nothing, as Charles De Gaulle once said. That statement of democratic principle of course is internationalism, not nationalism. We need to adopt it as part of the ABC of political realism in face of the current crisis.

Democrats need to work towards a Europe of independent democratic cooperating Nation States, and abandon the fantasy of turning the EU into a world power under effective Franco-German hegemony, with the elites of small countries like Ireland serving as their well-paid local acolytes.

Anthony Coughlan Director The National Platform EU Research and Information Centre

What the Euro-Federalists want in the face of the debt crisis

“By the end of the summer Angela Merkel and I will be making joint proposals on economic government in the eurozone. We will give a clearer vision of the way we see the Eurozone evolving. Our ambition is to seize the Greek crisis to make a quantum leap in Eurozone government…The very words were once taboo.(Now) it has entered the European vocabulary. . . France has fought for a long time for an economic government of the euro zone. We can’t keep having a currency disconnected from economic policy. We have done something historic … There was no European Monetary Fund. We’re not there yet, but we’re progressing, and we have to continue towards that … To arrive at this economic integration we have to work on convergence. Naturally, France and Germany, being the two biggest countries of the Eurozone, have to lead by example.”

- French President Nicolas Sarkozy, Post-Summit Press conference, Irish Independent 22 July; Irish Times 23 July 2011

“With Italy and Spain infected by the contagion that Ireland, Greece and Portugal were unable to recover from, completing the euro project by creating a fiscal union appears to be the only real alternative to preventing it joining failed monetary unions in the dustbin of history. The issuing of eurobonds has consequences far beyond finance and economics. For euro zone states to fund themselves with euro bonds would be a step towards full political union. But this has always been the project’s ultimate end-point. And for good reason … As long as integration is Europe’s destiny, it is Ireland’s destiny too.”

- Irish Times editorial, Saturday 16 July 2011

“Europe will eventually have to operate more like the United States when it comes to raising funds on international markets, but nobody envisages getting to that point for several years at least. But by expanding the European Financial Stability Fund last night, the early outlines of such a system are clearly visible. Europe simply must act collectively when its individual members have critical debt problems and that will eventually mean some kind of Europe-wide debt agency.”

- Irish Independent editorial, Saturday 23 July 2011

“We have a shared currency but no real economic or political union. This must change. If we were to achieve this, therein lies the opportunity of the crisis… And beyond the economic, after the shared currency, we will perhaps dare to take further steps, for example for a European army”.

- German Chancellor Angela Merkel, Open Europe Press Digest, 13 May 2010

COMMENT ON THE ABOVE by Anthony Coughlan

In mid-July British Chancellor George Osborne said that he now favoured the 17 Eurozone States moving towards a fiscal/political union as the best way of saving the euro-currency, but that the UK had no intention of joining that.

This seemed to signal a major change in UK Government policy as it has been for the past half century. It implies that Britain now favours a two-tier or two-speed EU, whereas up to now successive British Governments have always wanted to be in the inner EU circle along with the French and Germans in deciding fundamental policy.

It means too that Britain is happy enough if the Republic moves with the other Eurozone States towards a fiscal/political union amongst the 17, while Northern Ireland stays with Britain in the wider EU of the 27.

This raises the question so far as Northern Nationalists, are concerned why should they support the concept of a United Ireland if in practice it means little more than exchanging a British-dominated monetary and fiscal union for a Franco-German dominated one? And why should Northern Unionists find the latter prospect more politically attractive than their present one?

Citizens’ Demonstration outside the Dáil on Monday, “Europe Day”, 9 May, from 12.30 to 2:00, against the farce within

JOIN THE DEMONSTRATION  AGAINST THE  “EU RE-DEDICATION RITES” OUTSIDE THE DÁIL,  MONDAY  9 MAY, FROM 12.30 TO 2:00PM

Ireland’s Euro-fanatics and ultra-Europhiles are getting panicky.

As the European Central Bank turns us all into indentured debt peons for a generation and France and Germany plan assaults on our 12.5% company tax rate, they fear that Ireland’s long love-affair with the EU may be coming to an end.

Hence the ceremony of re-dedication planned for the Dáil this Monday, “Europe Day”, 9 May.

It is meant as an opportunity for the political  leaders of  the Euro-faithful to renew their vows.

Lucinda Creighton, Dick Roche’s successor as Minister for Europe, is the occasion’s impresario.

Ireland’s Commissar, the exorbitantly-paid Fianna Fail appointee Maire Geoghegan-Quinn, will address the Dáil.

The State’s 12 MEPs will attend so that TDs can ask them questions. Let us hope that at least some TDs will have good questions ready on the power-grabbing, expenses-fiddling and corruption of the European Parliament.

This special Dáil session will undoubtedly see much cant about “the European ideal”,  “our European partners” etc. in the hope of impressing the continentals. But they just want our money these days, as Irish taxpayers are mulcted under the aegis of the ECB to meet the bad debts of German and French private banks.

The reason 9 May is “Europe Day” is to commemorate French Foreign Minister Robert Schuman’s launch of the European Coal and Steel Community on 9 May 1950. The “Schuman Declaration” which he issued that day spoke frankly of the establishment of this first supranational European community as “a first step in the federation of Europe” – a federation being of course a State. That is what makes this statement and this day so important for the Euro-federalists.

Irish people have been lied to time and time again to conceal the fact of a federal-style quasi-Superstate under Franco-German hegemony being the ultimate political purpose of the EU.  For decades they have been sold the falsehood that the EU is just about jobs and growth, and not a political/fiscal union.  Remember the “Vote Yes for Jobs” slogan of the Yes-side groups in the second Lisbon Treaty referendum?

The “myth of origin” of the EU/EC is that it is essentially  a “peace project” to end wars between France and Germany. This is quite unhistorical. The truth is that the 1950 Coal and Steel Community was thought up to reconcile France to German rearmament in the newly founded NATO – a key aim of American policy at the start of the Cold War. The French were alarmed at the thought of Germany being rearmed just six years after the Germans occupied France.  Jean Monnet, who authored Schuman’s declaration, was America’s man in the affair. The Americans backed strongly the Monnet/Schuman proposal to put the coal and steel industries of France, Germany and the Benelux  countries under a common supranational High Authority, of which Monnet was made first Secretary-General. This was the predecessor of the later Brussels Commission. This step quelled French anxieties at the time. In those days European integration was US Government policy, and it  is well-known that the CIA financed the European Movement throughout the 1950s and 1960s and perhaps later to push that objective.

CITIZENS’ DEMONSTRATION: There will be a non-party Citizens’ Demonstration against this Europe Day farce outside the Dáil in Kildare Street  from 12.30 to 2.00 pm. on Monday, 9 May.

PEOPLE ARE INVITED TO BRING A POSTER WITH THEM, WITH AN APPROPRIATE MESSAGE, but no party banners: for example  “EU/ECB Rule: Death of Irish Democracy”,  “Ireland Yes, EU/ECB No”, “Europe Day Dail Farce”, or some variant of these.

AND PLEASE PASS ON THIS MESSAGE TO OTHERS.

(Signed) Anthony Coughlan
Director
The National Platform EU Research and Information Centre
24 Crawford Avenue
Dublin 9
Tel.: 01-8305792

Ireland after it’s 2011 General Election

Statement from the National Platform EU Research and Information Centre, March 2011

1. FIANNA FÁIL DOWN, FINE GAEL AND LABOUR STILL TO GO

One big party – Fianna Fáil -  that supported Ireland’s blanket Bank bailout, the EU/IMF stitch-up last December,  the 2009 Lisbon Treaty, the 1992 Maastricht Treaty which abolished the Irish púnt,  and every other step towards EU-integration over decades, bit  the dust in the February General Election. We must now wait some time to see the two other big parties that did exactly the same thing, namely Fine Gael and Labour, bite the dust also as they impose on us the savage rigours of the EU-IMF deal over the next few years.  This should open the way for the new political forces that were reflected in the success of the Independent TDs, the trebling  of Sinn Féin’s Dáil representation and the advent of the United Left Alliance, to become the genuine opposition force in Irish politics that is so obviously needed

2. IRISH LABOUR AS THE MUDGUARD OF FINE GAEL

If the Labour Party were really to act in the “national interest” which it prates so much about and in accordance with the programme it sought the votes of the people on, its leaders would let Fine Gael form a government on its own, with Fianna Fail and other support from outside.  Fianna Fail would not dare to vote against a Fine Gael minority government for several years, so that such a government would be quite stable.   Instead, as Sean O’Casey said of Labour at the time of the first Fine Gael-Labour Coalition of 1948-51: “Their posteriors are aching for the velvet seats of office.” Instead of Labour being the largest element in opposing the Fine Gael/Fianna Fail implementation of the EU/IMF stitch-up, Messrs Gilmore, Rabbitte, Quin and Howlin and Joan Burton have assumed Irish Labour’s traditional role of “mudguard of Fine Gael rather than advance-guard of the workingclass”!  It used be said that Labour struggles with its conscience, and Labour always wins. . . Except that on this occasion a handful of ageing Labour leaders were so desperate to get into office for their own benefit that there was not even the pretence of such a struggle.

Since 1948 Labour’s role in Irish politics has been periodically to revive Fine Gael from near terminal decline by putting it into office, simultaneously enabling Fianna Fail with virtually identical policies to revive itself in opposition. Thus the Irish Establishment could afford the luxury of having two big parties to champion its interests rather than one. Labour Ministers got big jobs, good salaries and pensions for their services, while the Labour Party was decimated in the subsequent election. This has happened on four occasions since 1951. The difference on this occasion is that Fianna Fail’s electoral defeat has been so great that it may not be able to recover in opposition. There is no real objective social basis for its continuance as a political party, now that the impact of the financial crisis and the huge increase in its vote has enabled Fine Gael to morph into becoming Ireland’s “natural” conservative party.

Whether this will actually happen depends on the non-Fianna Fail forces on the Opposition benches working together in the period ahead to make themselves into a cohesive, credible and radical opposition, cooperating  with one another at least on fundamentals.  It is inevitable that there will be a major reaction against Fine Gael and its Labour junior partner in the next general election, as they spend years as the local administrators of German-sponsored EU-IMF austerity.  The next election may also come about much sooner than five years because of the continuing national and international financial crisis.

3. THE EUROZONE FRAMEWORK OF IRELAND’S ECONOMIC CRISIS

The Irish State’s economic crisis stems fundamentally from its folly in joining the Eurozone in the first place in 1999, impelled by the longstanding uncritical Europhilia of the Fianna Fail, Fine Gael and Labour parties and others. By abolishing the national currency at that time, Ireland adopted the currency of an area with which it did only one-third of its trade (i.e. exports and imports combined).  Another third of its trade was with the UK and the other third with the USA and the rest of the world.  Last year two-thirds of the Irish State’s foreign trade was still outside the Eurozone!  Moreover, joining the Eurozone led Ireland to adopt negative real interest rates at the height of the “Celtic Tiger” boom and thereby inflated the property bubble which has now burst, leaving both  the State and its State-guaranteed banks objectively insolvent.

The 10 EU Member States outside the Eurozone  – Denmark, Sweden, Britain, Poland, the Czech Republic etc.- have nothing like the Irish State’s problems. These EU Member States are thanking their stars these days that they avoided the course of folly that Ireland’s political elite pushed its people on to. A little thought will show one that abolishing the púnt was by far the worst decision ever taken by an Irish Government. It was far worse than the 2008 blanket Bank guarantee by Taoiseach Cowen and Finance Minister Lenihan, for if the Republic had not joined the Eurozone in the first place, there would have been no need for that guarantee.  It was the European Central Bank which insisted that it be given:  namely, that no Irish bank must be allowed to fail in case the German-French banks from which the Irish banks had borrowed, would not be paid back.

If we had stayed outside the Eurozone there would have been no ECB to bother us.  The Eurofanaticism which led Fianna Fáil, Fine Gael and Labour to push through the Maastricht Treaty and push us into the Eurozone initially has been the most outstanding historical delinquency of Ireland’s political Establishment. Yet deference to the EU is so ingrained in 26-County official and media opinion that many who should know better are too timid even today to recognize and draw attention to these obvious points.

There are calls for a public enquiry into the infamous blanket bank guarantee of September 2008 and why it was continued last September. More relevant and useful would be an enquiry into the folly that led the Irish State to join the Eurozone in the first place, from which the financial collapse and the bank guarantee have both stemmed.

4. SACRIFICING IRELAND’S CHILDREN TO HOLD THE EUROZONE TOGETHER : THE 24 MARCH EUROPEAN COUNCIL MEETING

We are now trapped like rats inside the Eurozone, although it is only a matter of time before the Eurozone breaks up and some or all of its Member States leave it and reestablish their national currencies, for its structural faults are irremediable.  The only question is how soon will this occur and in what circumstances – whether it will be done in an organised or disorganized fashion.  In the meantime Germany, with France holding on to its coat-tails, plans for Ireland and the other peripheral Eurozone countries a punishing regime of austerity and national asset sales that could go on for years.

On 24 March the European Council meeting of EU Prime Ministers and Presidents is expected to agree an amendment to the Lisbon Treaty to set up a permanent EU bailout fund from 2013 – the European Financial Stability Mechanism. Ireland will be expected to contribute to this, but it will not have retrospective effect or alleviate the pain for the Irish people of last December’s EU-IMF stitch-up.  The EU authorities are very anxious to avoid a referendum in any EU State on the establishment of this Fund even though it will entail an amendment to the EU Treaties. The EU Summit meeting will seek to push through this amendment by using the “self-amending provision” of the Lisbon Treaty (Article 48 TEU). Messrs Kenny and Gilmore will be under pressure to push it through in Ireland without a constitutional referendum on the grounds that it is only a minor technical change and does not increase the powers of the EU.
The Opposition TDs in Leinster House will need to consider a Court challenge to this likely course, if the incoming Government seeks to follow Fianna Fail’s policy of denying the Irish people a referendum on this EU Treaty change.  At the same time there is likely to be an attack on Ireland’s 12.5% Corporation Profits Tax rate and a scheme for a common cross-EU Tax Base which would fundamentally subvert Ireland’s attractiveness for foreign investors. The Common Tax Base idea, which the Brussels Commission is proposing, is a scheme for so-called “destination taxes”.  It envisages Corporation Tax being calculated centrally at EU level so that firms pay profits tax to the governments of the different countries in which they sell their goods, and not to the Government of the country where those goods are originally made.

The new Irish Government needs to coordinate its responses to the crisis with the governments of the other so-called PIIGS countries in the Eurozone – Portugal, Italy, Greece and Spain – and resist the Franco-German dictation now taking place. This depends on Messrs Kenny and Gilmore overcoming the  decades-old habits of Irish deference and political kow-towing to the EU and our EU “partners”. It needs them to  show some political backbone and willingness to stand up for Irish interests.  Up to now Irish policy is to keep as far apart from the other PIIGS countries as possible. This is in line with the Iveagh House people’s policy of always seeing Ireland as being the “good boy” in the EU class, happy as long as it receives pats on the head for good behaviour from Franco-Germany!

5. HOLDING THE ECB TO RANSOM

The ECB has lent the Irish Banks some €150 billion. If the Irish banks all closed tomorrow morning, the ECB would not get its €150 billion back because that money is now in the system in Ireland. The ECB knows that Ireland’s banks have not got the money to pay it this vast sum. From the ECB’s point of view its best plan to recover the money it advanced to cover the reckless lending of the banks is to shift the burden of repayment on to the Irish taxpayers. Therefore the political and media suggestion that the ECB will close down the ATM machines so there will be no money in the system, is so much scaremongering to intimidate the public into agreeing to take on these debts it is not responsible for. The central issue at present is that the ECB wants the Irish State and taxpayers to take on the burden of paying this €150 billion back to the ECB as rapidly as possible, so that instead of the Irish Banks owing the ECB this vast sum of money, the Irish State/taxpayers will do so and will pay it back over years by flogging off the Banks themselves to foreign owners, selling off the NAMA loans at knockdown prices, privatizing State assets systematically and screwing Irish taxpayers for this purpose.

This is essentially what the EU/IMF Memorandum of Understanding commits the Irish Government to doing.  The Irish public needs to be warned that what its political leaders are planning is a massive fire-sale to foreigners of the recapitalized Irish Banks and State assets generally – the NAMA loans, Coillte, An Post, the ESB, Bord Gais etc. and Ireland’s natural resources, so that we can pay back the money the ECB is putting in  the Irish Banks, essentially in order to ensure that private banks in Germany, France and Britain do not suffer losses on their Irish operations. Until this fire-sale is completed, the ECB depends on us and we can in effect hold it to ransom.  Hence the new Irish Government should be in no hurry to comply with the ECB’s wishes.  It should act in accordance with the old truism: If you owe the Bank a million you are in trouble, but if you owe it a hundred million it is the Bank that is in trouble!  The ECB stood irresponsibly by while the German, French and British banks punted huge sums on the Irish property market for years and made big profits thereby.  As the Eurozone’s lender of last resort the ECB should now pick up the tab.  The Irish State needs to repudiate the horrendous private Bank debts that it has so foolishly guaranteed, if it is to be able to repay its legitimate sovereign debts and return to the international bond markets at an early date in order to borrow at reasonable interest rates.

6.  MONETARY UNIONS, FISCAL UNIONS, POLITICAL UNIONS

One cannot have an independent State unless it has its own currency, and with that control of either its interest rate or exchange rate policy, for these are fundamental  economic instruments for advancing a people’s welfare.  Those who fought for an Irish Republic historically took for granted that national independence meant that an Irish State would have its own currency and the related economic instruments.  The rate of interest is the internal  “price” of money, so to speak, and the currency exchange rate is its external “price”. A Government cannot control either unless it has a currency of its own in the first place.  That is why former EU Commission President Romano Prodi exulted when the Monetary Union was set up for a minority of EU States in 1999: “The two pillars of the Nation State are the sword and the currency and we have changed that.”

The fundamental problem for the Eurozone and its 17 Governments is that there cannot be a stable, lasting monetary union that is not also a tax and public spending union, and hence a Political Union, so that its component Member States are compensated for loss of their  ability to influence their competitiveness by varying their exchange rate – for they have no independent currencies any longer – by automatic  transfers from richer to poorer States through a common federal-style Eurozone tax and public service system. The latter means a Political Union like the USA, and the dream of building a United States of Europe on similar lines to the US has for decades been a dream/fantasy of the Euro-federalists, of whom there are many in the leadership of the Fine Gael and Labour parties.

A system of common taxes and public services exists within national States, but it does not exist cross-nationally.  It cannot exist cross-nationally because the social solidarity, the sense of community and mutual identification, the sense of being a common political “We”, which is what makes people pay taxes freely and willingly to a common Government because it is “their” Government, does not exist at EU level.  A democracy or democratic State is impossible without a “demos”, a people; and there is no EU or Eurozone “demos”, in contrast to its component Nation States.

This is the fundamental fallacy of the EU integration project, the attempt to turn the EU into a quasi-State, even though already half or more of the legal acts made in each of the 27 EU Member States each year are on average of EU origin. Free trade is one thing, and is normally a good thing.  A common currency, credit and exchange rate policy for very different economies is something totally different. The resistance of German public opinion to financing Greece, Ireland, Portugal etc. in the current  Eurozone crisis is but one small example of this. The solidarity needed for such continual resource transfers between the Member States of the Eurozone to enable it hold together does not and cannot exist. Nor can it be artificially created.

7. REESTABLISHING IRELAND’S NATIONAL CURRENCY

The advantage of a country having its own currency is that it enables its Government either to control credit and issue money for purposes of job-stimulus and the like through varying the rate of interest, or to influence its competitiveness with other economies by varying its exchange rate. Governments can set a target for either the interest rate or the exchange rate, but they cannot achieve both targets simultaneously, for each rate affects the other.

In the Eurozone interest rate and exchange rate policy are quite properly decided in the interests of the Big States, for they contain most of the population of the Eurozone. The one-size-fits-all interest rate regime of the European Central Bank (ECB) must always be unsuitable for some Eurozone countries therefore, for the 17 economies concerned differ widely.  Moreover, as the Irish State does nearly two-thirds of its trade outside the Eurozone, whereas all of the 16 other Eurozone members do half or more of their trade with one another, the exchange rate for the euro must normally be unsuitable for Ireland also. This is vividly shown these days as the euro rises vis-a-vis the dollar and pound sterling. This hits Irish exports to the dollar/sterling areas where we do most of our trade and encourages competing imports from those areas.
Having taken the disastrous step of joining the Eurozone in the first place, it would be foolish to pretend that one can get out of it without pain, especially when Irish Governments have agreed to stand over the mess in the State’s private banks and have built up such a deficit in the State’s public finances. However, re-establishing an independent Irish currency and with that its own credit and exchange rate policy has to be a central objective of all genuine Irish democrats, for without that there can be no truly independent Irish State. People should not be afraid to state this, especially as the pain of remaining in the Eurozone is mounting all the time and the historical trends point to continual strains within it and continual crisis as long as it lasts, and its eventual partial or total dissolution is inevitable.

The threat of repudiating the private bank debt now moved to the ECB  and of reestablishing the Irish pound is the principal lever/weapon the Irish State has vis-à-vis the Eurozone. At present Ireland cannot restore its economic competitiveness by devaluing its currency. It can only become more competitive by “devaluing” – that is, by  cutting -  peoples’ pay, profits and pensions instead for years to come.  The main advantage of leaving the Eurozone and rejoining the 10 EU Member States outside it is that it would enable the Ireland to resume control of its money supply and credit and thereby stimulate domestic demand and employment, while simultaneously it could boost the State’s economic competitiveness by devaluing the exchange rate. The main drawback of this step is that much of the State’s foreign debts would be in euros, if the Eurozone still existed, and would be expensive to pay off in a depreciating currency. On the other hand, the boost to competitiveness and exports arising from having a more suitable exchange rate than the Eurozone one, should enable Ireland earn more foreign currency with which to pay those debts. Temporary exchange controls would also be needed for a transitional period. It is in any case likely that some countries will leave the Eurozone in the next few years, if the Eurozone as a whole succeeds in holding together at all.

If the Eurozone breaks up, a planned dissolution and a related reapportionment of debts would clearly be better than a disorganized one.  There are many examples of monetary unions that have dissolved and been replaced by national currencies. The Irish State itself left the UK monetary union in 1921, although it maintained an overvalued púnt at par with sterling until 1979.  The USSR rouble was replaced in short order by 15 successor currencies in its 15 successor States in 1991. The Czechoslovak crown and Yugoslav dinar were replaced by successor currencies in the 1990s.  In 1919 the Austro-Hungarian thaler was replaced by the different currencies of its several successor States.

What is happening now is that Ireland, Greece, Portugal etc. and the interests of their peoples are being sacrificed in order to save the Eurozone, whose dissolution would be a blow to the entire integration project of building a European quasi-superstate under Franco-German hegemony to become a big power in the world.  The acolytes of that project in Ireland  – in the leadership of the Fianna Fail, Fine Gael and Labour parties, in Foreign Affairs at Iveagh House, the Dept.of Finance and the Taoiseach’s Department, in the Central Bank, the Irish Times, RTE and the senior echelons of the Irish Congress of Trade Unions  – are desperately afraid that their political life’s work may have been in vain, so  they are quite willing that the welfare of the Irish people be sacrificed to save it. These are perhaps the most fundamental issues that are at stake in the current crisis.

People should remember also that the only period in the 90-years’ history of the Irish State when it used its monetary independence, followed an independent exchange rate policy and effectively floated the currency, from 1993 to 1999, gave us the “Celtic Tiger” rates of economic growth of 8% a year – until that was destroyed by the low-interest-rate-induced bubble of the Eurozone from 2000 onward.

Irish Times: Dominating Role of Larger EU States

The Irish Times – Friday, March 4, 2011 (letters)

Madam, – Dr Garret FitzGerald (Opinion, February 12th) shows concern that moving away from the so-called “community method” of making EU laws towards a more “inter-governmental” approach may open the way to an EU that “for the first time becomes dominated by some larger states”.

This looks like trying to lock the proverbial stable door after the horse inside has bolted.

For decades Dr FitzGerald and those who share his views on the EU have been advancing the quite unrealistic notion that the EU is a radically new form of political life and governance in which the big European states are willing to subordinate their national interests to a larger common EU interest and that it therefore makes sense for smaller states to “pool sovereignty” with them.

In historical reality the EU since its inception has been an arena for the pursuit of the national interests of its member states, above all its bigger ones, France and Germany especially. The big states use the EU to try to dominate the smaller ones if it suits them. If not, they will go outside it or beyond it. Three developments in the past 20 years show this strikingly.

The first was the establishment of the euro currency under the 1992 Maastricht Treaty. The core objective of that was to reconcile France to Germany’s sudden reunification in 1990, using economic means that were quite inappropriate for that purpose.

The current financial crisis shows the euro currency’s structural flaws. It has fundamentally divided the EU between the 17 EU states inside the euro zone that are now suffering the euro’s torments, and the 10 EU states outside it that are not.

The second was the 2001 Nice Treaty which allows an inner group of nine or more EU states to integrate further among themselves and to use the EU institutions to do that, even though the other EU members are opposed. This was a fundamental break with the notion of the EU as a partnership of equals in which no major step would be taken without unanimity. It enables the big states to present the others with unpleasant faits-accomplis. For example it would enable the 17 euro zone members, or a sub-set of them, to adopt a common tax base for assessing corporation profits tax, or a common tax rate if they wish, as could well happen in the coming period.

The third was the Lisbon Treaty of 2009. In power-political terms this treaty’s most important provision is that it puts EU law-making on a primarily population-size basis for the first time – from 2014. This means that in three years’ time Germany’s voting weight in making EU laws on the EU Council of Ministers will be doubled from its present 8 per cent to 17 per cent, France’s, Italy’s and Britain’s vote will go from their present 8 per cent each to 12 per cent each, while Ireland’s will fall from its present 2 per cent to 0.8 per cent. Is not this by any standard a power-grab by the big states?

For decades Irish policy-makers have used rhetoric about “the European ideal”, “our EU partners” and “an EU community of equals” to justify handing over ever-greater tranches of State power and law-making to the EU. A more hard-headed and less self-deluding approach will surely be needed by future Irish governments if we are to get out of our present mess. – Yours, etc,

ANTHONY COUGHLAN,
Director,
The National Platform EU Research and Information Centre,
Crawford Avenue, Dublin 9.
 

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