(Note: The following replaces & corrects earlier version of 7/May)

TWO TREATIES FOR THE EUROZONE AND AN AMENDMENT TO  ONE OF THE EU TREATIES  – ALL RELATED TO EACH  OTHER!

Wednesday 9 May 2012

INTRODUCTION:

AMENDMENT TO ARTICLE 136,  TREATY ON THE FUNCTIONING OF THE EUROPEAN UNION (TFEU)  -

“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.”

- Proposed amendment to Article 136 TFEU of the EU Treaties by which the 27 EU Member States  authorize the 17 Member States of the Eurozone to establish a  Stability Mechanism

The above Art.136 TFEU amendment to the EU Treaties has still to be approved by Ireland in accordance with its constitutional requirements under the “simplified” EU treaty amendment procedure of Article 48.6 TEU.

The European Council “Decision” to insert this amendment into the EU Treaties comes into force on 1 January 2013 if  by that time it has been approved by all 27 EU Member States in accordance with their constitutional requirements.

The ESM Institution which the 17 Eurozone States seek to establish and which Ireland would become a Member of is to be set up by the ESM Treaty for the 17 on the basis of this  Art.136 TFEU authorization  by the 27.  The ESM Treaty states that it is “complementary” to the Fiscal Treaty on which we have a referendum vote on 31 May.

The Government has promised the other 16 Eurozone Governments that it will have the ESM Treaty ratified by July,  but without the necessary constitutional referendum being held on it and on the Art. 136 TFEU amendment which authorizes it.

Q.  BUT WHERE WILL WE GET THE MONEY?

A.   We will get the money by holding a referendum on the Article 136 TFEU amendment and the ESM Treaty that it authorizes. This is constitutionally required in Ireland in order to validate these proposals as they stand, but our supine Government wants to avoid such  a referendum at all costs.  The 16 other Eurozone States will have to persuade us to vote Yes in such a referendum if they are to establish the kind of Stability Mechanism which the ESM Treaty envisages.  They can do this by agreeing to forgive the private bank debt the ECB has insisted should be imposed on Irish taxpayers, plus the Anglo-Irish promissory notes etc.   An Irish referendum on Article 136 TFEU and the ESM Treaty would also be an opportunity to add the voice of the Irish people to the calls across  Europe for the Eurozone authorities to agree a growth strategy instead of the present failed austerity policies.

Q.  WHERE WILL WE GET THE MONEY IF WE VOTE NO TO THE FISCAL TREATY?

A.   Where will the Government get the money to pay the €11 billion the ESM Treaty will require from us -  €1.3 billion up front and €250 million of that this July! -  with an open-ended treaty commitment to pay further sums thereafter without limit?

DEAR DR BARRETT,

It is quite wrong of you to state in your Irish Times op-ed article of Friday 4 May that No-side advocates in the current referendum are “threatening to veto an institution as vital as the ESM”. Regrettably you do not mention in your article the €11 billion which the ESM Treaty requires Ireland to contribute in different forms of capital to the Stability Mechanism the ESM Treaty proposes – with €1.3 billion up front (1.6% of the total) “irrevocably and unconditionally” (ESM Treaty, Art.8).  Nor do you mention the blank cheque in this treaty for the ESM’s Board of Governors to raise further capital sums without limit as they decide may be required in future (ESM Treaty, Art.10).

WHY IRELAND HAS A VETO ON THE ARTICLE 136 TFEU AMENDMENT TO THE EU TREATIES AND THE ESM TREATY WHICH THIS AMENDMENT AUTHORISES

Those on the No-side in our Fiscal Treaty referendum who know what they are talking about are saying that the ESM Treaty and the Article 136 TFEU amendment to the EU Treaties which authorises a “Stability Mechanism” should be put to referendum in Ireland before we can either ratify the ESM Treaty or approve this Article 136 TFEU amendment in accordance with the provisions of EU law and the terms of the Irish Constitution.

This is

(a) because a permanent commitment to the ESM as a new Eurozone Institution of which Ireland becomes a “Member”, together with its accompanying  rules and its extraordinary legal and taxation immunities for its Board of Governors and personnel, entails a surrender of  much of what is left of Irish State sovereignty;

and

(b) because if  the amendment to Article 136 TFEU quoted above is lawfully to permit a Stability Mechanism for the Eurozone like that proposed in the ESM Treaty – which would effectively override a number of existing EU Treaty articles -  then a different method of amendment of the EU Treaties needs to be adopted than that being used in the present instance.

It is therefore the No-side people who are seeking  in effect to defend EU law and the integrity of the EU Treaties by pointing this out and calling for  the Article 136 TFEU authorisation and the ESM Treaty which it purports to authorise to be ratified in the only manner which is lawful under the EU Treaties and constitutional  in Ireland –  namely, by way of referendum of the people. It is a pity that your Irish Times article fails to acknowledge this.

WHY UNANIMITY AMONG THE 17 EUROZONE STATES IS REQUIRED TO APPROVE OR RATIFY ANY STABILITY MECHANISM FOR THE EURO AREA COUNTRIES

I am surprised that you do not acknowledge that the express terms of the Article 136 TFEU authorisation quoted above require unanimity amongst the 17 Euro area States for the establishment of any Stability Mechanism which the latter may decide to set up.

If you look at the words of the proposed Article 136 TFEU authorisation, you will see that it does not say that  “Member States whose currency is the euro” -  meaning some of them -  may set up a Stability Mechanism, but “The Member States”, meaning all of them (In French “Les membres” as against “Des membres”).  The proposed ESM Treaty as it stands provides that it can come into force when Eurozone States contributing 90% of the capital have ratified it.  The eight largest of the 17 Eurozone States can do this, thereby bringing the Stability Mechanism into being, even though they would be a minority of the countries of the euro area.

How then can the Stability Mechanism for the 17 that is envisaged in this ESM Treaty be for “the euro area as a whole”, as required by the Article 136 authorisation by the 27 EU Member States quoted above?

There are other, even legally weightier, reasons for unanimity being required for ratification of an ESM Treaty of the kind the Government will be asking the Dáil to ratify in June, once our referendum on the Fiscal Treaty is over, as well as sanction the first €250 million payment to the ESM fund in July, but this is one good reason.

THE ESM TREATY SEEKS TO OPEN THE LEGAL PATH TO THE “FEDERATION FOR THE EUROZONE, A CONFEDERATION FOR THE REST OF THE EU” WHICH NICOLAS SARKOZY CALLED FOR LAST NOVEMBER

The ESM proposed in the ESM Treaty would radically restructure the rules of the Economic and Monetary Union (EMU) which Ireland joined under the Maastricht and Lisbon Treaties.  Having failed to obey the 3% and 60% of GDP “excessive deficit rules” set out in those treaties, Germany and France are now proposing to put the EMU on an entirely different basis than hitherto by means of this new EU Institution, the ESM.  They thereby want to override the “no bailout” rule of Article 125 TFEU which forbids EU loans to Governments in order to enable the proposed ESM for the Eurozone to do this, something which is forbidden under the current EU treaties.

Germany and France are seeking in this way to by-pass the rules of the current EMU and to carve out a legal-political path to what French President Nicolas Sarkozy called for last November: “A Federation for the Eurozone and a Confederation for the rest of the EU”.  The proposed ESM Institution is intended to be the Bank-cum-embryonic-Finance Ministry of the future Eurozone Federation which the ESM Treaty effectively creates the legal path toward.

WHY THE WRONG TREATY REVISION METHOD IS BEING USED TO INSERT ARTICLE 136 TFEU INTO THE EU TREATIES IF THIS PROPOSED AMENDMENT IS TO VALIDATE THE ESM TREATY AS IT STANDS

The 27 EU Member States are of course legally entitled to amend the EU Treaties in order to permit the establishment of a Stability Mechanism for the 17 Eurozone States of the radical kind proposed in the ESM Treaty – as long as they do this by the proper legal method governing the revision or amendment of the Treaties set out in Article 48 TEU.

Majority legal opinion is of the view that if Article 136 TFEU is lawfully to permit an ESM of the radical character envisaged in the proposed ESM Treaty, then the EU Treaties need to be amended by the procedure set out in Article 48.2 of the Treaty on European Union (TEU), the so-called “ordinary” treaty revision procedure,  rather than  by  “simplified” treaty revision procedure of  Article 48.6 TEU which is currently being used.

As you know, this “simplified” treaty revision procedure was inserted into the EU Treaties by the Treaty of Lisbon.  It allows the European Council of EU Prime Ministers and Presidents to amend the treaties merely by taking a “Decision” among themselves – such a “Decision” being subject to subsequent constitutional approval by their respective Member States.  See the enclosed copy of the European Council “Decision”, set out in the EU’s Official Journal, on this.

The Prime Ministers and Presidents on the European Council did not sign anything when they took this “Decision” on 25 March 2011. They took their “Decision” collectively among themselves, but it must still be constitutionally approved by their National Parliaments or by referendum of their peoples. The constitutional process of “approving” such a “Decision” is analogous to but not the same as the process of ratification of a treaty following its signature. The “Decision” may well not be constitutionally approved, just as a Treaty may not be ratified even if it has been signed.

This EU “simplified treaty amendment procedure” of Art.48.6 TEU is a form of  legal short-cut meant to deal with minor technical amendments to the EU Treaties which do not really require a full intergovernmental conference to be called,  followed by a lengthy treaty ratification process.  The “simplified treaty amendment procedure” was however never meant to provide for such a radical scheme as the fundamental restructuring of the Economic and Monetary Union which the ESM Treaty as it stands proposes.

This ESM Treaty is tantamount to a German-inspired attempt to organize a legal-political coup to override the EU Treaty provisions on which the existing EMU is based.  Hence the proposed Article 136 TFEU amendment is almost certainly being “approved” in an unlawful way under the  EU Treaties if it is taken as authorizing the ESM Treaty Messrs Kenny and Gilmore want to ratify by July 2012 – even before the Art.136 authorizing amendment comes into force on 1 January next! That is another reason why this step would be unlawful.

I am informed that this is an important issue in the constitutional challenge to the amendment to Article 136 TFEU and the ESM Treaty which has been launched in the High Court by Donegal Independent TD Thomas Pringle.  Thomas Pringle is seeking to defend EU law, the integrity of the EU Treaties and the Irish Constitution by his legal action.  He deserves the support of every democrat and patriotic Irish person. It would be helpful if you would consider in some future Irish Times article the important legal and constitutional issues which Thomas Pringle’s brave challenge raises.

DR GAVIN BARRETT’S CONTENTION THAT THE ARTICLE 136 EU TREATY AMENDMENT IS “UNNECESSARY” FOR THE ESM TREATY’S  STABILITY MECHANISM TO BE ESTABLISHED?

I am truly surprised to see such a distinguished exponent of European law as yourself write in your article that, “It is far from clear that the Article 136 TFEU amendment is really necessary in order to set up the ESM”.

If that is so, why do all 27 EU Member States think it necessary to insert the Article 136 TFEU amendment quoted above into the EU Treaties?  The EU is a Union governed by law.  The Member States do not amend the EU Treaties  unnecessarily.   Why are all 27 EU countries currently going through their constitutional processes for approving the European Council Decision to amend the EU Treaties in order to permit the establishment of a Stability Mechanism for the Eurozone if, as you say in your article, ”it is far from clear” that this is necessary?  Are you really suggesting that the 27 EU Governments and their legal advisers are all wrong  and do not know what they are doing?

You mention in your Irish Times article that the ESM’s temporary predecessor, the three-year EFSF loan fund set up for Greece in 2010 and from which Ireland and Portugal later got their bailouts, was ”successfully set up” under another treaty article – Art.122 TFEU to be precise – but you are presumably well aware that this treaty article  was never meant for such a purpose.

That EU Treaty Article deals with mutual aid between EU Member States in the event of natural disasters. It was clearly never meant to cover sovereign bailouts for Eurozone countries which had got into a financial mess because they failed to obey the 3% and 60% “excessive deficit rules” of the existing EMU.  That is why an entirely new legal provision needs to be inserted into the EU Treaties – namely, the proposed amended Article 136 TFEU – in order to provide a legal base in the Treaties for the proposed permanent ESM loan fund of €700 billion for the Eurozone, together with all the other radical things which this new ESM Institution could do, of which the 17 Eurozone States would become Members.  How does one become a “member” of a “Mechanism” by the way?

MONETARY POLICY FOR THE EURO AREA IS AN “EXCLUSIVE EU COMPETENCE” AND NOT SOMETHING AN EU SUB-GROUP OF 17 EUROZONE STATES CAN ARROGATE TO THEMSELVES

It is regrettable that your uncritical political commitment to further Eurozone integration should lead you to try to sidestep such a basic principle of EU law as Article 3(c) TFEU, which provides that anything to do with monetary policy for Member States whose currency is  the euro is an “exclusive competence” of the supranational EU as a whole. This competence cannot lawfully be arrogated to themselves by a sub-group of EU Member States, namely the 17 countries  of the Eurozone, just because that is what Germany wants, with France tagging along.

It is an ABC principle of the EU Treaties that the Eurozone States must abide by the existing provisions of EU law as regards anything they might desire or propose which would affect monetary policy for the euro area, because this is an “exclusive EU competence”.  The establishment of an entity such as the proposed ESM with its associated  €700 billion permanent fund for lending directly to sovereign governments would certainly affect monetary policy for the Eirozone.

Germany, France and the other Eurozone Members cannot lawfully do whatever they like with the EMU – although that essentially seems to be what they are seeking to do by means of this legally flawed ESM Treaty.

THE ECJ DECIDES ON EXISTING EU TREATY LAW, NOT ON PROPOSALS FOR FUTURE LAW

The statement in your article that “The European Court of Justice has never said” that setting up a  €700 billion Stability Mechanism for the Eurozone requires an EU Treaty amendment such as Article 136 TFEU is surprising.  How could the ECJ have possibly made any judgement of this kind when Article 136 TFEU is a proposed amendment to the Treaties and not an actual Treaty Article?  This proposed Article 136 TFEU amendment will not  have legal force until next January, if by then it has been constitutionally  approved by all 27 EU Member States.

The ECJ has therefore no jurisdiction with regard to it. It is a matter for the Irish Supreme Court to rule on if the Supreme Court chooses to exercise its constitutional powers – which of course include protecting the integrity of the provisions of the EU treaties as these now form part of Irish law.

I put it to you that the above considerations make it clear why we need to have a constitutional referendum in Ireland on the ESM Treaty and on the Article 136 TFEU on which the proposed ESM Treaty as it stands is legally dependent.

USING IRELAND’S VETO THROUGH A REFERENDUM WOULD  PUT US IN A POWERFUL BARGAINING POSITION VIS-À-VIS THE EUROZONE AS NOTHING ELSE CAN POSSIBLY DO

Those who want an ESM like that proposed in the ESM Treaty wish for it to be established in the legally and constitutionally right way, for it would profoundly affect our Constitution and it requires a referendum here.

A referendum on the Article 136 TFEU amendment and the ESM Treaty would nonetheless be an opportunity for Ireland.  It would be a real chance for us to get radical relief on our State debts. It would put Ireland in a powerful bargaining position vis-a-vis  the Eurozone if  the other Eurozone Governments wish to press ahead with  the kind of radical new ESM Institution with enormous powers which is envisaged in the ESM Treaty as that stands at present.

Standing by the Irish Constitution in face of German-led pressure and exercising Ireland’s veto in defence of EU law and the EU Treaties would of course require some gumption from Messrs Kenny, Gilmore and their fellow Ministers.  Holding a referendum on Article 136 TFEU and the ESM Treaty would put Ireland in a powerful bargaining position by means of which we could rid ourselves of the burden of the enormous private banking debt and all that that entails.  Would we not be mad to fail to take advantage of that?

May I therefore invite you to join me and my colleagues in calling for such a development.  Let us exercise the Veto that we have on Article 136 TFEU and the ESM Treaty and make our politicians stand up for Ireland and the Irish people who elected them, while at the same time defending EU law and the EU Treaties against Germany’s and France’s takeover-bid for the Eurozone.

With best regards,
Yours sincerely

The National Platform EU Research and Information Centre
24 Crawford Avenue
Dublin 9
Tel.: 01-8305792

TO:
Professor Colm McCarthy
Department of Economics
UCD
Dublin 4

Sunday 29 April 2012

Dear Colm,

I am writing to you to make some points arising from your comments on the so-called Fiscal Treaty and the referendum on it on RTE’s Morning Ireland last Tuesday morning.

You made a small error, if I may say so, when you said on the radio on Tuesday that the Fiscal Treaty can come into force when 12 of its 25 signatory States have ratified it. In fact it requires ratification by 12 of the 17 Eurozone States for it to come into force. Ratification by the eight signatory non-Eurozone States does not count for that purpose (See Art. 14 of the Treaty on Stability, Coordination and Governance in the EMU).

Minister Leo Varadkar, who should have known better, made the same mistake on Vincent Browne ‘s TV3 programme last Wednesday, and Prime Time made it similarly last Thursday.

I do not know if you are aware that this issue of the Fiscal Treaty and, more importantly, the ESM Treaty being able to be ratified without unanimity amongst all 17 Eurozone countries is arguably in breach of EU law and the existing EU Treaties. This issue of a unanimity requirement for these two Eurozone Treaties is at the heart of current constitutional challenges to the ESM Treaty in Germany, Estonia and – as announced in the Dail last week – here in Ireland.

This ESM Treaty requires us to stump up €11 billion in different forms of callable capital to the proposed ESM loan fund, €1.6 billion up front “irrevocably and unconditionally” – a figure that may be raised thereafter without limi(Art. 8 ESM Treaty) . And there is much more in the ESM Treaty that should make people worried. I wonder have you thought through the implications of this?

Both the Fiscal Treaty and the ESM Treaty are not EU treaties, as you know, but formally speaking are ”intergovernmental” treaties for the 17 Eurozone countries. They can only come into being however – because they affect monetary policy in the Monetary Union, that being an “exclusive competence” of the EU – on the basis of an authorization or license which requires an amendment to the EU Treaties. All 27 EU States, including Ireland, must agree to that authorizing amendment, and that authorisation has not yet been constitutionally approved here.

This authorization is given in a two-sentence amendment to Article 136 of one of the two primary EU Treaties, the Treaty on the Functioning, of the European Union, which 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 this mechanism will be made subject to strict conditionality.”

You will note that the authorization says “THE Member States , not “Member States” or “SOME” Member States , but rather all of them. Yet the Fiscal Treaty as it stands provides that it can come into force when 12 Eurozone States have ratified it, and the ESM Treaty provides that it comes into force and the Stability Mechanism which it proposes may be established once States contributing 90% of the capital to the ESM fund have ratified that.

A simple calculation based on the contributions set out in the Annex to the ESM Treaty shows that the eight largest Eurozone countries would contribute 90% of this capital so that, as the ESM Treaty stands, a minority of the 17 Eurozone States could bring the ESM into being. How then can the Stability Mechanism which it purports to establish be “for the euro area as a whole”, as required by the Art.136 amendment which authorises it?

More fundamentally, how can the ESM Treaty for the 17 Eurozone States be enabled to put the EMU which Ireland acceded to under Maastricht and Lisbon on an entirely new economic and legal basis when monetary policy for the euro area is an “exclusive EU competence” – and not a matter just for the Eurozone countries . . . and when the rules for EMU, including the Art.125 ban on Government bailouts and the 3% and 60% of GDP excessive deficit rules plus their enforcement mechanisms, are clearly set out in the existing EU Treaties and override all other laws and treaties for Member States of the Union?

If those original rules of the EMU had been enforced, the Eurozone countries would not now be in the mess they are in. Ireland complied with the excessive deficit rules of the EMU in the early 2000s, but when Germany and France broke them in 2003 and 2004 they were set aside, as you know, and the enforcement provisions in the Treaties – including heavy fines – were not applied. If they had been there would have been no need of bailouts and the Article 125 ban on bailouts would make perfect sense, for it would never have come into contention.

Now Germany, France and others want to get round the existing EU Treaty rules, and especially the Article 125 ban on bailouts, by means of the ESM Treaty for the Eurozone. The “Stability Mechanism” which this treaty envisages – and one can imagine all sorts of other Stability Mechanisms that would conform to EU law – is essentially a Bank or fund which would lend directly to Eurozone Governments that might be in trouble as the European Central Bank is forbidden from doing this by Article 125 TFEU.

But the EU is supposed to be a creature of law, and the Irish Constitution is obliged to uphold EU law. If the Eurozone States, having got themselves into their current mess, want to set up a structure for the EMU based on quite different rules which would effectively permit direct bailouts for Governments and the setting aside of the “no-bailout” article in the Treaties, they have to amend the EU Treaties with the agreement of all 27 Member States, and not just by means of a special treaty amendment for the 17 which flouts the express terms of the Article 136 TFEU authorization on which the ESM Treaty depends. To attempt to do that latter would effectively be to run a legal coach-and-horses through EU law and the existing EU Treaties in the Franco-German political interest.

You spoke on the radio yesterday and unfortunately gave the impression to those listening as if the ESM were a pot of gold which we would be excluded from getting access to if we were so foolish as to vote No to the Fiscal Treaty. Your comments were repeated on the evening TV news and I have no doubt they will be quoted repeatedly by Yes-side propagandists during the Fiscal Treaty referendum campaign if the Government does not have the good sense to put this referendum off until we can hold it alongside a referendum on the ESM Treaty and the Art.136 amendment to the EU Treaties which authorizes the ESM Treaty.

Such a referendum will almost certainly have to be held anyway, whether as a result of the Attorney-General’s advice in due course or as a result of the constitutional challenge to the ESM Treaty which Donegal Independent TD Thomas Pringle is taking in order to defend the Irish Constitution and EU law which it upholds and which should come up in the High Court during May when the Government has responded to his Statement of Claim, which I understand has been sent to the Solicitor-General.

I ask you would it not be foolish of Irish voters to change their Constitution so as to impose a maximum public deficit rule of 0.5% and a permanent balanced budget rule on Irish Governments for the indefinite future in order to obtain access to a proposed Eurozone loan fund, when this fund does not yet exist, when the ESM Treaty which would establish it has not yet been ratified and may well never be ratified, and when the ratification of that treaty will almost certainly require a separate referendum to be held on it in Ireland anyway?

That is why I would like to suggest to you that if one takes account of the Fiscal Treaty’s “complementary” treaty, the ESM Treaty – which, incidentally, the Government has promised the other Eurozone States it will have ratified by July! – the most rational course for people to take in relation to the Fiscal Treaty is really to vote No to it and to call for a referendum on the ESM Treaty and its Art.136 authorising amendment to be taken together with a possible second referendum on the Fiscal Treaty, when the full implications of the whole interconnected caboodle have been properly considered by the Irish public and media.

In my opinion, if the Government looked at the matter rationally it would welcome such a development as being in the country’s best interests. For if people vote No to the Fiscal Treaty referendum on 31 May that referendum can easily be run again – as long as it is done alongside a referendum on the ESM Treaty and the Art. 136 amendment to the primary EU Treaties authorizing that – for Ireland has a veto on the latter.

My reason for suggesting this is that if a referendum were required in this State on the ESM Treaty and its authorizing Art.136 amendment, the Eurozone could not establish the permanent ESM loan fund which they want to set up unless they have Ireland’s agreement. We need to use that veto, not ignore it.

This is how Ireland could get access to real money, real relief on our public debts and a fundamental transformation in the State’s financial position. The alternative is to look for relief to Taoiseach Enda Kenny’s wholly mythical pot of ESM gold, which does not yet exist and may well never do so in its present mooted form because of the illegality under EU law of its mode of establishment and its unconstitutionality under the Irish Constitution. A No vote on 31 May opens for us a way to real money; a Yes vote makes us look like fools.

The course of action outlined here would put Ireland in a powerful bargaining position – as nothing else can do – to get massive write-downs on our State debt, a cancellation of those draconic promissory notes and all the rest. It could even put us in a position to give a lead across Europe in urging an expansive, growth-oriented policy on the Eurozone instead of the current austerity that is clearly not working.

This would of course require the Government to show some gumption vis-a-vis the Eurozone authorities instead of bowing to them spinelessly out of misplaced and outdated Europhilia. If Ministers fear offending Germany and France by deciding independently to hold a referendum on the ESM Treaty and Art.136 TFEU, they should be praying instead that Thomas Pringle TD’s constitutional challenge will succeed.

Forgive me for going on at such length. But if there is a real possibility of such a position being attained by holding these referendums on the ESM Treaty, would it not be utter folly for us not to take it? Germany, France and the rest would have no alternative but to oblige us if they wanted Irish voters to say Yes in such an ESM Treaty referendum, for their €700 billion loan fund would depend on it.

That is why in my opinion genuine Eurofederalists who oppose the Franco-German takeover-bid for the EMU which is currently occurring through these two Eurozone Treaties, as well as longstanding Eurocritics like myself and my colleagues who are opposed to further surrender of what is left of Irish sovereignty, have an objective interest in uniting to defend the integrity of the EU Treaties as they stand against this Franco-German scheme to make the Eurozone their captive.

For what Germany and France are planning in their takeover-bid for the Eurozone and their proposals to change radically the EMU which Irish voters voted for under Maastricht and Lisbon, would radically alter the EU for the worse and push it in a profoundly undemocratic and anti-social direction.

Europhiles as well as Eurocritics could thus validly be urged to vote No to the Fiscal Treaty in order to hold the EU together!

Maybe you would consider these points and whether you think they have any merit. If you cared to meet to have a chat about these treaties and related matters for lunch or over a drink any day, I should be glad to meet you at any time or place that suited you.

With best regards
Yours sincerely

PS. Because of the public interest character of this matter, I hope you do not mind too much if I circulate copies of this as an “Open Letter” to the media for their information.

The Government’s announcement of a referendum on the so-called “Fiscal Compact Treaty” (properly titled the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union/TSCG) calls in question its original intention to introduce the quite different European Stability Mechanism Treaty (ESM) to the Dáil for approval of its ratification on Tuesday or Wednesday next, or else sometime in the present pre-Easter Dáil term, as the Taoiseach recently announced.

The ESM Treaty would set up a permanent Eurozone bailout fund of at least €500 billion form this July – an economic firewall against sovereign debt “contagion” spreading to Spain and Italy. It has to be ratified by all 17 Eurozone States by their appropriate constitutional procedures. The ESM Treaty would commit Ireland to contributing €11 billion to the permanent Eurozone fund – so much money up front and so much in guarantees called “callable” capital later if required. There is already talk of boosting this fund by another few hundred billion once it is established, to which Ireland would naturally have to make a contribution also.

The Preamble to the ESM Treaty, which can be easily downloaded from the Internet, states (Recital 5): “It is acknowledged and agreed that the granting of fonancial assistance in the framework of the new programmes under the ESM will be conditional, as of March 2013, on the ratification of the TSCG [that is, the "Fiscal Treaty"] by the ESM Member concerned…”

This means that if the ESM Treaty, is ratified by Ireland sometime this month – we will be committing ourselves to contributing €11 billion to a fund from which we can receive no benefit or advantage whatever if voters should vote No to the Fiscal Treaty referendum that will presumably be held sometime in May or early June, although the Fiscal Treaty need not be ratified until the end of this year. The ESM Treaty was signed on2 February, the Fiscal Treaty/TSCG was signed on Friday last.

Would the Government not be acting in a very foolish fashion to lay the country open to such a possibility?

Would not the Irish State appear to be acting really bizarrely in the eyes of international public opinion if the ratification of these two quite different treaties was put the wrong way round in this way – very much against the Irish People’s interests?

Or has the Government in mind to introduce and ratify the ESM Treaty during March, as the Taoiseach said,

• thereby binding the State to contribute €11 billion plus to this permanent Eurozone Fund,
• and then use that as a moral bludgeon with which to browbeat a bamboozled electorate into voting Yes to the “Fiscal Treaty” – on the ground that if they should vote No to it, they will be depriving themselves of possible access to the permanent Eurozone fund at some time in the future?

Could our leaders really be so cynical?

Surely it becomes imperative in these circumstances that the Government should postpone ratification of the ESM Treaty until after the referendum on the Fiscal Treaty has been held?

The 17 Eurozone Prime Ministers and Presidents have agreed that they would try to bring the ESM Treaty into force by July. The original intention with this treaty’s predecessor, ESM Treaty No.1, which Michael Noonan and the other Eurozone Finance Ministers signed last year, in July 2011, had been to bring the permanent ESM fund into being in 2013, although ESM Treaty No.1 was never sent around for ratification. The date of next July would still give Ireland plenty of time in which to hold its “Fiscal Treaty” referendum in May or early June and thereafter ratify the ESM Treaty (No.2) to come into force by July if the people should vote for it.

Anthony Coughlan (Director)

DO YOU KNOW that Ireland could hold the Eurozone at our mercy regarding our national debt, the Anglo-Irish promissory notes and the terms of the Troika’s Memorandum of Understanding? This can be done by requiring a referendum instead of Oireachtas approval of the “Decision” of the EU 27 to amend Art.136 of the EU Treaties so as to authorize the establishment of a permanent €500 billion fund for the Eurozone, the “European Stability Mechanism Fund”, to which Ireland must contribute €11 billion?

DO YOU KNOW that approval of this “Decision” is the only thing on which Ireland has the power of veto? This is because if a referendum on approval of this “Decision” were found to be constitutionally necessary, it would put the State in a position to insist on major concessions on all these vital financial matters. Why should the Government throw away Ireland’s best bargaining card in this way? It is the only chance we have to get rapid radical relief for our ongoing economic pain.

DO YOU KNOW that the European Stability Mechanism (ESM) Treaty for the Euro area was signed by the ambassadors of the 17 Eurozone countries to the EU on 2 February 2012? This looks like being brought before the Dáil for ratification on Tuesday or Wednesday of next week, when the Taoiseach reports back from next Friday’s EU/Eurozone summit. It must be dealt with in this Dail session because the 17 Eurozone States have agreed to rat-ify the ESM Treaty by July.

DO YOU KNOW that this is ESM Treaty No 2? It replaces ESM Treaty No 1 which Finance Minister Michael Noonan signed along with other Eurozone Finance Ministers last summer but which was never sent around for ratification. Unlike its earlier version, ESM Treaty No 2 states in its preamble (Recital No. 5) that it is agreed that no Eurozone State will be able to obtain money from the permanent ESM fund which the treaty would establish unless they have first ratified the separate “Fiscal Compact Treaty” which has been pushed by Chancellor Merkel since Christmas. This requires a permanent balanced budget provision or “debt brake” in national constitutions or their equivalent. This Fiscal Compact Treaty, which will probably be signed by the 17 Eurozone States next Friday and which many people here have criticized, does not need to be ratified until the end of this year.

DO YOU KNOW that the Government has invited submissions from the public on this Fiscal Compact Treaty – a most unusual development? This will distract attention from the Government’s failure to insist that the amendment it has agreed to make to Art.136 of the EU treaties requires a referendum in Ireland because it makes a radical change to the scope, objectives and character of the Economic and Monetary Union which the Irish people agreed to sign up to under the Maastricht and Lisbon Treaties?

DO YOU KNOW that a motion to approve the “Decision” of the European Council to amend Art.136 of the EU Treaties + A motion to approve ratification of the European Stability Mechanism Treaty + A European Communities Amendment Bill to bring the provisions of the latter into Irish domestic law, will all be put before the Oireachtas probably on Tuesday or Wednesday week? This is even though there has been absolutely no public discussion on any of these vital matters, and media attention has been concentrated exclusively on the Fiscal Compact Treaty on which Ireland does not have a veto. At a minimum the people deserve a White Paper.

DO YOU KNOW that by holding a referendum in Ireland on the Art.136 amendment to the EU treaties – without which the €500 billion ESM fund cannot be established – we could not only insist on our sovereign debt situation being transformed, but that a better solution to the whole Eurozone economic crisis could be adopted?

If you would like to find out what is really going on, please read the detailed explanation in the analysis on this site entitled “Two Steps to a Fiscal Union for the Eurozone… & A Third Step to Distract Attention from the First Two“.

The European Stability Mechanism Treaty and the Fiscal Compact Treaty can each be Googled on the Internet.

“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.

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“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 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

“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?