UPDATE: Reply to Dr Gavin Barrett’s article on the Fiscal Treaty referendum in Friday 4/May Irish Times
“A Federation for the Eurozone and a Confederation for the rest of the EU”
(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!Reply to Dr Gavin Barrett, Senior Lecturer in European Law, UCD, who wrote an article urging a Yes vote in the Fiscal Treaty referendum in the Irish Times on Friday 4 May, by Anthony Coughlan, Director, The National Platform EU Research and Information Centre, 24 Crawford Avenue, Dublin 9; Tel.: 01-8305792
Wednesday 9 May 2012
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?
Filed under: Anthony Coughlan, austerity treaty, ESM, Fiscal Compact Treaty, Irish Economy, Myths & Misrepresentations, Referendum | Clibeanna: Article 136 TFEU, Dr Gavin Barrett, Fiscal/Stability Treaty, irish times, promissory notes, veto | 2 Comments »
From: Anthony Coughlan, Trinity College
The National Platform EU Research and Information Centre
24 Crawford Avenue
Professor Colm McCarthy
Department of Economics
Sunday 29 April 2012
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
Associate Professor Emeritus in Social Policy, Trinity College Dublin
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.First published online @ http://www.indymedia.ie/article/101780
The relation between two different treaties we are asked to ratify, which people Need to understand
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)
Filed under: Anthony Coughlan, EU Economy, Euro / Monetary Union, Fiscal Compact Treaty, Fiscal Union, Irish Economy, Referendum | Clibeanna: Coordination and Governance in the Economic and Monetary Union, ESM, European Stability Mechanism, fiscal compact, Fiscal Compact Treaty, fiscal treaty referendum, irish referendum, Treaty on Stability, TSCG | Leave a comment »
Below for your information is a copy of the letter that was delivered to Mr Justice Frank Clarke, Chairman of the Referendum Commission, from Anthony Coughlan last Thursday, with the most relevant passages highlighted in bold …
Sunday 27 September 2009
MrJustice Frank Clarke
The Referendum Commission
18 Lower Leeson St.
The National Platform EU Research and Information Centre
24 Crawford Avenue
Thursday 24 September 2009
Dear Mr Justice Clarke
May I enclose for your information a copy of the new edition of the Lisbon Treaty: The Readable Version, the first edition of which I sent you and your Referendum Commission colleagues some time ago. I also enclose a document which describes the main changes the Lisbon Treaty would make.
May I take the opportunity of saying that the current Lisbon referendum, as I presume you have noted, has been characterized by monstrous illegality on the part of several key parties, as follows:-
1. The intervention of the European Commission, which is unlawful under European law, as the Commission has no function in relation to the ratification of new Treaties, something that is exclusively a matter for the Member States under their own constitutional procedures;
2. The part-funding of the posters and press advertisements of most of Ireland’s Yes-side political parties by their sister parties in the European Parliament, even though it is illegal under Irish law to receive donations from sources outside the country in a referendum and when, under EU law, money provided by the European Parliament to cross-national political parties is supposed to be confined to informational-type material and to avoid direct partisan advocacy. I read that the Green Party has refused such funding from its sister party in the European Parliament on the ground that it is advised that this is illegal under European law (Later comment on this latter point inserted by A.Coughlan:
Presumably this scrupulousness is because Green Party Local Government Minister
John Gormley, as Minister responsible for running the referendum, cannot afford to
have the political party he belongs to flout the law!)
3. The Government’s unlawful use of public funds in circulating to voters a postcard with details of the so-called “assurances” from the European Council, followed by a brochure some time later containing a tendentious summary of the provisions of the Lisbon Treaty – both steps being in breach of the Supreme Court’s 1995 judgement in McKenna that it is unconstitutional of the Government to use public money to seek to procure a particular result in a referendum;
4. The failure of your own Referendum Commission to carry out its statutory function under the 1998 and 2001 Referendum Acts of preparing for citizens a statement or statements “containing a general explanation of the subject matter of the proposal (viz. the proposal to amend the Constitution) and of the text thereof in the relevant Bill”, namely the 28th Amendment of the Constitution Bill 2009.
May I make some points to you and your Referendum Commission colleagues regarding this.
The Lisbon Treaty-Your Guide which you have circulated to voters makes no attempt to inform them about the proposed Constitutional Amendment, despite that being your prime statutory duty and that of your Referendum Commission colleagues under the Referendum Acts.
The leaflet and other material which you have made available do not tell citizen-voters that the new first sentence of the proposed Amendment we shall be voting on provides that the State
“affirms its commitment to the European Union” which would be established by the Lisbon Treaty – a sentence, incidentally, that was not in the Constitutional Amendment in last year’s referendum – and you give voters no idea that this is the case or what such a commitment might entail.
You do not inform voters that the second and third sentences of the proposed Amendment make clear that ratifying the Lisbon Treaty would abolish the European Community which Ireland joined in 1973 and would establish in its place a new European Union on the basis of the Lisbon Treaty which would be constitutionally very different from the European Union that we are currently members of, or what that difference might be.
Nowhere in the Referendum Commission’s information material that you have sent to voters do you advert to the fact that the Lisbon Treaty would confer on Irish citizens an “additional” citizenship of the post-Lisbon European Union, with associated citizens’ rights and duties vis-à-vis that Union, and what the implications of such a change might be.
One would think that there could be be few things more constitutionally important for citizens than being endowed with an additional citizenship. Yet you and your Commission say absolutely nothing about it in the “information” material you have circulated – in violation of the provisions of the Act which gives you your authority.
You say nothing about how the rights and duties that we would have as real citizens of the constitutionally new European Union which the Lisbon Treaty would establish would relate to our rights and duties as Irish citizens in the event of any conflicts arising between the two; or how the “additional” citizenship that Lisbon would endow us with differs from our essentially notional and symbolical EU “citizenship” of today.
It is clear that such a dereliction of duty on your part and that of your fellow Commissioners amounts to constitutional delinquency of a high order, as well as being a gross misuse of the ¤4 million of public money that you have been entrusted with. It will be interesting to see how future historians assess your actions.
As for yourself personally, instead of doing the job which the Referendum Acts impose on you, you have arrogated to yourself the task of answering questions on the Lisbon Treaty on the radio and in the press, in which you give your personal opinions and judgements, whereas all statements by the Commission should be collectively agreed by its members, as the Referendum Acts clearly envisage.
In no way do the Referendum Acts authorise you to do the “solo runs” on radio and in the press that you have undertaken. Your predecessor, retired Chief Justice TA Finlay, who was an exemplary chairman of the Referendum Commission between 1998 and 2002, would never have permitted this.
Some of the oral statements you have made, moreover, have been either false or misleading. From several l examples I could give, I quote two. A fortnight ago you accepted in response to a question on Morning Ireland that the right of Member State governments to “propose” and decide their National Commissioner would be changed by the Lisbon Treaty into a right to make “suggestions” only, effectively for the incoming Commission President to decide – that key person’s appointment being in the gift of the Big States.
You added the rider however that you did not think this change was of much consequence. You must be aware from previous private correspondence that I had with the Referendum Commission on behalf of my colleagues in our EU Research and Information Centre that many people on the No-side consider this be a Lisbon Treaty amendment of considerable consequence. One way or another, its consequences are clearly a matter of political judgement which it is not your job as Referendum Commission chairman to make.
Last Friday I heard you state on Morning Ireland that the difference between the “additional” citizenship that we would have of the post-Lisbon European Union and the notional or symbolical “complementary” EU citizenship we are said to have today was “of no great consequence” either, or words to that effect. Yet the most cursory acquaintance with the constitutional changes which the Lisbon Treaty and the Constitutional Amendment to ratify it would bring about, shows that this is just not true. Lisbon is the old Treaty Establishing a Constitution for Europe after all which the French and Dutch rejected in 2005, even if it implements that Constitution for Europe indirectly rather than directly.
You and your Referendum Commission colleagues still have some time left in which to fulfil your statutory function under the Referendum Acts that set you up. You still have a few days in which to do your duty to the Irish people whom you are profoundly failing at present, as they face their historic decision of next Friday with virtually nothing from you and your Referendum Commission colleagues which might give them “the general explanation of the subject matter” of the Constitutional Amendment “and of its text”, on which they will be voting, as the Referendum Act requires.
On behalf of citizens all over the country who are deeply disquieted by the Referendum Commission’s failure to provide information on how the Lisbon Treaty would affect the Consitution, may I appeal to you to do that duty still and to carry out your statutory function under the Referendum Acts.
President, Foundation for EU Democracy, Brussels
PS. I intend to release this letter to the media this weekend and to circulate it widely to Irish opinion-leaders.