Last Post of Referendum: If you haven’t yet voted, please read this…

  • John Corcoran (ICTA) writes in an email: At 8.25 am yesterday morning Paul Krugman and John Corcoran spoke simultaneously on BBC radio and advised the Irish people to vote No in the Fiscal Treaty Referendum.  John spoke on BBC radio ulster and Paul on BBC radio 4.  Both are distinguished former students of the London School of Economics.   Please join with John and Paul and ensure a No vote today.  If you click on the podcast link… you can hear the interview.
    John Corcoran, M.Sc. Economics London School of Economics and Political Science.
    Spokesperson, Irish Commercial Tenants Association;
  • David McWilliams / Irish Independent – The fiscal treaty will only make things worse: The situation in the eurozone is not getting any better. The fiscal treaty, by imposing austerity on an already enfeebled economy, will make things worse, prompting more capital flight. Rolling the snowball down the hill is not an honest option.
    Mightn’t it be better to open the negotiations properly now?
  • Forpras Financial SolutionsWhy vote NO to the Fiscal Stability Treaty? Why are our Irish politicians telling us to vote YES? Are you aware that the ESM (European Stability Mechanism) isn’t even setup and yet Portugal, Spain and Greece need immediate bailing out? Where will all this funding come from? Well, more and more taxes will be needed to pay for all these bailouts and ofcourse the vicious circle of Ireland having to borrow to help bailout itself out and our partners. Every cent borrowed needs to be repaid with excessive interest rates. The government tells us not to worry as they have agreed with their collegues in the EU that we will be permitted to pay these loans over an extended timeframe. But nobody is agreeing to help reduce our debts or even write a portion off? Why? […] It looks like Ireland and the Irish public will be left with mountains of debt. More and more Irish will be required to pay higher taxes (VAT 23%, property tax, water charges, higher car taxes, higher fuel taxes and the list goes on) resulting in the standard of living in Ireland falling, rising debt and a massive increase in the number of Irish unable to pay off their debts whether they be mortgages, credit cards, etc.
  • Vincent Browne / Politico.ie – We owe it to ourselves to oppose a trajectory that will vandalise society: I will vote No to express indignation with the cavalier disregard of the procedures and protocols of the European Union itself of the sovereignty of its member states, in the conduct of the leaders of the EU institutions and of Germany and France, in their insolence in interfering with the internal affairs of Greece and Italy, in their disregard for “democratic” procedures of the Union – even in the way this Fiscal Treaty came about.
    I will vote No to defy the wishes of the German elite, which benefited so spectacularly from the emergence of the Eurozone and now makes modest redistribution of that generated wealth, conditional on adherence to its economic and budgetary diktats, diktats that disadvantage not only the mass of people throughout the rest of Europe but the mass of people in Germany itself. 
    I will vote No to give backbone to the government’s dealings with the EU on the promissory notes and the other bank debt. 
  • TEEU – the power unionTEEU Executive Committee Urges Members to Vote No to Austerity: The inevitable result would be a further contraction in the size of the economy – already decreased by over a quarter since 2008 – with an accompanying increase in unemployment and decrease in government revenue. As Nobel laureate Paul Krugman simply put it, austerity “pushes depressed economies deeper into depression”. We, and others, have pointed out that a fiscal stimulus is what is required and have suggested, to no avail, a means of applying it.

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

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?

Tuilleadh

Open Letter to UCD Economist Colm McCarthy

From: Anthony Coughlan, Trinity College

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

Anthony Coughlan
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

We need to postpone ratifying the ESM Treaty until After the the Fiscal Treaty referendum

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)

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