In a total contempt to democracy Brussels made Ireland to vote twice on Nice and Lisbon Treaties. The EU has been forcing referendums onto the Irish people until they get the answer that they want. The Irish people were the only ones allowed to have a say on the Lisbon Treaty, they said "No" however that was the wrong answer. It has been saying that the Lisbon Treaty brought more democracy and Europe close to the citizens, but we just have been witnessing the opposite. The referendum in Ireland was thrown away, and the Irish people were bullied into voting Yes. The EU is clearly undemocratic and it has been ignoring the decisions made by the Irish people for too long.
Then, the European Institutions and Member States bullied Ireland into accepting a EU bailout in order to stop “contagion” to other Eurozone Member States. The request made by Ireland in November 2010 for a EU-IMF bailout (€85 billion package) was, unsurprisingly, welcomed by the EU finance ministers who said, “providing assistance to Ireland is warranted to safeguard financial stability in the EU and in the euro area.” However, the euro debt crisis has not stopped there, as Portugal became the third euro-zone country to be bailed out, and there is no guarantee yet it would be the last. Nevertheless, two years ago, we have been told that the creation of the EFSF and the ESM would prevent that from happening. However, all measures to prevent the current debt crisis have failed. If ever any more proof was needed that the bailouts do not work, they are just piling up debt, it is Greece’s current situation. By accepting the bailouts those countries have lost sovereignty over economic and financial policy and this strategy cannot solve any problem. The Eurozone, particularly Greece, Portugal, Ireland, Italy and Spain, would have more debt, more unemployment and more recession. These countries face a long period of stagnation, high unemployment, and painful structural reform. The present situation would be exacerbated, pilling debt, and submitted to the Franco-German demands. As Dan Hannan MEP said “Greece, Ireland and Portugal have not been rescued: they have been sacrificed to save the euro.”
In December 2010 Ireland has agreed to pay on average 5.8 percent for its €67.5-billion EU bailout. Then, Ireland’s new Coalition Government decided to seek a re-negotiation of its loan terms, particularly the rate of interest. However, Germany has been eager to introduce high interest rate attached to EU loans. It was therefore clear that Germany would only accept to renegotiate the interest rate attached to Ireland's loan in exchange for something, such as support for the competitiveness pact, or an increase in Ireland’s 12.5% corporation tax. Nicolas Sarkozy and Angela Merkel insisted on making Ireland’s increase of its corporation tax as a condition for having the interest rate on its bailout loans reduced. Ireland was therefore bullied again, this time on corporate tax rates. According to the Irish Times, Ireland’s Agriculture Minister, Simon Coveney, said, ahead of the 2010 March’s European Council, “We are not going to commit economic suicide by raising a corporate tax rate that has served Ireland well and that will be of significant assistance to us in rebuilding our economy, which will be export-led and which will be reliant on future foreign direct investment in Ireland”.
The Eurozone leaders formally adopted the so-called Euro Plus Pact on 25 March 2010. The pact is intended to strengthen “the economic pillar of EMU and achieve a new quality of economic policy coordination, with the objective of improving competitiveness”. In fact, the aim is to limit national competences over tax, wages and social security policies. The Euro Pact Plus provides that “Member States commit to engage in structured discussions on tax policy issues,” and points out that a common corporate tax base could “ensure consistency among national tax systems while respecting national tax strategies”. The Euro Plus Pact reduces Member States’ ability to run their own economic and social policies without achieving competitiveness. In fact, they were talking about competitiveness while denying Ireland its competitive advantage.
In the meantime, on 16 March 2010, the European Commission proposed a draft Council Directive on a Common Consolidated Corporate Tax Base (CCCTB). Several Member States, particularly Ireland and the UK as well as the Czech Republic and Slovakia immediately spoke out against the proposal. The Prime Minister of Ireland, Enda Kenny, has described such move as "tax harmonisation through the back door." It is important to note that this proposal does not comply with the principle of subsidiarity, as noted, last May, by the House of Commons. Nevertheless, Ireland was bullied into support the CCCTB in return for lower interest rates on its bailout loan. According to a statement by the Heads of State of Government of the Euro Area and EU institutions, issued on 21 July 2011, they agreed to apply to Portugal and Ireland the same EFSF lending rates and maturities agreed for Greece. However, the statement reads, “In this context, we note Ireland's willingness to participate constructively in the discussions on the Common Consolidated Corporate Tax Base draft directive (CCCTB) and in the structured discussions on tax policy issues in the framework of the Euro+ Pact framework.”
The Eurozone has learnt the hard way that the Euro and the common monetary policy do not work. Bill Cash noted that the crisis in Greece, Ireland and Portugal “are symptoms of a deeper structural problems within the European Union”, which “are the reasons why the European project does not work”. According to Bill Cash the EU has failed to respond to the need for reform and it has created this implosion by moving towards greater centralisation, by refusing the results of referendums and by undemocratic insistence on the European project. Hence, the answer is not “more Europe”, in fact as more Europe we have as worse become the situation. However, the EU refuses to accept the failure of the Eurozone. In fact, they now want to move towards a fiscal and political union in order to save it. According to Angela Merkel the Eurozone member states have set themselves on an “irreversible course towards a fiscal union." Merkel stressed, “we are not just talking about a fiscal and stability union. We have begun to create one.” However, contrary to what has been said, the fiscal union will not stabilize or make any positive difference for the debt crisis. As Bill Cash said, fiscal union “will lead to greater implosion, greater sovereign debt, more defaults and more trouble.”
On 2 March, the leaders of 25 EU Member States signed the so-called inter-governmental Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union. The contracting parties will ratify the Treaty according to their constitutional requirements. It is important to recall that according to the first draft text, the treaty would have entered into force following the deposit of the ninth instrument of ratification by a Eurozone contracting party. Then, the second draft text has increased the threshold of countries necessary to ratify the treaty from nine to fifteen, as Germany wanted to have as many Eurozone Member States as possible on board. However, amid concerns that some countries might face difficulties in passing the treaty through national parliaments or it might be subject to referendums, under the latest draft the threshold of countries needed to ratify the treaty for it to come into force has been reduced from fifteen to twelve. The Treaty specifically provides that “This Treaty shall enter into force on 1 January 2013, provided that twelve Contracting Parties whose currency is the euro” have ratified it. Consequently, it will still enter into force even if some countries national parliaments reject it or it is not approved in referendum. It remains to be seen what would happen if less than twelve Eurozone states fail to ratify the treaty before 1 January 2013.
It is important to note that the socialist candidate for the French presidency, François Hollande said he would “renegotiate this deal” if elected in the upcoming presidential elections. The Treaty is likely to face ratification problems in several countries, including in the Netherlands, France and Germany. However, the failure of one state to ratify this treaty does not prevent its entry into force for other states. Nevertheless, the Treaty won’t have credibility. In fact, the fiscal compact agreed at the December Summit has not been enough to calm the financial markets. The credit rating agency Fitch said, following the EU summit in December, it had concluded that "a 'comprehensive solution' to the euro zone crisis is technically and politically beyond reach.”
Last February, following the legal opinion of the Attorney General, the Irish government has announced that it will hold a referendum on ratification of the Treaty. Hence, despite all the attempts of the EU negotiators to avoid it, the Treaty will be subject to referendum in Ireland. Germany's Europe Minister, Michael Link, conceded that the Treaty has been designed in a way to avoid referendums. The EU is once again disregarding democracy and member states’ sovereignty by trying to force this Treaty onto citizens without giving them a say. They are not allowed to have a say on such important matter affecting them.
The Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union is aiming at deepening economic integration and tightening fiscal rules for the Eurozone. According to a Communication by euro area Member States, issued on 30 January “This represents a major step forward towards closer and irrevocable fiscal and economic integration and stronger governance in the euro area.” The Treaty is a step towards fiscal union, which is driven by German national interests. One could wonder whether eurozone citizens are willing to accept more national sovereignty being given away. However, they have not been asked whether they accept a fiscal union with an economic policy imposed by Germany. Only Irish voters will have a say on this Treaty through a referendum. But, they are being bullying into voting Yes.
The Irish people should vote NO. This Treaty will bring no benefit to Ireland. The Treaty represents German’s attempt to impose its domestic economic model on other member states. This is not in Ireland interests. The Treaty entails more centralised controls over the domestic economies of member states, particularly control over national budgets. It is intended to bind euro zone countries into stricter rules, namely the need of retaining their budget deficits below 3% and their debt levels below 60% of GDP. The Treaty introduces the so-called golden rule on balanced budgets, which is “deemed to be respected if the annual structural balance of the general government is at its country-specific medium-term objective as defined in the revised Stability and Growth Pact with a lower limit of a structural deficit of 0.5 % of the gross domestic product at market prices.” The obligation of national governments to cut deficits to 0.5% of GDP is likely to be very difficult for several member states to meet. The contracting parties are required to enshrine this rule in their national law.
If Ireland is already in a straightjacket, the situation is set to get worse as its sovereignty will be further reduced. The eurozone Member States’ economic and fiscal policies will be further coordinated at EU level and national governments would no longer be responsible for a great range of domestic economic policies. Ireland will further lose control over its financial and economic affairs. The so-called fiscal compact is the beginning of the end of budgetary sovereignty for eurozone member states. However, Member States further surrender of their national sovereignty is a recipe for failure.
Moreover, at Germany request, the preamble to the Treaty provides that “the granting of assistance in the framework of new programmes under the European Stability Mechanism will be conditional, as of 1 March 2013, on the ratification of this Treaty by the Contracting Party concerned and, as soon as the transposition period mentioned in Article 3(2) has expired, on compliance with the requirements of this Article,”. Hence, in order to an eurozone member state to be granted assistance within the framework of the ESM, which is expected to come into force in July 2012, it must ratify this treaty and comply and implement the so called balanced budget rule provided in Article 3 (2) within one year of entry into force of Treaty. A country that may wish to seek financial assistance under the ESM has no option but to ratify this Treaty. The eurozone continuous support for Ireland is conditional on it saying yes in the referendum. According to Michael Meister, a budget and finance spokesman for German CDU party, “Whoever doesn't accept the treaty has no protection from the ESM bailout fund. If the Irish people think they don't need any ESM protection they can, of course, reject the fiscal treaty.” In fact, Ireland's Deputy Prime Minister, Eamon Gilmore, said “Ratifying the [fiscal] treaty will also provide Ireland with access to emergency funds in the future, if we need them, through the new European Stability Mechanism.” He noted, “Our intention is to emerge from the EU/IMF [bailout] programme without having to resort to the ESM, but the facility itself is an important backstop that will further enhance international confidence in Ireland.” This is therefore being used to bully the Irish people into voting yes. The Irish people have the right to decide their future without any threat or interference from Brussels. But, they are being bullied, again, into voting Yes.
As above-mentioned, this Treaty only requires 12 of 25 contracting parties to ratify before it comes into force, hence even if Ireland votes against it, the Treaty will enter into force. As Bill Cash noticed “A new rule is being imposed through the arrangements under this treaty which involves a kind of qualified majority voting for referendums whereby if member states do not have the requisite number of referendums in which they say that they do not want the treaty, they will simply be ignored.”
At the signing ceremony of the Treaty, the European Council President, Herman Van Rompuy said to the EU leaders “You now all have to convince your parliaments and voters that this treaty is an important step to bring the euro durably back into safe waters”. Moreover, according to José Manuel Barroso “The treaty is an important part in our global strategy to restore stability in our European finances”. He also said “This treaty represents the very culture of financial stability that is the pre-requisite for a true economic union.” However, these are misleading statements, as this Treaty won’t make any difference to the current crisis. It will do nothing to resolve the present debt crisis, which, in fact, is getting worse. Wolfgang Münchau, Douglas McWilliams and Roger Bootle in their evidence to the House of Commons European Scrutiny Committee’s inquiry Possibilities for Reinforcing the Eurozone following the December European Council, agreed that this treaty does not resolve the present crisis. They believe that the fiscal compact won’t achieve its objective of helping to save the eurozone immediate problems. Wolfgang Münchau said “ the fiscal compact itself cannot solve the crisis, simply because, even if it was good, it will not come into effect for many years, so it will not have that effect.” As Bill Cash said “This Treaty of itself will not solve the root problems of the EU but will make them worse by cutting off the democratic oxygen of the voters who choose their governments in general elections and who decide what kind of economy and democracy they want for good or ill.”
In the meantime, the European commissioner for monetary affairs, Olli Rehn, ruled out a delay in the repayment by Ireland, by the end of March, of the €3.1 billion promissory note that it issued two years ago to cover the cost of winding up Anglo Irish Bank. Taoiseach Enda Kenny said “We have made it clear that a longer period and a lower interest rate would be of enormous importance to Ireland”. However, Olli Rehn has denied Ireland request to defer the payment related to its banking debt. He basically said that Ireland has to do what is told, ignoring the efforts Ireland has made so far. He said, “The European Union is a community of law,” and “That assumes by definition that each and every member state respects the commitment it has taken, and this goes for Ireland as well.” In fact, he said, “I actually wonder why this has to be asked at all because the principle in the European Union and in the long European legal and historical tradition is in Latin – pacta sunt servanda – respect your commitments and obligations". This is absolutely ludicrous. First of all, the Stability and Growth Pact has proved not to be enforceable against the large countries, as France and Germany breached the original rules of the pact. It is also important to recall that Brussels went beyond the powers conferred by the Treaties to provide a legal basis for the emergency funding. The European Financial Stabilisation Mechanism (EFSM) breaches the “no bailout” clause, that forbids Member States for being liable for the debts of another, and it is also a misuse of Article 122 (2), which is meant for national disasters. In fact, Madame Lagarde conceded, when she still was Finance Minister for France, that they broke all the rules because they wanted to save the euro at all costs. Moreover, the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union is unlawful. Under this intergovernmental Treaty the EU institutions, particularly the European Commission and the European Court of Justice would be exercising functions beyond those given to them under the EU Treaties, which breaches EU law. A group of member states cannot confer any role or further powers to the EU institutions, through an intergovernmental treaty, outside the EU framework, without the approval of all EU member states. The drafters of the treaty were not particularly concerned with its legality, since the main aim is to save the euro. Independent TD Shane Ross rightly suggested that the Economic Affairs Commissioner “should brush up on his Greek, because Greece was the first exception to the rule he was making yesterday. Spanish was the second exception to the rule, and that was only yesterday. Spain was given leeway on its budget deficit.” Olli Rehn is bullying the Irish people, who obviously have showed anger against his comments. As noted by the Financial Times “the eurozone’s obstinate rejection of Dublin’s ideas may well lead many Irish voters to conclude that in Europe, smaller countries are less equal than big ones.” The Financial Times agrees that Ireland should be allowed more room. The Financial Times Editorial published on 14 March reads, “Dublin is asking to “retrofit” IBRC to this by substituting European Financial Stability Fund bonds with longer maturities and a lower interest rate for the promissory note” whilst noting “This would not threaten the sovereign assumption of bank debt – which was foolish but cannot be undone – but it would allow Dublin to service it when the economy will hopefully be growing again.”
Ireland has been bullying by Brussels for too long! The Irish people are being treated with contempt. It is about time Brussels start listening to people democratic wishes. Ireland is in the euro straitjacket, unable, therefore to respond to events such as the present crisis. As Bill Cash said if the UK as well as Ireland and other Member States want to regain their democracy and economic stability they must return to an EFTA-plus arrangement. Bill Cash believes that the real problems are contained in the existing treaties and they are the reason why we have the crisis in Europe, consequently they must be fundamentally changed.
