The Austerity Treaty (and its discontents)

One aspect of the voting pattern in the referendum on the Fiscal Compact Treaty on 31 May last that was strangely remarked upon by, among others, the Financial Times and the Economist was what the Financial Times called the “class divide” that it revealed.

Five constituencies voted No, three of them Dublin working-class constituencies—Dublin North-West, Dublin South-West, and Dublin South-Central—and the two Donegal constituencies. Academic gurus were cited as finding a growing “left-right” divide in Irish politics, caused by austerity.

Four major unions—UNITE, the TEEU, Mandate, and the CPSU—campaigned for a No vote, on the grounds that the Fiscal Compact regime would not create jobs and is in effect anti-worker.

The referendum clearly revealed an understandable measure of alienation among a section of the working class at the price that it is being forced to pay by the present economic crisis.

But that alienation was not a sufficient basis on which to mobilise a No majority in the referendum, much less to build a politics that can get the country out of the crisis.

The Yes campaign was based on the usual combination of patronage and blather but also skilfully used the fear that a No vote would cut the country off from access to economic recovery. A No vote would mean the country being barred from the European Stability Mechanism (ESM).

The No campaign emphasised austerity but largely failed to bring home the fact that there were significant issues about the European Stability Mechanism.

There was little understanding that constitutionally the ESM Treaty and the amendment to an existing EU treaty authorising the ESM Treatyrequire a further referendum in Ireland, and that politically the EU treaty amendment provides Ireland with a veto that is a powerful bargaining card with which to bargain for relief on the private bank debt.

Compliant media failed to tell the people that in fact the ESM was much more complex than what it was being portrayed as, and that in fact “best boy and girl in the class” behaviour can get us nothing but more and more austerity.

Enda Kenny’s reflections a couple of days after the referendum are very revealing about how he understands his role as head of the government of what its constitution still describes as a “sovereign, democratic, independent State.” He proclaimed that the Yes majority “strengthened Dublin’s hand in its negotiations in Europe over introducing measures to boost growth and in dealing with the tens of billions of euros of bank debt that Ireland had assumed during the crisis.”

He was probably not even aware of how ironic his statement was. In four years the state will be marking the hundredth anniversary of the 1916 Proclamation, which asserts “the right of the people of Ireland to the ownership of Ireland and to the unfettered control of Irish destinies.” The great and the good of the state will be dancing at the crossroads to mark the event.

Having to “negotiate” with others so as to be able to “introduce measures to boost growth” is clearly not the mark of “unfettered control,” nor is having to lay out 40 per cent of the state’s GDP to bail out banks on the instructions of others an assertion of “the right of the people of Ireland to the ownership of Ireland.”

But even more bizarre was the admission made a few days before the referendum by the Fianna Fáil leader Mícheál Martin about the blanket bank guarantee by the Fianna Fáil and Green Party coalition government on 30 September 2008, which shifted the debt of insolvent private banks onto Irish taxpayers: “We did it for the euro . . . We did it to prevent contagion across the euro zone.”

As a historian, Mr Martin would be aware of another act by Ireland as a small nation in the interests of a great-power enterprise. The price paid was of a different kind, but in both cases the action was not truly a self-determined one but rather that of a dependent.

On 20 September 1914, a little over a month after the outbreak of the First World War, John Redmond, leader of the Irish Party in the British House of Commons, made his call at Woodenbridge, Co. Wicklow, for Irishmen to fight for the British Empire “wherever the firing-line extends.”

Many answered his call, and nearly fifty thousand were killed.

Alert: Government Attempts to Pass ESM with Minimal Public Debate

Today – Wednesday, & Tomorrow – Thursday

The Government will seek Dail approval of:
The Article 136 TFEU amendment to the EU Treaties which authorises the setting up of the permanent Eurozone loan fund, the European Stability Mechanism
+ A motion to approve the ESM Treaty which is authorized by this amendment
+ A motion to approve future Government spending on the ESM,
TODAY – WEDNESDAY, AND TOMORROW – THURSDAY.
A guillotined debate on the second reading of the latter Bill will take place TOMORROW.

This means that the whole business of signing up the Irish State to the ESM Treaty for the Eurozone and committing us to significant expenditure to help bail out Spain and other Eurozone countries in the coming period, could go through all stages in the Oireachtas BY THE END OF NEXT WEEK – with minimal debate in the Irish media over the long-term implications of these steps or awareness of what this all means amongst the general public.
The ESM Treaty can be downloaded from the internet – http://www.european-council.europa.eu/media/582311/05-t…2.pdf
The relation of the ESM Treaty to the Article 136 TFEU amendment to the EU Treaties authorizing it and to the Fiscal Treaty which Irish voters voted on last Friday is set out in the publication “A Tale of Two Treaties” by Cork solicitors Joe Noonan and Mary Linehan.
This can be downloaded from the internet at: http://taleoftwotreaties.tumblr.com
The letter below to the Ambassadors in Ireland of those EU States which have not yet ratified or approved the ESM Treaty or the Article 136 TFEU amendment sets out the reasons for regarding the ESM Treaty as it stands as illegal under EU law and in violation of the Irish Constitution.
A reformatted standalone version of this as explanatory text, is available here - http://nationalplatform.org/2012/06/06/4-reasons-the-esm-treaty-is-illegal-2/ – “4 Reasons why the ESM Treaty is illegal”.
If these measures are pushed through the Oireachtas this week and next in the way the Government proposes, the only way this profound illegality and unconstitutionality can be prevented is by President Higgins referring the relevant Bill to the Supreme Court for adjudication or by Deputy Thomas Pringle’s legal team securing a relevant injunction to stop it pending a Court hearing of the issues.
Yours sincerely
Anthony Coughlan
Director, National Platform EU Research & Information Centre

People’s Movement patron begins legal challenge on treaties

Thomas Pringle TD explains why he felt compelled to take a court case
on the proposed amendment to article 136 of the Treaty on the Functioning of
the European Union and the ESM Treaty.

As an Irish public representative and citizen I keep asking myself if it would not be absurd if Irish voters were to vote on 31 May in the referendum on the Fiscal Compact Treaty in favour of imposing austerity rules on ourselves in order to get access to a proposed permanent euro-zone loan fund when the separate but “complementary” treaty establishing that fund is arguably illegal under EU law, unconstitutional in Ireland, has not yet come into force, and indeed may never do so.

On 9 March last I wrote to the Taoiseach, the Minister for Finance and the Minister for Foreign Affairs explaining some of these very serious concerns. I have received no reply to this correspondence beyond the usual standard acknowledgement of receipt of the communication.

I have now been left with no other option but to initiate legal proceedings, challenging the Government on fundamental aspects of both the European Stability Mechanism (ESM) Treaty and the Stability, Coordination and Governance in the Economic and Monetary Union (Fiscal Compact) Treaty.

I believe that both treaties raise serious legal difficulties, at the level both of EU treaty law and of Irish constitutional law. My primary democratic concern as both a citizen and an elected public representative is the integrity of the Constitution of Ireland and the EU treaties, which now form such an important part of our constitutional framework. I believe that the matters on which I seek the clarification and assistance of the court are of crucial importance not only for the citizens of this country but for the future of the EU.

My contention is that the particular stability mechanism being set up under the ESM Treaty is in breach of article 29.4.4 of the Constitution of Ireland, under which “Ireland affirms its commitment to the European Union within which the member states of that Union work together to promote peace, shared values and the well being of their peoples.”

The proposed stability mechanism seems on the face of it to permit member-states to work not in solidarity and togetherness but rather towards separation and exclusiveness. This is because it allows only some member-states, and indeed only some members of the euro zone rather than all of them, to participate in an arrangement that will clearly have implications for all.

I am asking the court to examine the legality of the amendment to article 136 of the Treaty on the Functioning of the European Union before any further action is taken by the Government to approve that amendment. That amendment permits the establishment of a “stability mechanism” that would be able to grant financial assistance, “subject to strict conditionality.”

This amendment is being adopted under the so-called “simplified revision procedure,” which I believe is legally wrong. My argument is that the changes being proposed are so fundamental that they should go through the ordinary revision procedure to ensure proper democratic scrutiny. They also require the approval of the Irish people in a referendum.

I am also asking the court to consider whether the ESM Treaty is in breach of existing EU treaty principles that have been approved by the Irish people in previous referendums and that are now therefore part of our law.

In addition, I am asking the court to decide whether the state can ratify the Treaty Establishing the European Stability Mechanism without first having the approval of the people in a referendum.

The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, signed on 2 March 2012, is intertwined with the ESM Treaty. Each one depends on the other. Therefore, if I am right in my belief that the ESM Treaty is unlawful, there is a serious question over the validity of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union.

And the implications for Ireland are vast, given its present economic situation. Under the ESM Treaty, Ireland would be obliged to make capital contributions of up to €11,145,400,000 in various forms of capital to the new permanent €500 billion bail-out fund that is to be set up. For Ireland this is the equivalent of approximately a third of Government tax revenue for 2011.

I believe that my application to the courts is just one more manifestation of a growing concern within the EU about developments towards a political union for the euro zone along the lines of what President Sarkozy has termed “a federation for the euro zone and a confederation for the EU as a whole.” It is not a direction that I want the EU to take, and I am sure that I am not alone.

ESM Stroke politics = New National Disaster

The Government hopes to be able to pull a stroke within the next few weeks that could be as disastrous politically for this country as the blanket bank guarantee of 2008 has been socially and economically.

The stroke? Sign up, virtually ‘on the q.t.,’ to a new permanent euro-zone bail-out fund, the European Stability Mechanism, to which Ireland will be “irrevocably and unconditionally” obliged to the tune of €11 billion, while all the time making great palaver about holding a referendum on the Fiscal Compact Treaty.

Yet together the European Stability Mechanism and the Fiscal Compact Treaty represent quite fundamental moves in the direction of a qualitatively different euro zone from the one established under the Maastricht Treaty in 1992.

Under the new regime virtually the whole area of budgetary policy will be removed from the national level to the supranational level of the euro zone, without a referendum.

The ESM treaty describes the two treaties as being “complementary.” So why not a referendum on both treaties? Legal advice from none other than the Attorney-General.

The present incumbent of that position, Marie Whelan SC? No. Her predecessor, Paul Gallagher SC, advised the previous Government that there was no constitutional problem in not holding a referendum.

It will be recalled that Gallagher also advised that Government on the night of the blanket guarantee for the Irish banks in September 2008.

So a change of Government did not result in a new, more independent approach to a developing euro-zone fiscal union, any more than it meant any real and significant loosening of the financial servitude imposed on the country by the previous Government. All done for the good of Irish banking interests and the German and French banks from whom they had borrowed.

Even at this late stage it is not too late to demand that the Attorney-General advises on the constitutionality of what the Government is trying to do—particularly in the light of the fact that there are significant differences between the earlier ESM Treaty that the previous Attorney-General advised on and the second version.

Under the ESM Treaty mark 2, any money from the permanent bail-out fund would be given only to states that had inserted the so-called permanent budget rule or “debt brake” in their constitutions or equivalent.

First published online @ http://www.indymedia.ie/article/101640

The Irish Veto: Why a referendum on one treaty and not on the other?

The Government wants the Dáil and Seanad in the very near future to approve a hugely important amendment to the EU treaties without any referendum, even though this amendment and its legal and 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.

The EU authorities are seeking to change the whole basis of the Economic and Monetary Union.

They are doing this by establishing a permanent ESM bail-out fund of €500 billion, which is to be surrounded by an apparatus of strict controls over national budgetary policy, including the permanent balanced-budget rule (0.5 per cent deficit rule).

This fund, which the euro-zone states want to set up from next July, would oblige Ireland to make a contribution of €11 billion, in various forms of capital, towards a permanent bail-out fund, called the European Stability Mechanism. This fund is to be set up by means of the European Stability Mechanism (ESM) Treaty for the seventeen euro-zone countries once all twenty-seven EU countries have amended article 136 of the Treaty on the Functioning of the European Union.

The amendment to article 136 would extend the scope of the existing EU treaties significantly and bears a huge weight of legal and 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.”

It is widely recognised among economists that the proposed ESM Treaty, the permanent eurozone funding mechanism it would establish and the apparatus of control of national budgets goes nowhere near solving the present financial crisis of the euro area.

What is needed is more emphasis on stimulating economic growth and demand throughout the area, to the benefit of the common good of Ireland and the other euro-zone countries.

An Irish veto

The European Council of twenty-seven prime ministers and presidents decided in March 2011 to set up a permanent bail-out fund for the euro zone.

Ireland has a veto, for before the “decision” can come into force it must be approved by all twenty seven EU member-states “in accordance with their respective constitutional requirements,” which means that in Ireland it requires approval by the people in a referendum.

The proposed amendment in effect entails a surrender of state sovereignty, which goes beyond the original “licence” that the Irish people gave the state in earlier referendums to join a “developing” European Community and widens the scope and objectives of the present EU treaties by significantly increasing the powers of the EU.

 But there’s more . . .

The amendment is to be made under the so-called “self-amending” article 48 (6) of the Treaty on European Union, which was inserted in the EU treaties by the Treaty of Lisbon. By using this procedure, 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 or competence.

For the European Council to claim the authority under EU law to set up a permanent bail-out fund for a sub-group of EU states is an assertion of significantly increased powers for the EU as a whole, because up to now the EU treaties provided for no such fund or mechanism in the Monetary Union. The treaties provided rather for an EU monetary union that would not require or permit cross-national “bail-outs” under any circumstances and would be run on quite different principles from what is being now proposed.

The ESM Treaty sets up the European Stability Mechanism, and sets out the institutional structure and the rights and privileges of this “mechanism.”

The mechanism will include a permanent bail-out fund of €500 billion, to which each of the seventeen members of the euro zone must make a contribution in accordance with a “contribution key.” The treaty provides that the fund may be increased later by agreement—and there is already talk of increasing it.

Ireland must contribute €11 billion “irrevocably and unconditionally” to the fund in various forms of capital.

The ESM Treaty was signed by EU ambassadors on 2 February 2012—replacing an earlier ESM Treaty that was signed by Michael Noonan and other euro-zone Finance ministers in July last year but that was never sent around for ratification. The seventeen euro-zone states have agreed that ESM Treaty No. 2 will be ratified so that it can to come into force by July this year.

This is to happen once it is ratified by signatories representing 90 per cent of the initial capital of the fund, so that Ireland has no veto on it. Not only that, but the treaty could come into force when the eight largest euro-zone member-states, which together hold 90 per cent of the fund‘s capital, ratify the treaty.

The preamble to the treaty states (recital 5) that it is agreed that money from the permanent ESM fund will be given only to euro-zone states that have ratified the later Fiscal Compact Treaty (“Treaty on Stability, Coordination and Governance in the Economic and Monetary Union”) and its permanent balanced budget rule or “debt brake,” and that the two treaties are complementary.

The Fiscal Compact Treaty was insisted on by the German chancellor, Angela Merkel, over the winter of 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 bail-out fund to which they would be expected to be the principal net contributors.

Instead they were told that the “no bail-out clause” of the EU treaties, article 125 of the Treaty on the Functioning of the European Union, guaranteed that there would be no bail-outs by the others for any member-state using the single currency that did not abide by the excessive-deficit rules.

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’s decision to insert the article 136 amendment into the EU treaties, ratifying the subsequent ESM Treaty, with its strict budgetary rules, 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 level to the supranational level of the euro zone—without a referendum in Ireland or even a Government white paper on the implications of that

The provisions of the Fiscal Compact Treaty were agreed at the EU summit meeting on 30 January and need not be ratified until the end of this year. This treaty provides for a rule requiring a permanent balanced budget, or “debt brake” of 0.5 per cent of GDP in any one year, to be inserted in the constitution (or equivalent) of euro-zone states.

All seventeen euro-zone states must ratify this treaty, but it comes into force once it is ratified by twelve of of them, so Ireland has no veto on it.

The preamble to the Fiscal Compact Treaty refers to the fact that money from the new permanent bail-out fund (the ESM) will be given only to states that have ratified it. Most of the provisions of the treaty overlap with the so-called “Six Pack” of EU regulations and a directive that constitutes the “Reinforced Stability and Growth Pact” and which were put into EU law last December.

It is important to note that the ESM Treaty and the Fiscal Compact Treaty are not EU treaties, binding in EU law, but are rather “intergovernmental treaties” among the seventeen member-states of the euro zone, although they provide for the full involvement of the EU Commission and the European Court of Justice in their day-to-day implementation.

These are clear moves towards a fiscal union for the euro zone, 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 so far.

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.

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.



First published online @ http://www.indymedia.ie/article/101627

Shhhhh! They signed!

The treaty establishing the European Stability Mechanism, a permanent bail-out fund for the euro zone, was quietly signed in Brussels on 2 February.

In an outstanding display of what passes for transparency, there wasn’t a word from the Government about this handmaiden of austerity.

The treaty now needs to be ratified by the seventeen members of the euro zone, with the intention that it will come into force in July. The ESM is designed to be a permanent successor to the European Financial Stability Facility and goes hand in hand with the EU Permanent Austerity Treaty.

The People’s Movement pamphlet on the treaty is at www.people.ie/eu/esmref2.pdf.

The Government should come clean with the Irish public about the European Stability Mechanism Treaty

People's Movement welcomes call by elected representatives

The People’s Movement welcomes today’s wake up call in this morning’s Irish Times by twenty six Oireachtas members and one MEP warning about the implications of an commitment by the Government to a very significant diminution of the sovereignty of the State, hoping that it can sleep walk the country into it. We agree wholeheartedly with their demand that the issue must be put to the country in a referendum.

The Government should come clean with the Irish public about the European Stability Mechanism Treaty. Signing this Treaty last July Finance Minister Noonan committed the State to “irrevocably and unconditionally” contribute some €11 billion towards an Eurozone fund from 2013 onwards with the possibility of demands for further sums down the line.

The Fianna Fail Party should explain why it apparently supports the Government action and the amendment to the EU Treaties to permit the 17 Eurozone countries to set up a permanent bailout from 2013 to replace the current temporary bailout fund that was established in April last year for Greece and which has since been applied to Ireland and Portugal.

It is reasonable, given the state of our economy for people to know the full details of the cost and implications of this. Initially we will have to borrow €1.27 billion to pay into this fund and its proponents are happy that we should pay €11.1454 billion in the end.

What guarantee can they give us that the country will get any benefit?

Also if the State were to receive ESM assistance there are no limits to the “strict conditionality” provisions that might be attached in light of the fact that the Treaty formally subordinates Ireland’s interests to those of “the stability of the euro area as a whole” It would mean a regime of unmitigated austerity for decades to come.

And for whose benefit? Certainly not the people of Ireland.

Background Information

This initiative seeks to warn the Irish public about some of the consequences that can arise from European Stability Mechanism (ESM) and the Treaty to establish it which the Government has already signed up to and which it proposes to ratify in the near future.

The ESM Treaty follows the decision of the 27 EU States to amend the EU Treaties by adding a new clause to Article 136 TFEU taken under the new, so-called "self-amending" Article 48.6 of the TEU that was inserted by the Treaty of Lisbon.

This Article 48.6 permits the European Council of EU Heads of State or Government to amend the main policy areas of the Treaties without calling an intergovernmental conference, so long as the amendment "does not increase the competences" of the EU.

The proposed amendment to Article 136 TFEU 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."

The Treaty commits the State “irrevocably and unconditionally” to contribute vast sums to a permanent Eurozone Fund, the European Stability Mechanism (ESM), from 2013 without any guarantee that it will bring Ireland any benefit, and which could be used to put the Irish State under a regime of permanent austerity by “stabilisation” measures such as the Euro Plus Pact.

The post-ESM Treaty Monetary Union would be based on the possibility of significant financial resources being transferred from richer Member States to poorer ones through loans, financial guarantees, debt buy-backs, remission of interest rates and relaxation of loan maturity terms, interwoven with provisions for "strict conditionally" and supported by the structure of rules and policy enforcement mechanisms that are set out in the Euro Plus Pact currently before the European Parliament.

If the State were to receive ESM assistance, there are no limits set in the ESM Treaty to the “strict conditionality” provisions that may be attached. There is no reason that loans or grants or overdraft facilities should not have attaching to them such conditions as that an Irish Government will introduce a balanced budget constitutional amendment here or whatever Germany and France require of it in the interests of safeguarding "the stability of the euro area as a whole". 

Related Link: http://www.indymedia.ie/article/100585

For further information, contact Kevin McCorry info at selisboninfo dot com 086 3150301

Government plans to publish ESM bill, EU-IMF bill and household charges bill before the end of the year

The Government plans to publish a number of bills during the current Dáil session, including a number arising from the EU-IMF programme.

The Department of Finance will publish five bills in the coming months. The Fiscal Responsibility Bill will provide a statutory basis for a range of fiscal policy and expenditure management reform, while another bill will enable Ireland to ratify the treaty establishing the European Stability Mechanism. The European Financial Stability Facility (Amendment) Bill and Euro Area Loan Facility (Amendment) Bill will enable Ireland to ratify agreed amendments to the EFSF framework agreement and the Greek loan facility agreement, and will be introduced as soon as this week.

Among the other important bills to be published are two from the Department of the Environment. The Local Government (Charges) Bill will impose an annual household charge on owners of residential properties, while the Water Services (Amendment) Bill will establish a system for inspecting and monitoring the performance of septic tanks and other onsite waste-water treatment systems.