Could CAP be tapped to fund ESM?

Tánaiste and Minister for Foreign Affairs and Trade Eamon Gilmore and IFA President John Bryan sought support for an upcoming referendum yes at Cork farm machinery firm Lynch & McCarthy Ltd recently.

Included from leftwere Mrs Abby McCarthy, Jimmy Hosford, Minister for Research and Innovation Sean Sherlock, MEP Phil Prendergast, Michael McCarthy, Peter McCarthy, and at the back, Senator John Gilroy and David McCarthy.

I sent a query to the Department of Agriculture in Dublin last week. It read: “Has the Government sought written reassurances from the EU — in advance of the referendum on the 31st — that the CAP budget will not be ‘tapped’ for funds for the proposed ESM budget?”

ESM is the European Stability Mechanism, a device to be created if the stability treaty comes into being.

The ESM will have a proposed fund of €700bn, with the objective of bailing out insolvent European banks, and possibly countries.

Ireland’s contribution to this proposed fund, over an unspecified number of years, is estimated at €1.3bn per year.

To put my question in context, Ireland’s take from the CAP this year will be about €1.7bn.

Last year, it was proposed by Brussels that the CAP budget for Europe from 2014 to 2020 be set at €972.2bn.

My suspicion is the obvious one: given that certain states in the past have sought CAP budget reduction, and, on occasion, its abolition, how much of a danger could the CAP now possibly be in, given the need to find funding for the ESM?

Maybe there is no threat. However, it’s a foolish man who doesn’t ask.

The answer arrived by way of a one-line reply from Agriculture House.

“This query should be referred to the Department of Finance.”

Now, I was really worried. I don’t claim to know all the ins and outs, or the whys or wherefores, of how governments or the banking system work.

But I know enough to realise that, yes, the Department of Finance governs all the budgets of the various government agencies, but also that it’s the minister for agriculture who would have to answer questions, should our single farm payment, or any future variation of it, suddenly diminish or, God forbid, disappear. I intend to contact the finance people this week; however, I’m nearly afraid to do so, for fear the Troika, which now oversees our finances, gets any ideas.

Leaving aside whether the CAP may or may not get ‘tapped’, what’s just as worrying is the proposal to take €1.3bn out of the economy for the ESM: doing so would surely add further to national hardship.

The effect of the loss of that money to the Irish economy is quantifiable — all you have to do is imagine reducing the Department of Agriculture’s budget by that amount.

My thoughts on this referendum business, and its possible consequences, were further complicated when I realised that, far from trying to get our books balanced, a ‘yes’ vote seems to be a vote to licence the Government to commit the country to further borrowings.

All the talk on the ‘yes’ side is of the need to pay back our debts, get the finances in order, and the need for more borrowings.

It may be possible, over a very long time, to do any two of those things, but not the third, in my opinion.

Returning to my original question on the CAP and the ESM, it’s bad enough that Agriculture House kicked to touch when I asked the question, but it’s equally worrying that none of the farm organisations has, so far, raised the question either.

Like the majority in this country, I want the euro to survive, but I do think that Ireland needs to reevaluate its ability to repay its debts, long-term.

I have three small children, and the first of them will be finished secondary school in six years’ time. Will she, and her brother and sister following on, be damned to a life of crippling taxes and poor job prospects just because this generation was not imaginative enough to think our way out of this mess?


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