New EU treaty lets Germany, France off the hook

Apparently we have another new treaty which requires members of the eurozone to set up a legislative ‘debt brake’ and if they don’t adhere to it, as yet undetermined sanctions will be automatically applied.

It’s not clear whether the relevant minister has to travel to Berlin to be punished, or if German officials will travel to them — at that country’s expense, of course.

The 1997 Stability and Growth Pact included sanctions for countries whose budget deficit exceeded 3% of GDP and whose national debt exceeded 60% of GDP, but in March 2005 Germany and France pushed for a softening of the rules of the pact.

When it came to the crunch and the Prodi Commission wanted to apply the rules of the pact to hold Germany and France to account (imagine that, an Italian following the actual rules?) the governments of the EU joined forces and voted against the Commission.

Therefore, it was Germany and France, not Ireland or Greece, who were the first to break the spirit and letter of that pact and who set the precedent for other countries to follow. After all, why should other countries follow the rules when the biggest two countries in the EU refused to?

Why should we now believe this new treaty will be enforced when countries breach whatever debt brake they put in place, and who is going to impartially assess if those debt brakes are realistic and then when, as is inevitable, a country fails to stay within its limit, who is going to determine a proportionate sanction?

This new treaty still allows the political class of the EU to wallow in self denial that, like or not, sooner or later there will have to be a Eurobond and the ECB will have to be a lender of last resort. The fact remains that countries like Ireland and Greece simply cannot service the level of banking debt that was transferred to their taxpayers at the behest of the ECB, acting on orders from the German and French governments, who were themselves acting on orders from their respective financial services lobbyists, as well as servicing the current deficits caused due to the collapse in employment as a result of the very same financial services withdrawing funding to small and medium-sized business.

Private investors who took a gamble, and lost cannot be protected by EU governments from the consequences of their failed gamble for much longer. The EU is rapidly reaching the point where its leaders will be faced with the choice of protecting the wealth of private corporations against the well-being of the public and, if the former is chosen, the consequences will rest with the current generation of EU leaders, whose entrailment to private vested interests must surely rank them among the worst generation of leaders since the appeasers of the 1930s.

This new ‘treaty lite’ is certainly money well spent by the financial services lobbyist.

For example, I wonder how much money Fine Gael has received in corporate donations from that sector since taking office?

Desmond FitzGerald

Canary Wharf

London