Writing on the wall

IT’S simple: The fiscal treaty is an austerity timebomb that will go off after we exit the current EU-IMF programme.

If you want more austerity, vote for the treaty. If you want an alternative, vote no.

The Government has given the public the best reason to vote no to the fiscal treaty by saying there is nothing new in the treaty, that it simply writes economic rules we have already signed up to into law. In other words, the austerity policies we have suffered for the last four years would continue permanently.

It is telling, in this regard, that Taoiseach Enda Kenny refuses to debate the treaty on national TV. It’s easy to frighten people — and that has been the Government’s main weapon — with threats about money not coming out of ATMs, pensions and social welfare not being paid, and other untruths from the safety of news soundbites or brief Dáil exchanges. However, Mr Kenny knows he might be found out if he was directly challenged on the actual provisions of the treaty itself.

The treaty requires that states are legally obliged to maintain a “structural deficit” of no more than 0.5% of GDP. Our structural deficit is due to be 8.6% at the end of this year. This means, on top of the €24bn in cuts and charges which have crippled our economy and our society already, we get another €14.2bn in cuts and charges over the next seven years to meet the treaty targets.

The treaty further demands we reduce our debt to GDP ratio from the 115% level it is expected to reach when the treaty comes into force to 60%, at a rate of 5% per year. Going on current government figures, this would mean more than €4bn in further cuts each year in the first four years, over €3bn per year for the next four years after that, and then only slowly reducing down over a 20-year period.

The austerity we have seen for the last four years has resulted in 438,000 unemployed, 200,000 people emigrating, the destruction of thousands of small and medium-sized enterprises, and savage income cuts imposed on low and middle-income families and on the vulnerable in our society. Passing the fiscal treaty means another decade or more of this level of cuts and austerity.

The Greek economy has been devastated by two EU-IMF austerity programmes and as the same austerity “medicine” has been applied to the wider European economy, the eurozone has plunged into recession. If we continue down this road, we are heading towards a 1930s-style depression.

This is the reason why very few countries in Europe have ratified the fiscal treaty. The government of François Hollande in France won’t do it. Even Angela Merkel’s own parliament in Germany won’t do it. Greece is one of the few countries that did ratify the treaty and look at what has happened there.

Furthermore, if there was any deviation from the austerity needed to meet the treaty targets, fines of up to €160m per year could be applied.

Let’s not forget, the major reason Ireland and other EU countries have such big deficits and debts is because the reckless gambling of bankers, bondholders, and developers crashed the financial system, and because Ireland and other states then nationalised the bad gambling debts of these speculators and put them on the backs of ordinary people.

In fact, if we take out banking debt and debt interest, the so-called deficit problem and the threat of the State having no money largely disappears. Government figures show the primary deficit (ie, the deficit without bank debt and debt interest) will only be €3.1bn in 2013, not the €18bn the Government claim. That gap could easily be made up with increased income tax on those earning over €150,000 per year and a small 5% wealth levy on the super-wealthy in our society.

The other issue the Government do not want to debate is the European Stability Mechanism — the so-called insurance policy. The Government says we must vote for the fiscal treaty in order to gain access to the ESM.

In this, they are implying that the ESM is some sort of benevolent fund to bail us out, if we need it. In reality, the ESM is simply a permanent version of the current EU-IMF austerity programme. The treaty states clearly that funding will be provided based only on “strict conditionality”. In other words, it will be provided only if the Government agrees to impose even more cuts and charges on ordinary people to ensure the ESM gets its money back.

Furthermore, the citizens of Ireland will be liable to pay up to €11bn into this fund if it is needed to safeguard the euro, and the ESM can increase that amount at any time. Given that both Spanish and French banks may soon need a bailout, it is very likely that there would be no money left for Ireland if it needs it.

Incredibly, the people running the ESM will be immune from investigation or legal prosecution. The body will literally be a law unto itself.

So, far from the ESM being a reason to vote for the fiscal treaty, it is one of the best reasons to vote against the treaty.

We must call a halt to this madness and tell Europe that our society and economic future cannot be sacrificed to continue the policy of bailing out banks and crippling austerity.

The only way to do that is to vote no on May 31.

* Richard Boyd Barrett TD, People Before Profit, United Left Alliance


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