Ireland: Why this fiscal compact is necessary
30 May 2012
The Irish Times
As Ireland votes in a referendum on the German inspired fiscal compact on May 31st, the Irish Times invites the electorate to focus on the treaty and not on extraneous issues.
At the close of this raucous and often not very illuminating campaign on the fiscal treaty, we vote on May 31st. Not on the Government’s performance.
Not on the government's controversial water or household charges. Not even on “austerity”. We vote on whether or not to allow the Government to ratify the fiscal treaty and to amend our Constitution accordingly. It is in European terms an unusual and important democratic right, rightly cherished, but one that surely carries with it a democratic responsibility, an onus on voters to cast their vote solely on the issue at hand. Too much to hope perhaps . . .
As we have done in every one of the seven referendums on EEC/EC/EU integration that have been put to the Irish people, The Irish Times again recommends a Yes vote. Not just out of an incurable and uncritical Europhilia, but also a pragmatic assessment of Ireland’s vital interests at the time – and this time too – a sense above all that there are things we do better, and some that can only be done, together, collectively, with our European partners.
The construction of monetary union and a single currency is very much a case in point. That unfinished task – a bird never flew on one wing – is what tomorrow’s vote is about, providing the solid Europe-wide fiscal foundations on which sound money must be based, and against which euro member states will be able in solidarity to borrow collectively at sustainable rates of interest. This is not just a strange German notion, but a fact of economic life.
There is no such thing as a free lunch. Cheap money comes at a price that all the euro member states must pay – fiscal disciplines, sound housekeeping, and mutual enforcement methods. And, yes, some pain. That is the rationale for both the treaty we are being asked to support and the conditionality attached to access to the European Stability Mechanism (ESM) funding that we may well need again. And this is not, as No campaigners would have it, a “bankers’ treaty” or a “speculators’ treaty” but precisely one which will enable European states to band together against the whims of speculators by creating a currency of sufficient weight and stability to make it impervious to their attacks.
The price of money – the interest rate – is above all just a measure of perceived risk and uncertainty. A return to borrowing on the bond markets next year will inevitably, whether Ireland votes Yes or No, be a return to a sea of uncertainty, and potentially sky-rocketing interest rates, from the relatively safe harbour of lower euro zone bailout rates. Why, in the name of sanity, would we voluntarily deprive ourselves of that fallback?
Too much of the Yes case in this referendum campaign has been made on the defensive back foot, a double-negative argument, based on the malign consequences of voting No. Yet the positive case for a treaty that it is an essential, worthwhile building block in the construction of our currency, needs to be heard.
Above all, however, vote! This is your Constitution, your currency, your future. Don’t let someone else take the decision for you.