Characterising the Fiscal Stability Treaty as an ‘Austerity Treaty’ is an obvious, but clever, move by opponents of Ireland’s membership of the European Union. It appeals to basic instincts with a simple, attractive sound-bite, which requires little explanation or supporting evidence. Who wants to vote for austerity? It is a proposition which can generate fear and resentment with very little effort. A prospect which makes us immediately seek an easy alternative – to simply reject the Treaty. This is an understandable human reaction, but it does avoids the real question – what then? Those advocating rejection have a duty to tell the Irish people what the consequences of rejection would be. So far they have avoided doing so, but bandying about the threat of ‘austerity’.
Of course this tactic is very clever, if the objective is simply to reject the Treaty, without really debating or understanding its merits or implications for Ireland. More importantly, and more accurately, it is also profoundly dishonest and dangerous, because it avoids dealing with the detail and facts contained in this Treaty. We need to consider these details very carefully. Furthermore, we must live in the real world and have a full and frank analysis of the political and economic context of the Treaty. These are two distinct, but absolutely vital, steps that every proponent and opponent of the Fiscal Treaty must take. Anything less will be a distinct disservice to the Irish people, to our country and to future generations.
I have been involved in Ireland’s discussions and negotiation of this Treaty from the outset and have a fairly intimate knowledge of what it actually contains. Let there be no mistake. Its provisions will be demanding and will make member states of the Euro currency, including Ireland, work extremely hard to abide by rules that are necessary to keep that currency in place. Most of the rules have been in place for a long time, but many of them have been breached repeatedly by member states. So our pre-existing commitments to balance our budget, to keep our deficit to a minimum and to keep debt levels low, will become more binding and enforceable. Not just for Ireland, but for all Member States. This is an essential step in restoring international confidence in our currency – the Irish currency – the Euro. It will also help avoid harmful and irresponsible fiscal practices among Member States in the future.
If we are not prepared, and seen globally to be prepared, to put in place enforceable rules to govern our currency union, then we have a major problem. This Treaty does just that. It makes the rules of the monetary union binding. This benefits Ireland. If this crisis has taught us anything, it is that those of us who share the Euro currency are completely and totally interlinked. What happens in any other Member State of the currency union impacts severely on Ireland and vice versa. It is thus in our interests to tighten up the rules and make sure that every State abides by them. Otherwise we will undoubtedly face further disaster in the future. Far from being a Treaty of ‘austerity’, this is a Treaty to make our currency safe and secure in the long term. It is difficult to see how or why others can argue against that.
Some may argue that Ireland should never have joined the Euro currency union. It is a valid argument, although I disagree with it. Without a doubt the currency was beset with design flaws from the start, largely because politicians lacked the courage to pioneer the kind of economic integration needed to make it work. However, the benefits to Ireland’s economy have been immense and could not have been achieved without it. Exports have more than doubled since 1998 while The size of the economy is significantly larger, despite the very sharp downturn in recent years. In real terms, GDP was around 50 per cent larger in 2010 than in 1998, while GNP was almost 40 per cent higher. Our small economy has become a hub for investment and trade within and outside the Eurozone. In fact, our membership of the currency union is far more important to Ireland than our much hallowed corporate tax rate. If we are to have an engine for recovery it will be inward investment and exports, especially to the European Union. The Euro is absolutely key to that. So our interest in saving and stabilising our currency is and will remain crucial. It is the most important priority of the Irish Government and will remain so. This Treaty is a vital element in the process of saving our currency and guaranteeing its future.
The key elements in this Treaty will have to be debated and discussed in great detail in the months ahead. The demand for information and explanation will be great. The Government, the Referendum Commission, the political parties and the many employers who see this Treaty as being vital to the national interest, to securing the stability of our currency and our economy, will have to explain clearly the complex elements of this Treaty. They will also, equally importantly, have to explain the context of the momentous decision that the Irish people will make. The challenge is great, but I very much look forward to the information campaign and national debate that lies ahead.