John O’Hagan on the Treaty
This post was written by Philip Lane
Guest post from my colleague John O’Hagan
Many things in life are complex and are not, understandably, properly understood by most people, unless they devote enormous amounts of their time to do so. That is why we leave so many important decisions to our democratically-elected representatives and not to plebiscites/referendums.
The Fiscal Stability Treaty (FST) though has to be decided by referendum and because of its necessarily complex economic/legal language the electorate must rely partly on expert witnesses, as in any major court case by jury. A key thing for any jury is the credibility and reliability of these witnesses. And so it is with the referendum on the FST.
Many people will have, or want, to depend on the advice and arguments of others. In this context they must ask: which witnesses they can rely on in relation to an issue of such importance and who do they represent?
It is noteworthy in this regard that almost all the main ?witnesses? for the No vote have been against EU integration at every stage of the process. Their opposition in relation to the FST must be seen by the jury or electorate in this context.
The witnesses aligned on the Yes side include representatives of almost all businesses in Ireland, who provide the growth and employment so emphasised by the No side. They also include the two parties of government, elected only last year with a large majority, plus many other organisations and political groupings.
Key to any such decision is for each person to look at the consequences of a Yes, and a No, vote, based either on their own analysis or on the views of others better informed whose judgement they respect. Each person though must make the ultimate decision: a consultant may recommend some medical procedure but it is your decision whether or not to proceed.
As such, each person must take responsibility for his/her own vote and not complain after the event that they were not informed or misled or were not interested. This is especially so in a situation where there will be no second chance, as such an Irish vote will almost certainly not be needed for the Treaty to come into being. If ratified by twelve euro member states the Treaty will be passed.
The fundamental reason for the FST is that a currency union needs rules of engagement for the economic game to take place, as otherwise chaos will result. This is true in any game, be it football, boxing, golf, or whatever. It is to avoid another Greek situation, with its irresponsible past approach to fiscal matters (and earlier France and Germany), that the FST is a necessary first step in establishing and enforcing such rules: to protect each and every one of us from reckless behaviour by another in the currency club. The FST then is fundamentally about the future of the currency union.
Many of the rules outlined in the FST in fact are already enshrined in law, as many expert commentators have demonstrated. So there is really almost nothing substantially new and hence no substantial negative consequences from a Yes vote. To equate a Yes vote with a vote for austerity is at best a highly disingenuous electoral ploy. Fiscal correction is required either way.
A Yes vote of course will not in the short term at least bring about any improvement in the growth and employment situation. Many more things need to be put in place to effect such an improvement, including enhanced competitiveness, realistic pay rates and social welfare payments, proper incentives, increased training, and so on. However, the FST will provide the necessary stability and certainty for these things to happen.
What are the consequences of a No vote? The main danger is that of huge uncertainty, with the possibility of quite dramatic negative consequences. To argue that this amounts to scaremongering reminds one of the last government?s similar claims; when people warned of the pending disaster about to unfold on the banking front. It would be irresponsible in fact not to spell out the possible consequences of a No vote.
The most serious consequence in the long run is that it would represent a rejection of the necessary rules of the club to which we supposedly want to belong. These rules have been agreed and signed up to already by the heads of state of all seventeen members, plus eight others, including Sweden. This is why the FST referendum is fundamentally about Ireland’s future participation in the euro.
To argue that by voting No we could extract more from the others in return for our membership is naive in the extreme. It would only hold if Ireland’s continued membership was considered existential to the future of the euro, which recent events in Greece have clearly shown not to be the case. The poker game has changed, and anyone who wants to lose so much European good will by using the strong arm tactics of the bully in this new situation, holds a very weak hand indeed.
A No vote then would put in jeopardy Ireland’s future membership of the euro. This could come about primarily through in time not having access to funding, at least not at affordable rates for all we need to borrow, following a No vote. Or it could come about because we choose to exit the euro.
In this scenario do we go it alone on the high seas of international financial markets, or aim for self-sufficiency as in the 1930s, or do we put ourselves once again under British monetary rule? The electorate needs to know the answer to this question from the No side, and now.