Statement from Fianna Fail’s Foreign Affairs spokesman Seán Ó Fearghaíl this afternoon in the Dail:
Go raibh maith agat a Ceann Comhairle.
At 3 o’clock yesterday the eyes of Europe once more turned towards Ireland. Supported by the enduring strengths of our constitution, the Irish people, despite desperate government efforts to avoid it, have finally been given the opportunity to give their opinion on the future direction of the EU. It is a chance for the people of Ireland to affirm our role in a Union that has transformed a war torn continent into the most peaceful and prosperous community on the globe. Fianna Fáil will, as it has since we first guided Ireland into the European Community in 1973, support efforts to move Europe forward.
Since the agreement of the outlines of the Fiscal Compact in December, Fianna Fáil has consistently called for a referendum to be held. The democratic deficit that is gnawing away at the heart of Europe cannot be ignored. Desperate and ultimately failed government efforts to avoid a referendum have weakened it in the eyes of the electorate and our EU partners. We will vote in favour of the treaty as a step towards facing up to the fundamental challenge facing the euro zone. However we believe that it does not go far enough and that the ECB’s role needs to be reformed, Fiscal Union established and pan European banking regulation set out. The fundamental design flaws of the Euro need to be addressed in order to get Europe’s and Ireland’s economy moving again.
Our policy of constructive engagement with Europe has benefitted Ireland immensely and will continue to do so into the future. The benefits of free trade, infrastructural investment and unprecedented freedom of movement across the continent are central parts of Irish people’s lives today. The greatest assertion of Irish independence from Britain was the day we joined the EEC and broke the cords of economic reliance on the UK that had binded this country since 1922. Those who cynically play the nationalist card in the upcoming referendum should always recall that independence is more than mere slogans.
Our engagement with the EU is founded on shared values of solidarity, human rights and democracy. It is an engagement that involves, like any good friend, criticism where necessary. We are profoundly critical of the limits of the Fiscal Compact which is just one step in a far longer journey towards addressing the crisis we face. However as the proverb goes every journey starts with a single step. We will not however, indulge in crude populism, demagoguery and snake oil sales man solutions to problems that demand honest action. The responsibility that falls on us as public representatives demands more than that.
The Fiscal Compact Treaty
It is important that we look at the context of the Treaty, its details and the potential future repercussions on Ireland.
The European project stands at a crossroads. Internally it is assailed by a currency crisis, a stagnant economy and rising unemployment. Externally it faces a volatile globe with rising economic powers that threaten to sideline it and condemn Europe to increasing irrelevancy. Europe needs to take decisive choices on what direction to take in order to address these problems. This treaty is a step and just a step, towards the decisive action necessary. The economic future of our own country is bound up with the choices the EU on a whole makes over the next critical few months and years. Ultimately, no amount of Action Plans will solve the unemployment crisis if the broader European macro economic situation remains dire and all Pathways to Work will lead no where if the EU continues to lurch from crisis to crisis.
The 1992 Maastricht Treaty created the Common Currency after years of grave volatility in the markets and an utterly transformed Europe post 1989. It aimed to face up to the dramatic, seismic fall of the Berlin Wall and collapse of the Soviet Bloc that had been a dark shadow over free Europe since the end of the Second World War. It was envisaged by Jacques Delors, Helmut Kohl and Francois Mitterand as a core part of a new framework for a new Europe. However from the inception of currency it suffered from fundamental design flaws. Monetary Union requires Fiscal union. The Stability and Growth Pact of 1996 which aimed to establish rules to co-ordinate budgetary policies across the common currency area was wholly inadequate in this.
The Fiscal Compact Treaty that we will vote on in the coming months is basically a ramped up version of the Stability and Growth Pact of 16 years ago, which built on the Maastricht Treaty of 20 years ago. After the Stability and Growth Pact was consistently breached by Germany and France it was clear that it needed stronger enforcement rules. More recently the Economic Governance Six Pack passed by the Council and EU Parliament took steps towards this in December. The Fiscal Compact Treaty is not a radical departure, it is not a shocking loss of sovereignty and it is not the quantum leap required to solve the crisis at hand.
Essentially the treaty attempts to reduce the chances for poor fiscal policy in one country affecting another country, and the rules as well as the budgetary oversight and coordination and multi-year budgeting, are there to enshrine such good fiscal policy by making imprudent fiscal policies harder to enact.
The Compact is an international treaty outside of the EU Treaty framework. It will enter into force following ratification by at least 12 euro area member states and is open to the EU countries that are currently not members of the euro area. Unlike Lisbon or Nice however, it does not require the agreement of all EU member states, including Ireland, to go ahead. Ireland now has a choice, not a veto, on whether it wants to move forward with our EU partners. Fianna Fáil does not believe in a two speed Europe and look at the UK’s decision to step outside of this treaty with concern. The unity and solidarity of the EU across all member states is vital to its future success.
Verification of the Treaty is required to qualify for the European Stability Mechanism (ESM) which replaces our current funding arrangement the EFSF in January 2013. The ESM is the permanent funding mechanism designed to stave off future sovereign debt crisis. If Ireland decides to vote against this referendum and we are unable to return to the sovereign debt markets after the end of the EFSF we will not be eligible for the ESM. I believe that a no vote will be a self for filling prophecy in preventing a return to the markets. The bond markets will inevitably react harshly to the removal of the security net of the ESM.