Referendum and the Euro crisis: “Its unravelling, if it comes to that, will look very different.”

Even though David Begg could not get the numbers in the ICTU to call for a Yes vote for the Fiscal Compact Treaty, he has clearly has some of concerns of his own about where a No vote would take Ireland. RTE reports this afternoon that “he voiced fears that rejection would mean exclusion from the European Stability Mechanism, the consequences of which could be very difficult.”

The disaffection with a Europe that ten years ago was paying into the Irish economy, both through public and private investment, is palpable. Not least with people on the left who once looked to Europe to bring in the kinds of social protections that Irish leftist parties could only dream of getting past their electorates.

Now it’s all gone belly up, the accountants are in charge and the nation state is being pressed into the very tightest end of that political trilemma Pete keeps linking back to… Fertile ground for a section of the Irish left that’s never trusted the suits (and the accountants) in Brussels…

This is going to be a tough campaign which may have some major consequences not only for Ireland but also for it’s major trading partner, the United Kingdom… There is some considerable truth in David Cameron’s defence of the UK’s dip back into recession that he can’t help it if its market in Europe more broadly is slowly disappearing into a slough of dispond.

As noted already here on Slugger, Ireland has a free hand here.  Unlike Nice or Lisbon, the Irish decision cannot hold back other countries from signing up to the tough fiscal demands of the Bundesbank  European Central Bank… Furthermore Ms Legarde’s recently enlarged umbrella decreases the likelihood of contagion should any of the European countries go bust.

So what if Ireland votes no to the fiscal treaty? Well, they might get a handout. Then again, they will have just chosen not to seek shelter under Ms Legarde’s elegant and commodious umbrella.  Last year, when, admittedly the Eurozone was a great deal more vulnerable to the contagion effect, Angela Merkel asked: Does Greece want to stay in the Eurozone: Yes or No?

However the Government (and Fianna Fail) choose to play this campaign, being asked this question with regard to Ireland is  just one of the real fears stalking behind this referendum.

Chris Bowlby put together a fascinating piece for BBC Radio 4 Analysis programme, which tries demonstrates what might happen if there was an exit from the Euro, for Greece, Ireland or anyone else… He notes there woul be no opportunity to plan anything… At the point at which an exit from the Euro was mooted, it would effect a massive exit of capital from the country…

Setting up a new currency would, according to a representative of DeLaRue in England who print all manner of currency s could be implemented no quicker than four months… Devaluation would impose a 50% cut in value… As Brian Feeney noted in February:

What would happen then? Return to the Punt? You/re kidding.

Economic catastrophe is what would happen. The Republic can only borrow on the international bond market this year if it meets the terms agreed by the EU-IMF bail out. It they don’t have the euro behind them they will have to default on their debts.

That means no money to pay for teachers, nurses, medicines, you name it. It’s back to the 1930′s.

The No camp are banking on the idea that Europe would never let Ireland fall off such a cliff… Or I presume that’s what Gerry thinks when asked this afternoon where he would get the money it needs for next year if the country votes No:

Mr Adams said that Ireland would get it from the “current sources”, namely the EU, ECB and IMF. He rejected suggestions a No vote would make a second bailout more difficult to achieve.

He said Sinn Féin recognised the deficit had to be reduced and was proposing alternative plans. In the pamphlet, the party has put forward proposals for a radical Europe-wide reverse of current policies. It argues for all member states to put in a “once-off investment” into the European Investment Bank, that would then initiative a EU-wide investment programme. No sum is specified.

Except that the much hated Compact is the new entry fee to the ‘current sources’.  Such wishful [just keeping an eye on the Czar of, erm Frau Bundeskanzlerin surely? – Ed] interpretations depend on the likely flawed idea that the firewall (Ms Legarde’s elegant umbrella) is intended to keep Greece inside the Euro.  It’s such  that’s clearly giving Begg sleepless nights..

At the close of the analysis programme, Chris Bowlby puts tangibly what Beggs likely means by “very difficult”:

Everyone, Germans, Greeks, others across the eurozone and EU, is wondering where it might all lead – now the unthinkable is being well and truly thought. The eurozone may be saved intact; the optimistic public statements we still hear from leaders may be vindicated. But behind the scenes very different outcomes are being imagined.

Such are the sensitivities, the fear of prompting panic, we won’t know the response unless and until such a crisis is underway. Creating the euro was a painstaking, well-publicised process of negotiation, planning, weaving together economies and peoples. Its unravelling, if it comes to that, will look very different.