#EUREF: “Voting No would rapidly expose how unimportant we now are”

Vincent Browne notes in the Sunday Business Post (£) today that neither the yes nor the no camps have done their cases credit thus far. In the case of the government he rightly notes “claims that this treaty is about investment, jobs, growth and the stability of the euro are wild exaggerations in part and just wrong in part”.

In line with Micheal Martin’s early criticism (“the problem with this treaty is not that it does too much, it is that it does nothing about the real causes of this crisis”). This treaty is little more than a pause in the search for a much larger solution.


We are right to be impatient about German alarm, because they have not acknowledged how the euro project has been of spectacular benefit to Germany. Low interest rates suited Germany, still struggling with the adjustment of German unification. They did not suit other countries, including Ireland.

But impatience is irrelevant right now, for we need Europe’s strongest economy to be part of the rescue of Europe from the financial crisis. If we persuade the Germans to bear the main burden of the rescue, by signing up to rules that largely existed anyway, this is not a high price to pay.

His argument for voting No is almost entirely political…

…now that we have awakened to appreciate the enormity of this and the enormity of the permanent surrender of sovereignty, with everlasting supervision of our budgets, economic policy and our competitiveness, we need to call a halt.

Except that…

Actually, it won’t be a halt – for our voting No won’t stop it – but even though all we can do is fire a feeble shot across the bow, it will echo around Europe and, in the turmoil that is surely to come, it may have resonance.

Brian Lucey, not exactly a fan of the pact or the implications it holds for debt lock in, highlights just how circular the argument has become particularly on what we might call, for want of a better term, the dissident left:

It has morphed into a debate on austerity, driven for the most part by the ideologues of the left tapping into an inchoate if understandable desire on all our parts to see an end to austerity. At some levels the debate has been farcical, with Richard Boyd-Barrett claiming that an unspecified 10b (presumably per annum) can be found from “wealth” while at the same time arguing against taxing housing….wealth.

And why is this sceptical commentator planning to vote Yes. Simples. There’s been a climate change in Europe that most Irish commentators seem reluctant to acknowledge:

… even if we were not to require a single additional euro of debt, by running a balanced budget, we face a massive refunding requirement. To reiterate, national debt doesn’t get paid off – it gets rolled over and over. Paying off the maturing debt with new debt does this.

The trick, as we have noted above, is that with a modest amount of growth the burden on the state falls as a proportion, and with a modest amount of inflation the burden in present day funding terms falls further. The challenge then for Ireland is to achieve this.

But we will still have to pay off the debt. We need to repay, to refinance, over €30b between 2014-2018 in national debt, and some 23b in funds issued under the bailout. There is guaranteed funding from the ESM for this.

There is the argument that we can apply to the IMF which is true but application is by no means the same as acceptance. The IMF have previously expressed doubts (P 12 here) as to the appropriateness of them sharing the burden alone.

The EFSF continuation would also seem to me to provide some cover only for the existing bailout, leaving the remainder of the rollover of national debt and any additional funding to be sought from the markets. [Emphasis added]

And he finishes with the killer argument:

The ECB will support banks (although that support has to be coming to its limits) but they will not and cannot support states. Thus we face a “lesser of two evils” argument : this is pragmatic and economic reality no matter how much it may stick in the craw. Voting No would be the eviler of two lessers, and would rapdly expose how unimportant we now are.

As noted on Slugger some time ago, this is a genuinely free vote, for once. Despite the optimism of Terrence McDonough no one in Europe is waiting to put Ireland out of a hole it jumps into of its own volition. There is neither the time nor the resources for that.

Nor, as Stephen Kinsella notes, can it expect much from Monsieur Hollande’s stimulus package… Ireland has already had its stimulus package; or as David McWilliams has described it, its Hanseatic Handout (The Pope’s Children, Chp 7)…

Or as Naoise Nunn – a key strategist with Declan Ganley’s successful campaign against Lisbon I – put it on Twitter yesterday:

Mick is founding editor of Slugger. He has written papers on the impacts of the Internet on politics and the wider media and is a regular guest and speaking events across Ireland, the UK and Europe. Twitter: @MickFealty