ANALYSIS:Treaty supporters say it is good housekeeping, while opponents say it institutionalises austerity
AN OIREACHTAS committee report on the fiscal treaty, published this month, has identified 10 areas of dispute between the Yes and No sides in the referendum.
The report, by a subcommittee of the Committee on European Union Affairs, was a compilation of the evidence of 61 witnesses across 24 separate sessions.
It took in the views of politicians, ambassadors from EU states, academics, economists and interest groups.
The report gives excellent, readable summaries of the main arguments of all witnesses.
The areas of dispute identified were:
1.Purpose of the treaty: Supporters said it was good housekeeping and upheld fiscal discipline, while opponents said it protected banks, institutionalised austerity and accepted neo-liberal policies over Keynesian ones.
2.Economic effect: Opponents said it would delay recovery by not allowing investment and growth. Supporters argued it would improve market confidence, create better conditions for recovery, and guarantee access to the ESM.
3.Balanced budget rule: Those in favour said such rules were unavoidable given the size of the deficit, while those against said the treaty ignored the threat of structural unemployment.
4.The debt brake rule: This 0.5 per cent deficit rule will come into full effect in 2018. This rule is not as harsh as it seems, said supporters, while opponents said that if growth is absent it will mean further austerity.
5.European Stability Mechanism: It is a blackmail clause, according to No advocates. It is reasonable to make its availability conditional on adhering to fiscal rules, said supporters.
6.Alternatives to ESM: This involves both the debate on whether or not ESM funding will be available in the event of a No vote and if other sources, such as IMF funds, could be tapped. Some opponents suggested taxes on wealth and property as alternatives.
7.Consequence of Yes: Supporters largely referred to a restoration of confidence and availability of ESM funds; some on the No side said it would mean further austerity and a loss of sovereignty to unaccountable EU officials.
8.Consequences of No: Loss of access to ESM funding would be the first of a series of very damaging and long-lasting consequences, according to proponents. Those opposed said it would allow the Government to force a renegotiation within the EU.
9.Recovery: This area covers measures such as economic stimulus, including federalisation and eurobonds. Views differed on the relevance of the treaty to such measures.
10.Legal issues: This revolved around the existence of a possible veto, which might be achieved by the Government refusing to ratify other EU treaties, including article 136 of the Treaty on the Functioning of the EU.
There have been deeply conflicting claims from both sides as to whether or not the article 136 “veto” can be used.
TREATY VOICES AT THE COMMITTEE
A selection of what some of those who appeared before the committee had to say about the fiscal treaty.
Michael Link Minister at the foreign office, Germany:
Germany is not seeking austerity for its own sake, and it is not in Germany's interest to "kill the rest of the EU".
Dr Eckhard Lübkemeier German ambassador:
It is an essential quid pro quo for the ESM because investors must have assurance that their borrowers will be able to repay.
Emmanuelle d'Achon, French ambassador:
The fiscal compact is not an austerity treaty but a commitment to fiscal responsibility that complements the ESM. Growth and job creation are also required but they must be based on budgetary stability.
William Cash MP European Scrutiny Committee, House of Commons:
The involvement of institutions such as the European Commission and the European Court of Justice under the fiscal compact was of doubtful legality. The new arrangements are questionable and possibly illegal under EU law.
Jonas Sjöstedt MP Swedish Left Party:
If the treaty goes through, it will have three main consequences: it will deepen the recession and increase debt-to-GDP ratios; it will prevent states from taking country-specific measures; it will transfer massive powers to the EU Commission and the European Court of Justice. This has implications for democracy.
Brendan Butler, Ibec:
The fiscal compact will not itself create jobs – it is concerned with stability, certainty and responsibility. However, those factors are essential if jobs are to be created.
Bríd O'Brien Irish National Organisation of the Unemployed:
It is important to note that austerity has never solved a crisis on the scale of Ireland's. Sluggish growth in Europe is inhibiting recovery in the US economy. This will further challenge Ireland's open, export-led, economy.
Declan Ganley Libertas:
The solution that is required is to purge the bank insolvency that is undermining Europe. I would vote Yes if we were to get a deal on the bank debt . . . The compact will not deliver any of those things.
Joe Higgins TD Socialist Party:
The fiscal compact is dictated by and suited only to financial markets and unelected and unaccountable bankers, who hold a virtual dictatorship over the EU.
Dr Alan Ahearne NUI Galway:
The fiscal compact does not provide the full set of changes needed by the European Monetary Union. It has a narrow focus, dealing with fiscal discipline. Other aspects that must be address must include excessive private debt, current account imbalances, misaligned real exchange rates, competitiveness and weak balance sheet.
Tom McDonnell Tasc economist:
At best, the fiscal compact is incomplete. At worst it will damage prospects for recovery by reinforcing pro-cyclical fiscal policies. While the compact cannot be described as a good deal, the circumstances on balance favour ratifying it.
Prof John McHale NUIG:
While austerity undoubtedly slows the economy and destroys jobs, the trade-off is that imposing it will reduce Ireland's vulnerability to external shocks, make debt more sustainable and improve our access to funding by improving credibility.
Dr Karen Devine School of Law, DCU:
The ESM will create a potential liability on member states for the debts of other member states. Such a liability is specifically ruled out by article 125 of the Treaty for the Functioning of the EU. These breaches . . . are undemocratic and contrary to the ideals of democracy and the rule of law.
The committee’s report can be accessed online at: