Why I’m Voting Yes

Tomorrow morning, I will vote Yes in the Referendum.

This is for two main reasons, that the fiscal limits make sense for countries to adopt in the context of a single currency, and that we almost certainly will need funding from an international fund, and that the European Stability Mechanism provides the best opportunity for this.

With a transnational currency, there have to be certain constraints on government deficits to prevent contagion from one country to another. These constraints do not mandate further austerity.

In the short term, we are in a program managed by the Troika of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). They are lending us money to fund our government’s current inability to borrow on international markets. The restrictions on the government’s spending, mandating a combination of spending cuts and tax increases, are from the Troika, rather than any requirements of our euro membership. As things are, the state spends much more than it takes in, a gap that will have to be filled, but in a managed way in the hope of ensuring stability.

Balanced budgets in the long run are not the same thing as austerity. A balanced budget, or rather a deficit limit in this case, is about limiting the difference between the state’s income and expenditure. These concepts are explained in this video, produced two nights ago by friends of mine.

Governments can maintain both balanced budgets and relatively high levels of public spending, if they make that political choice. The Nordic countries have for years maintained both.

This Treaty was not designed with the Irish case in particular in mind. It was more focused on the case of Greece, which did overspend. So I accept the case of those who say that it would not have prevented the excessive spending here in the 2000s. That is not a reason to vote No. We need a currency that’s viable, and that means ensuring that a country like Greece could not put others at risk through its spending decisions.

I would like to see rules put in place to prevent governments within the euro area insuring debtors, rather than just depositors. What happened in September 2008 should not have happened, and the banks should not have been allowed to expect for that to have been on the table. But justified anger at this decision, and at the manner in which the European Central Bank is slow to reduce the amount to be repaid is not a good enough reason to reject this treaty.

We have no reason to expect that there would be a better deal on banking debt on offer before the end of the year on offer if we vote No. The very fact that it can come into force with 12 countries means that it was set up in a manner which allowed countries to opt out.

We will probably need funding. The best way to be sure of that is to vote for the Treaty. There is no way it could be easier or cheaper to get funding, whether from the IMF or if in some manner by a late entry to the ESM, than by passing this Treaty now. To quote from the preamble to the Stability Treaty,

STRESSING the importance of the Treaty establishing the European Stability Mechanism as an element of the global strategy to strengthen the economic and monetary union and POINTING OUT that the granting of financial assistance in the framework of new programmes under the European Stability Mechanism will be conditional, as of 1 March 2013, on the ratification of this Treaty by the Contracting Party concerned…

A post yesterday I read yesterday outlined the options we’d have for funding were we to vote No. None of them are appealing.

Even if we don’t need a second bail-out, to reject the mechanism by which we could receive one would send a signal of uncertainty to the markets. It is for these reasons that a survey of economists by Indecon showed that 90% believe that it is on balance in Ireland’s best interest to vote Yes. Similarly, in a survey by Dublin Chamber, 86% of business people are voting Yes.

I do not believe that we could vote No without risking social and political unrest. I read today sincere articles written by those I know from left-wing and from libertarian perspectives who would argue a No vote is needed to force fundamental restructuring. Perhaps they’re right. But as I look across the political situation in various European countries, I don’t want to see what might happen politically if an immediate adjustment to our budget had to take place.

So I am voting Yes as a small element in managing a recovery, and hopefully a new way of politics both domestically and in Europe.

We must campaign against the democratic deficit and waste of taxpayers’ money in European institutions. We must push against crony capitalism, and reassess how government should spend its money.

But we can do this and support the Treaty. So I will be voting Yes.

Letter to the Editor: Preparing for European treaty vote

Published in The Irish Times, 29 May 2012

A chara, – Seán L’Estrange (May 28th) voices concern about the wording of the amendment. He will be reassured to know that the wording is no different to the form that has routinely been used to allow the State to ratify European treaties. In 1972, we voted to insert a new Article 29.4.3°, “The State may become a member of the European Coal and Steel Community (established by Treaty signed at Paris on the 18th day of April, 1951), the European Economic Community (established by Treaty signed at Rome on the 25th day of March, 1957) and the European Atomic Energy Community (established by Treaty signed at Rome on the 25th day of March, 1957). No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State necessitated by the obligations of membership of the Communities or prevents laws enacted, acts done or measures adopted by the Communities, or institutions thereof, from having the force of law in the State.”

On Thursday, we are being asked to ratify only the treaty agreed on March 2nd of this year. Any further changes which would conflict with our Constitution would have to be put to the people, as was done seven times between 1972 and this year’s referendum, on each occasion with a similar form of words. – Is mise,

WILLIAM QUILL

Bray, Co Wicklow.

Would the Treaty be inserted in our Constitution?

No.

This is a claim we’ve heard from the No side. What we are doing is allowing the state to ratify the Treaty, in the same manner as every previous Treaty. It was only last night when discussing this socially that the significance of their claim, and how it diverges from the actual amendment, became clear to me.

Let’s take Article 29.4 as it stands:

1°	The executive power of the State in or in connection with its external relations shall in accordance with Article 28 of this Constitution be exercised by or on the authority of the Government.
2°	For the purpose of the exercise of any executive function of the State in or in connection with its external relations, the Government may to such extent and subject to such conditions, if any, as may be determined by law, avail of or adopt any organ, instrument, or method of procedure used or adopted for the like purpose by the members of any group or league of nations with which the State is or becomes associated for the purpose of international co-operation in matters of common concern.
3°	The State may become a member of the European Atomic Energy Community (established by Treaty signed at Rome on the 25th day of March, 1957).
4°	Ireland affirms its commitment to the European Union within which the member states of that Union work together to promote peace, shared values and the well-being of their peoples.
5°	The State may ratify the Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community, signed at Lisbon on the 13th day of December 2007 (“Treaty of Lisbon”), and may be a member of the European Union established by virtue of that Treaty.
6°	No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State, before, on or after the entry into force of the Treaty of Lisbon, that are necessitated by the obligations of membership of the European Union referred to in subsection 5° of this section or of the European Atomic Energy Community, or prevents laws enacted, acts done or measures adopted by— the said European Union or the European Atomic Energy Community, or institutions thereof, the European Communities or European Union existing immediately before the entry into force of the Treaty of Lisbon, or institutions thereof, or bodies competent under the treaties referred to in this section, from having the force of law in the State.
7°	The State may exercise the options or discretions— to which Article 20 of the Treaty on European relating to enhanced cooperation applies, under Protocol No. 19 on the Schengen acquis integrated into the framework of the European Union annexed to that treaty and to the Treaty on the Functioning of the European Union (formerly known as the Treaty establishing the European Community), and under Protocol No. 21 on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, so annexed, including the option that the said Protocol No. 21 shall, in whole or in part, cease to apply to the State, but any such exercise shall be subject to the prior approval of both Houses of the Oireachtas.
8°	The State may agree to the decisions, regulations or other acts— under the Treaty on European Union and the Treaty on the Functioning of the European Union authorising the Council of the European Union to act other than by unanimity, under those treaties authorising the adoption of the ordinary legislative procedure, and under subparagraph (d) of Article 82.2, the third subparagraph of Article 83.1 and paragraphs 1 and 4 of Article 86 of the Treaty on the Functioning of the European Union, relating to the area of freedom, security and justice, but the agreement to any such decision, regulation or act shall be subject to the prior approval of both Houses of the Oireachtas.
9°	The State shall not adopt a decision taken by the European Council to establish a common defence pursuant to Article 42 of the Treaty on European Union where that common defence would include the State

A Yes vote would add a new subsection 10°:

10°

The State may ratify the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union done at Brussels on the 2nd day of March 2012. No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State that are necessitated by the obligations of the State under that Treaty or prevents laws enacted, acts done or measures adopted by bodies competent under that Treaty from having the force of law in the State.

This follows the pattern of previous amendments allowing the state to ratify European Treaties (previous amendments allowed the state to ratify the Treaties of Paris, Rome, Maastricht, Amsterdam, Nice and the Single European Act were superseded by the Lisbon Treaty). The Treaty itself does not become part of the Constitution of Ireland; neither do its specific terms about budgetary constraints.

Take the Lisbon Treaty for example. In 2009, after the referendum, the Twenty-Eighth Amendment of the Constitution Act became law. This brought Article 29.4 to where it stands above. But had the government done nothing else, we would not be bound by the Lisbon Treaty. It was only when the European Union Act 2009 was subsequently passed that the Lisbon Treaty became part of Irish law.

It will very much be in a similar manner if the amendment passes the referendum on 31st May.

The honest No voices on our chances of funding

This morning, Denis Donovan, a former Deputy Director at the IMF, clearly stated his view that without signing up to the agreements outlined under the Stability Treaty, the IMF would not fund us if we needed more money:

The IMF has made it pretty clear throughout this euro debt crisis that they only go in in partnership with Europe. That’s because they don’t want to put their money at risk…The IMF is very worried about getting repaid, it’s a big concern. If the Europeans are not willing to take the risk to lend to Ireland, there’s no way, in my view, that the IMF will be able to do it.

This corroborates and goes even further than the view of Karl Whelan, an economist from UCD, and a favourite of Sinn Féin, who when considering the possibility of emergency funding from the IMF only, wrote “What is clear, however, is that any programme approved would provide Ireland with far less funds than a second EU-IMF programme.  This will mean more austerity not less”.

So there we have it. If we opt out of this Treaty, and if we need emergency funding, our chances of getting IMF are between non-existent or one that’s much harsher than what we’re currently experiencing.

And as to Gerry Adams’s suggestion on The Week in Politics last night that we could avail of funding from the European Stability Mechanism (ESM) without signing up to this Treaty. If we were Johnny-come-latelys to this the Stability Mechanism, they would equally be in no humour to be generous about terms. There’s nothing in this Treaty in terms of budgetary constraints that could be avoided if we needed emergency funding after this.

The only honest view on funding on the No side that I’ve encountered is that of Cormac Lucey. Writing in Business and Finance, he bases his argument on the very basis that voting No will mean that we will not have access to the ESM, “Allowing Ireland access to the ESM cookie jar from 2014 onwards would only give the public sector another excuse to delay its long-overdue adjustment to reality.” A fiscal hawk like Lucey would like us to get a harsh budgetary adjustment over and done with in one foul sweep, without any loans from outside to ease the process.

This is what those ton the left have to answer. If it is austerity they are campaigning against, why are they advocating a position that will make austerity much more likely?