It may be hard to accept, but ratifying the treaty will give us a quicker escape from the IMF, writes Stephen Donnelly TD, in the Sunday Independent.
THE referendum is coming and the airwaves are getting fat . . . with one-sided, over-simplistic, spin-sodden nonsense. The Government should have used this referendum on the Fiscal Compact treaty to begin repairing the relationship between Irish citizens and the body politic. Instead, it is sticking to the same, tired formula — ‘Vote for Jobs, Vote for Stability, Vote for A Better Future’. Add a healthy dash of fear, repeat, and hope enough people buy it.
In this year’s Edelman Trust survey, 70 per cent of Irish people said they “do not trust [their Government leaders] at all to tell the truth”. It was the “at all” that really grabbed me. Of the 25 countries surveyed globally, only Italy and Berlusconi inspired less trust.
In the recent referendum on Oireachtas enquiries, Fine Gael, Labour, Fianna Fail and Sinn Fein, between them holding nearly 90 per cent of Dail seats, called for a Yes vote. The country voted No. Why? Because they don’t trust us.
In considering the space politicians seem to occupy in the Irish consciousness, I am put in mind of the title of US senator Al Franken’s book — Lies and the Lying Liars Who Tell Them.
Irish people will never trust politicians so long as those politicians treat those people like fools. And yet we just don’t seem to be able to help ourselves. The Taoiseach stated last week in the Dail that the treaty “is simply an agreement among all concerned to ensure a balance between money raised and spent in the shared interest of the stability of a common currency. It will have consequences for Ireland but these are positive, meaning no future Government will be able to bring us back to the brink through reckless spending of the people’s money”.
The treaty is not about ensuring a balance between money raised and spent. Were we to comply with it, we would over time have to bring our debt-to-GDP ratio down to around 25 per cent (it’s nearly 120 per cent today). This would mean foregoing badly needed investment for many years to come. This is not balance; it is imbalance.
Nor would the treaty stop governments from repeating the mistakes of the past. During the bubble, when the foundations of the crisis were being laid, Ireland ran a massive budget surplus. In 2006, our debt-to-GDP ratio fell below 25 per cent. The problem was not deficits or debt: it was a foolish government locking in too-high costs based on one-off revenues, and inept officials failing to keep a handle on out-of-control bankers.
Jobs and stability? Well, a Yes vote should increase stability in Ireland in the short term, but reduce it across Europe in the medium term. A Yes vote will not create jobs, but it would probably destroy fewer jobs than a No vote.
Really, the treaty is a sop to internal German politics — something Angela Merkel can take home to show her people what a stellar job she’s doing of bringing fiscal discipline to the masses. We’ve already signed up to the various economic rules contained in the treaty. The real change brought about by the treaty is to make it easier to enforce these rules (incidentally, Germany and France were the first to break them).
There are short- and long-term implications of a Yes and a No vote for Ireland. The long-term consideration is one of nationality — how far into a federal Europe do we want to go? The short-term issue centres on the following: in early 2014, we run out of Troika funding, and in the same year we will need to borrow over €10bn to pay the bills.
A Yes vote means that we can borrow this money from the European Stability Mechanism (ESM), the new fund of cheap European cash being set up to act as lender of last resort to countries that cannot borrow from the markets.
Of course, a Yes vote also means we would need to start adhering to the various economic rules we agreed to years ago. However, this wouldn’t change what we’re planning on doing anyway until at least 2018. The political mood across Europe seems to be changing, and so we could have numerous powerful allies working to revise the more idiotic aspects of the Treaty.
Unfortunately, a No vote means we wouldn’t be able to access the ESM fund. There is a clause in the ESM legislation which states that access to the fund is contingent upon ratification of the Fiscal Compact. This is the so-called ‘blackmail clause’ which our Government did nothing to try to prevent. This clause means that we would either have to borrow the money elsewhere, or make the full €10bn correction in 2014. That’s on top of the €3.6bn correction already planned for 2014.
So where would we get the money?
It is possible, though increasingly unlikely, that we could borrow from the markets. If we ask for ESM funding, we will undoubtedly be told to sign the Fiscal Compact first, leading to the latest in Ireland’s series of, ‘Your indicated preference is not agreeable, please vote again.’ Or there’s the IMF route, which would lead to several more years of our country being micro-managed by technocrats working to somebody else’s agenda.
This is why I am, reluctantly, going to vote Yes. I believe it would cause less harm than a No vote. It would also buy us time to break our reliance on bailouts and give us a way out of the IMF programme, restoring control of our own affairs.
This is not an easy message to put out in a country used to hearing sugar-coated waffle by politicians. Some weeks ago on RTE Radio I admitted that I didn’t yet know how I was going to vote. The presenter suggested that this was not good enough, and not what was expected by those who elected me. My decision to vote Yes, as something of a lesser of two evils, has annoyed a number of people, and they have let me know as much.
However, if we are to repair the damage done to this country, we must rebuild trust. This requires politicians and political parties being more honest, of not being afraid of laying out the pros and cons of major policy choices.
On a rainy Friday night in Bray recently, I gave it a go. I held a public meeting on the referendum promoted explicitly as a discussion, and not as a ‘Vote Yes’ or ‘Vote No’ rally. Over 300 people turned up. Nearly 1,100 people watched it live on the internet. For over two hours the audience and panellists (Shane Ross, Constantin Gurdgiev and I) engaged in robust, honest, detailed debate.
Did it work? At the end of the evening, one gentleman told me that he had never heard a TD who he didn’t think was lying to him, until that night.
People know they are being manipulated with half-truths, fear and spin, and they are sick of it. It’s time we started doing things differently.