Government needs to give treaty a harder look
If a country does not pay up, it loses its voting rights, which begs the question, how exactly will this fund be used?
Article 15 states: “The board of governors may decide to grant financial assistance through loans to an ESM member for the specific purpose of recapitalising the financial institutions of the ESM members.”
In other words, Irish taxpayers’ money might be used to bail out banks in other countries. In addition to spending billions to bail out Irish banks, the ESM treaty commits us to bailing out others. This is an extremely dangerous provision.
According to the European Banking Authority, Europe’s 16 largest financial institutions hold €386 billion of potentially suspect credit market and property assets.
The Cypriot government has already pumped €1.8 billion into the Popular Bank of Cyprus while the Spanish bank, Bankia, stated that it will require €19 billion. Even after these moves, though, there was panic and a flight of capital.
Yet under the ESM treaty which is, remember, our supposed insurance, Irish taxpayers’ money could be called upon to fund Cypriot and Spanish government efforts to bail out their banks!
However, what if the governors of the ESM fund made the wrong decisions? What if there were reasons to suspect their motives? What recourse do the people of Europe have to punish those who did wrong?
The answer is absolutely none. Article 35 states that the governors and directors of the ESM fund “shall be immune from legal proceedings with respect to acts performed by them in their official capacity and shall enjoy inviolability in respect of their official papers and documents”. In other words, they cannot be touched. ESM decision-making is, in fact, subject to total secrecy. Article 32 states that “all documents belonging to the ESM, or held by it, shall be inviolable”. Directors of the ESM are sworn to “professional secrecy” – even after they resign from office.
Let us, therefore, come back to Enda Kenny’s analogy between voting Yes and taking out insurance on the family home.
Closer scrutiny reveals that the homeowner would be liable for an €11 billion insurance bill, that they would hand their money over to a secret fund that might be used to bail out speculators and they have no legal recourse to action should the fund managers not pay up when their house burned down.
If this is called “stability”, then black really is white.
The left has repeatedly answered the “show me the money” question by stating that we will halt payments on State debt and redistribute wealth through taxation on the rich.
Isn’t it time to ask the right a few questions about their odd insurance policies?
Kieran Allen is a lecturer in the school of sociology in UCD and a member of People Before Profit and the Socialist Workers’ Party.