Treaty to produce 'shocking austerity'

Tue, Apr 3, 2012, 01:00

ACCEPTANCE OF the fiscal treaty will mean “permanent” and “shocking austerity” for Ireland, academic and political activist Kieran Allen said.

Speaking at the launch of his booklet The Fiscal Treaty and the Euro Crisis, Dr Allen, senior lecturer at the UCD school of sociology, said the treaty would “lock down” public spending and ensure the people of Europe are squeezed for years to come in order to pay back bonds to the banks.

To meet the targets included in the treaty, cutbacks of between €5 billion and €6 billion a year would be required, he said, which was the equivalent of closing down all primary and secondary schools for a year.

“Presumably we are not going to do that, so it has to be raised elsewhere by cutting social welfare, public sector wages and hospital services; it means really quite shocking austerity,” he said.

The referendum on the treaty will be held on May 31st. The treaty includes requirements that governments run balanced budgets, with “structural deficits” that do not exceed 0.5 per cent.

In his booklet, which analyses the treaty and the economic circumstances that gave rise to it, Dr Allen says the structural deficit was measured differently depending on the economist who was measuring it. The German Bundesbank had described the calculation of the structural deficit as “relatively complex, opaque and elastic on account of the numerous discretionary modelling options”.

The country already had “one mysterious entity in our Constitution called the Holy Trinity. I don’t know why we are putting another mysterious entity called the structural deficit in, which they cannot define,” Mr Allen said.

He also highlighted article 3.2 of the treaty which states if targets are not met, the EU Commission can put guidelines in place to determine the nature, size and timeframe of the corrective action.

“Once you don’t get your targets, the EU Commission decides what type of cuts will happen, how deep they will be and how quickly they will take place. It would mean terrible hardship,” he said.

Launching the booklet, Richard Boyd Barrett TD, of People Before Profit, said it engaged with the detail of the treaty and what it might mean.

The Government had presented a dishonest, “Orwellian” analysis of the treaty, he said, but the booklet would make a positive contribution to the debate.

It will be available from voteno.ie.