Irish insight valuable to EU policy debate

WORLD VIEW:'Irish politicians should not be shy about urging a better deal for Europe'

‘A EUROPEAN solution that Ireland is involved in designing.” This is the approach to the euro zone crisis called for by Simon Coveney in a speech last weekend to a group of students at UCC discussing the EU’s democratic deficit. It succinctly captures an element not adequately debated in the election campaign.

Why it is necessary was pointed out in a column by Colm McCarthy in the Sunday Independent. Arguing that the European banking system needs redesign if another crisis is to be prevented, he says the solution proposed by Germany and France involving a more competitive EU with better fiscal discipline addresses the wrong question.

This is not a crisis caused by government over-spending, he writes, but by “over-leveraged banks making foolish lending decisions”. Tackling it by harmonising pension ages, wage bargaining, corporate taxation or limits on debt fails to solve this banking crisis. That must be done by rigorous stress tests, difficult decisions on distributing (mainly German and French) bank losses and then by recapitalising and tightly regulating those that remain.

These are urgent questions, due to be decided upon at EU summits on March 14th and 25th, just after the new government takes office. The decisions will have lasting consequences for Ireland and the EU. We have a special insight because of the huge impact the crisis and then the EU-IMF rescue deal has on Irish living standards and the intense political debate on them.

This gives the incoming government a democratic mandate to negotiate other EU leaders cannot disregard. As McCarthy puts it, “Irish politicians should not be shy about urging a better deal for Europe”.

That involves finding European solutions which best serve Irish interests, common approaches that integrate national positions. We have a good record here – notably on the regional, cohesion and structural funds in the 1980s and 1990s.

Since then the single currency and other deepening impacts of the EU have inescapably brought mass publics into the political arena, going beyond what was previously the preserve of political elites. The euro zone crisis has well and truly awakened this sleeping giant. Politicisation animates Greek, Portuguese, Spanish and Irish citizens in an emerging conflict with media and public opinion in northern states such as Germany, France, the Netherlands and Austria. Political leaders there believe they will be punished by voters if they do not protect their interests – including by having to pay for restructuring foolish banks.

Politicisation cannot be put back into the bottle, as EU leaders tried to do by silencing their efforts at resolving the constitutional crisis after the French and Dutch referendums in 2005. It should instead be harnessed into tackling the widespread feeling that the EU has a deficit in its democratic procedures. That is not because Europeans lack a sense of community but because its policymaking has been insulated from public opinion and political mobilisation.

The German political scientist Thomas Risse puts it like this: “Democratising the EU means to politicise EU affairs at home and make them into normal domestic politics.” Silencing these debates will only add to existing feelings of alienation from the EU and ensure the rise of anti-EU populism. Its political system needs to debate and choose between what kind of Europe voters want to see and what kind of policies would best get them there.

This means steering debates towards politics within the system rather than about whether it ought to exist. Not all dissatisfied or alienated voters are Euro sceptics; many are better described at Euro critics, who want the EU to take a different direction. Deeper integration, greater interdependence and now a common austerity politics create greater political convergence between left- and right-wing parties; the current dominant forces are decidedly on the centre-right. The same forces also create winners and losers, tending to pitch more mobile, better educated and middle class voters against less travelled and poorer working class ones, but with a large group in the middle willing to go either way.

Democratic politics works these polarisations out by engaging citizens directly. Putting the euro zone crisis and the EU-IMF deal at the centre of this election campaign has helped clarify whether the solutions proposed properly address the real crisis involved and whether the costs are fairly distributed between Ireland and other EU member states. In their own ways Coveney and McCarthy contribute valuably to that political exercise, adding to its quality.

A new government will have a unilateral mandate for a multilateral solution to the euro zone crisis by helping design it to suit Irish interests. Recent reports from economists in two Brussels think tanks suggest possible ways forward. Breugel proposes a European mechanism for sovereign debt resolution involving bank restructuring, euro bonds and stronger sustainable growth strategy. The Centre for European Policy Studies says punishing debt transgressors without tackling the underlying bank problem risks another deeper crisis.

Voters deserve to hear more about what Irish parties think of such ideas before Friday.