What this next referendum is really all about

Sat, Mar 10, 2012, 00:00

INSIDE POLITICS:It is worth looking back at the false claims made by the No side during previous referendum campaigns

IN EVERY referendum campaign on Europe since 1972, the No side has come up with a range of arresting slogans that have generally proved baseless. This time around, the claim the fiscal compact treaty will outlaw Keynesian economics has become the early mantra of the No campaign. It should be no surprise that it is as misguided as most of the other No slogans down the years.

While the subtleties of Keynesianism are only fully understood by trained economists, the broad theory of John Maynard Keynes that governments should spend prudently in good times and loosen the purse strings in bad times, to counter the impact of recessions, has informed the economic policy of most European social democratic and socialist parties for more than half a century.

If the treaty was going to outlaw Keynesian economics, it might be expected that all of the social democratic parties around the EU would be opposing it tooth and nail. That is not happening simply because the treaty does nothing of the kind.

As one leading economist, Philip Lane, pointed out during the week, the treaty has been accepted by many social democratic parties across Europe. “For example, Sweden was among the early adopters of fiscal rules, since its political system recognised the importance of fiscal sustainability in preserving the government’s ability to manage the economy,” he wrote.

French socialist leader François Hollande has said he wants to renegotiate elements of the treaty, but it should be pointed out that he is in the middle of a presidential election campaign. His resolve should probably be taken as seriously as that of the Labour and Fine Gael politicians who claimed during the last Irish general election that they would not continue to bail out the banks.

Far from outlawing Keynesian economics, what the treaty seeks to do is to put an end to the kind of populist and inept fiscal policies that brought Ireland to the brink of ruin. The treaty on its own won’t achieve that objective but it should at least make it more difficult for politicians to behave irresponsibly in the future – and that can only be a good thing.

With the referendum date on the fiscal compact treaty yet to be set, it is worth looking back at the false claims made by the No side on previous occasions. They were summed up by Tánaiste Eamon Gilmore in a presentation to the Forum on Europe in 2008 in which he listed a number of things that had not happened over the previous 35 years of Ireland’s involvement in Europe.

Ireland had not been reduced to a province of a European empire; conscription had not been introduced for young Irish men and women; Ireland had not been forced to join any imperialist wars; the nation’s population had not collapsed; Irish culture had not become a thing of the past; trade union rights had not been abolished; abortion and euthanasia had not been introduced; and religious freedom was not suppressed.

“All of these firm fear-inducing predictions were made again and again, and every one was proved to be groundless and inaccurate. They are being made again today by the same individuals, and they are just as unfounded and misleading,” said Gilmore.

Pointing out the truth in 2008 did not prevent the Lisbon treaty from being defeated a few months later. That is why the Yes campaign will have to be vigilant in tackling every false assertion from the start if it wants to ensure the Irish people vote Yes this time.

The fact the treaty is a relatively short document dealing with one subject should mean a more straightforward campaign. Arguments that neutrality will be undermined or abortion foisted on the country by EU institutions will hardly get off the ground because the treaty has nothing to do with those issues. The key question is whether the Irish people will accept the treaty as a necessary step along the road to economic recovery, or whether they will be swayed by claims it institutionalises austerity – and that we can do better by refusing to accept the fiscal disciplines it enshrines.

The problem the No side will have in convincing people of their arguments is that it may be difficult to persuade people we would be better off outside the EU bailout. Even Sinn Féin appears to have abandoned the line that we should reject the bailout, and now seems to be saying we should continue to avail of it – but without any strings attached.

The fact voting No would rule out access to a second bailout is likely to give voters pause for thought, particularly as the cost of borrowing on financial markets would inevitably soar in that eventuality. Where the country would get the funding required to pay the current level of salaries and pensions to public servants as well as meeting the needs of welfare recipients is something the No side will have difficulty explaining.

The starkness of the choice facing voters should make for a focused campaign, and the reality that the rest of the euro zone will implement the treaty, with or without us, should also concentrate minds. Taoiseach Enda Kenny has pointed out there will be no second referendum this time around because the Irish people have a simple choice to make about an issue that concerns only themselves.

For all that, given the fact the last two European referendums have seen a victory for the No side first time around, nothing can be taken for granted and there is no guarantee of a Yes victory, whatever logic might say.

It will take a strong and coherent campaign by the Government and all the other pro-EU forces to convince people to vote in favour of the treaty. If they fail the consequences are too appalling to contemplate.