Fiscal treaty 'a necessary instrument'

The fiscal compact treaty is a necessary instrument in the EU’s “common toolbox”, the newly formed committee on the referendum has been told.

In the first of eight meetings this week, the Sub-Committee on the Referendum on the Fiscal Stability Treaty, chaired by Meath East Labour TD Dominic Hannigan, heard submissions from four EU ambassadors.

Danish ambassador Niels Pultz said his government has the “firm view” that the treaty is a necessity and “should be seen as an important part of the EU’s wider efforts to combat the debt crisis”.

Though outside the euro zone, Denmark agreed the treaty after a debate and discussion of just two months, a “remarkable achievement” he said that would have been unimaginable before the global financial crisis in 2008 and would have been a “bit unrealistic” at the end of last year.

He said many European countries failed to consolidate their public finances in the “good times” and that a number failed to address quickly enough structural problems in their economies.

“If all the European countries had conducted sound and sustainable economic and fiscal policies in accordance with the fiscal compact, Europe would most likely not have experienced the sovereign debt crisis," Mr Pultz said.

Czech Republic ambassador Tomas Kafka said that in the eight years since his country joined the EU they had the reputation as a bit of a “troublemaker”.

The country has still not signed up for the treaty; “however, that is something that may happen in the future, especially as the inclusive character of the treaty itself literally invites reconsideration”, he told the committee.

The fiscal compact was not the “only important factor” for the Czech Republic, which has adopted an “austerity agenda” to comply with the conditions of the Maastricht treaty. It had given the IMF a “not insignificant loan” and it signed, with Ireland and 10 other states, a common letter making a strong case for a growth agenda. “These facts I hope may put the Czech Republic in a more convivial and less troublemaking lights.”

Greek ambassador Constantina Zagorianou-Prifti said her parliament had passed the treaty at the end of March.

“The sacrifices of the Greek people are producing results,” she said. The primary deficit had been significantly reduced within just two years, to 2.4 per cent of GDP and it had regained 50 per cent of its competitiveness. Pressed about defaulting on Greece’s debts, she insisted: “No. Not now and not in the future.”

Polish ambassador Marcin Nawrot said accepting the EU treaty would enable his country as a future member of the euro zone to participate in rules on its future as well as shaping the rules applying to members.

Poland’s acceptance might increase the chances of accepting its proposals on the EU’s multi-annual financial framework and other policies. Given Poland’s modernisation needs, this was of key importance in the medium term “for our development and economic growth prospects," he said.