Citizens cannot afford a pact that will make recovery more difficult


The Government claims the austerity treaty is sensible and intended to balance the books – but the opposite is the case, writes GERRY ADAMS

THE IMAGE of thousands of mainly young people queuing outside the RDS to gain entry to the Working Abroad Expo is testimony to the depressed state of the economy and the failure of austerity.

Our exchequer deficit is rising. This State remains locked out of the bond markets. There are almost half a million citizens unemployed, and emigration is increasing. The domestic economy remains in recession. Vital funding for front-line health, education and community services is being cut, while billions of euro of taxpayers’ money – on March 31st another €3.1 billion – is pumped into the failed Anglo Irish Bank by this Fine Gael-Labour Government.

The failed policies of bank bailouts and crippling austerity, supported by Fianna Fáil, Fine Gael and Labour, are hurting the economy, society and citizens.

Enda Kenny, Eamon Gilmore and Micheál Martin want citizens to support a treaty that will enshrine the policies of austerity in our Constitution and international law in perpetuity. This treaty seriously undermines Irish sovereignty by surrendering important Irish fiscal and budgetary matters to unelected and unaccountable EU officials.

The Government is already committed to slashing a further €8.6 billion from the economy in the next three years to meet the troika deficit target of 3 per cent. The austerity treaty now demands an additional structural deficit rule of 0.5 per cent . This means up to a further €6 billion in cuts and new taxes will be imposed.

The Government claims the rules in the austerity treaty are sensible and intended to balance the books. The very opposite is the case. More austerity will deepen the recession, increase the deficit and make economic recovery more difficult. The citizens of this State cannot afford this policy and this treaty.

Article 3 of the treaty constitutionalises the new 0.5 per cent structural deficit rule despite the fact there is no agreed method of calculating a structural deficit, and many EU member states dispute the method used by the European Commission.

Article 4 strengthens the existing 5 per cent per year debt reduction target for member states whose debt to gross domestic product (GDP) ratio is above 60 per cent. This means states will have to reduce the excess debt by 5 per cent annually until they are within the 60 per cent ceiling. Together, the combined effect of the debt and deficit targets in articles 3 and 4 will be very severe on heavily indebted economies such as the Irish one.

Articles 5, 7 and 8 of the austerity treaty also transfer powers from the Oireachtas to the European Commission and European Court of Justice. These bodies will have authority to enforce the new deficit rules.

The commission is also given new powers to impose Economic Partnership Programmes on states in breach of its debt and deficit rules. These will feature structural “reform” similar to those in the EU-International Monetary Fund austerity programme, even where a member state is borrowing on ordinary terms from the international bond market.

Article 8 allows a member state to initiate legal proceedings against another if it believes that state is not complying with the rules. The court could impose fines of up to 0.1 per cent of GDP, which at 2011 levels in Ireland would mean €160 million. Crucially, by placing these rules and enforcement mechanisms in an international treaty and giving it the protection of the Irish Constitution, the Government will make them permanent.

Article 3 makes this very clear when it says the debt and deficit rules must be “binding” and “permanent”. These rules and mechanisms will be bad for the Irish economy.

The Government has agreed ratification of the treaty is necessary to access emergency funding from the European Stability Mechanism. The Government could have tried to stop this but chose not to.

Now it is claiming citizens must vote for the treaty to ensure access to emergency funding in the future. This is an attempt to bully voters into supporting a bad treaty. It is also an empty threat. The European Council will not refuse emergency funding to any euro zone member state in the future, irrespective of their final position on the austerity treaty.

To do so would be to break the commitment it gave at the European Council summit of July 21st, 2011, when it said it was “determined to continue to provide support to countries under programmes until they have regained market access, provided they successfully implement those programmes”.

It would also have a devastating impact on the euro zone as a whole, something no EU politician will be willing to risk.

Sinn Féin is for investment in jobs and growth. Next week we will publish an analysis of the treaty outlining our alternative strategy for stabilising the economy, creating employment and reducing the State’s debt and deficit.

The Government tried to avoid the democratic imperative of a referendum. It failed.

Now the choice before the electorate is very clear.

If you support bank bailouts and crippling austerity, vote for the austerity treaty. If you are for investment in jobs and for social and economic recovery, vote No.

Gerry Adams TD is leader of Sinn Féin

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