European Commission budget proposals deeply undemocratic


OPINION:If the proposition succeeds it will mean a substantial loss of economic sovereignty, writes MARY LOU McDONALD

PROPOSALS FROM the European Commission that would mean draft national budgets submitted to Brussels for scrutiny and peer review by other member states mean the future sovereignty of national budgetary and fiscal decisions now hang in the balance.

The basis of democracy will be corrupted if the Government does not oppose European Commission plans to enforce this draconian policing of national budgets. Commission president José Manuel Barroso and commissioner for economic affairs Olli Rehn are using the economic crisis to force through key changes in EU governance.

Such controversial changes would never command public support in ordinary times. However, the commission and the 27 member-state governments are hoping to rush them through on the back of the threat to the euro.

Importantly, the Lisbon Treaty makes this much easier to achieve and the hypocrisy of Fine Gael, who have been shouting very loudly about this issue in recent days, has been breathtaking.

Fine Gael, and indeed the Labour Party, stood with the Government in pushing the electorate to ratify Lisbon and must now accept responsibility for what the EU intends to do to member states.

Outlining their plans on May 7th, Barroso and the 27 heads of government, including Brian Cowen, said “deeper fiscal consolidation” by member states was required, with “additional measures for this consolidation”. This is EU-speak for more cuts in government expenditure in addition to those already indicated. It could also involve changes in economic policy, including taxation.

They also said that they wanted to “plug the gaps in economic co-ordination” particularly with regard to “budgetary surveillance”. This is EU-speak for giving more power to the commission to inspect and change member states’ budgets, without the support of the government in question.

Five days later the commission produced a detailed communication outlining proposals for this tougher policing of budgets. At the core of the communication were three significant proposals:

  • The first is that the EU would have the right to scrutinise member state budgets before their own democratically elected parliaments;
  • The second is that on recommendation from the commission, a meeting of European finance ministers could request broad changes to the member state budget. The member state in question would not have the ability to veto these proposed changes, as any decision by the ministers would be taken by qualified majority vote;
  • The third is that if the member state ignored the decision of the Council of Ministers they would face penalties in the form of reduced EU payments.

The objective in all of this is to secure the “financial stability of the euro area”. This is Eurospeak for forcing member states to reduce public expenditure and possibly to alter their tax regimes in order to return to a deficit of 3 per cent of GDP in line the Growth and Stability Pact.

Initial reaction to the commission proposals from France, Germany and Sweden has been negative. Closer to home Fine Gael and Labour have decried the loss of economic sovereignty implied by the proposals.

However, this opposition has focused on a single element of the plan – namely the requirement for member-state governments to submit draft budgets to the commission before they present it to their own parliaments.

This proposal is undemocratic and should be opposed. But the more substantive attack on our economic sovereignty contained in the proposals is not being opposed by Fine Gael or Labour, namely the power of the European Council, acting by qualified majority, to impose cuts in public expenditure or changes to our tax regime.

This power would allow finance ministers of other EU member states, on recommendation from the commission, to alter a proposed budget from a democratically elected government, even if that government voted against the proposed changes.

During both Lisbon referendums, Sinn Féin repeatedly said the treaty would give the EU additional powers to police and impose changes to member state budgets.

When we made these claims Fianna Fáil, Fine Gael and Labour accused us of telling lies. They were wrong; we were right. If the commission proposal is passed it will mean a substantial loss of economic sovereignty.

Just like their false claim that Lisbon would bring thousands of jobs to Ireland, FF, FG and Labour are finding it difficult to explain how the treaty they called on the public to support is now being used to undermine our democracy.

Mary Lou McDonald is vice-president of Sinn Féin