Fiscal treaty is just one part of deeper process


WORLD VIEW:Voting ‘No’ would leave Ireland with less input into final shape of fiscal and political unions

THE FISCAL treaty referendum is the first act of a three-part drama. Its disciplinary rules are necessary politically if other actors – Germany especially – are to move towards the deeper fiscal and political unions required to save the euro.

These two further changes will presumably involve yet more treaty reform and hence another referendum here. In that case a key political consideration for Ireland is how best it would be positioned to play an optimal role in the remaining acts of this play.

Already the differentiation that is a hallmark of the euro zone crisis is clearly visible. This treaty is an intergovernmental rather than a European Union one because of the British veto, thereby removing the leverage Ireland had to change the terms following initial rejection of Nice and Lisbon. While it is hoped to fold these rules back into the EU treaties by 2017 if they are ratified, the smaller euro zone has emerged as the central decision- making arena in solving the crisis.

If we vote No, Ireland would remain a member of the euro zone and still participate in the six-pack disciplines and procedures already agreed; we are also separately committed to being shareholders in the European Stability Mechanism and contributing to its initial capital (although we would be prohibited from drawing down on it).

Aside from the political and confidence jolt such a result would give the tottering euro zone, it would open up many questions about Ireland’s willingness and capacity to support deeper economic and political integration.

It could easily provoke a two- speed solution in which a smaller avant garde group excluding Ireland and southern states would forge ahead. Is it worth the price? Do we want to be positioned alongside Britain in this slower group?

Opinions differ hugely among specialists, political leaders and citizens throughout the EU on whether the disciplines written into this treaty can adequately address the euro’s weakness and economic recession.

The demand for growth and an end to austerity voiced by French, Greek and German voters and by several leaders has radically shifted perspectives, just as market uncertainty about Greece and Spain has forced the pace about future structural change in the euro’s design. Contradictions between the speeds of economic, political elite and citizen integration must be tackled if the currency is to survive.

Public opinion in most EU member states (including Ireland and Greece) strongly supports the euro. Along with the freedoms to travel and the expanding single market, it easily tops polling lists of the main advantages seen from closer integration, especially among younger people.

How though is the euro to be strengthened and growth restored? The emerging agenda links these tasks through the four growth proposals supplementing the treaty disciplines brought by François Hollande to Berlin this week, designed to be agreed in the short to medium term.

But even if they are, the pace of change forces a longer-term agenda into view involving a more active economic role for the European Central Bank, a bigger bailout firewall, greater taxation powers for the EU, more balanced economic flows within the euro zone and mutualisation of risk through eurobonds.

They coincide with two further rapidly emerging political debates on how to govern such a deeper entity and secure its democratic legitimacy. These both go well beyond what the fiscal treaty is about.

Governance changes pose choices between the intergovernmental methods classically preferred by the French and the preference for more federal methods by the Germans, notwithstanding their current disenchantment with the European Commission.

Angela Merkel’s recent references to “political union” would reinstate community institutions, a choice reflected in the governance arrangements set out for the euro zone in the fiscal treaty, but go substantially beyond them. (Using federal methods is not the same as creating a federal superstate.)

Securing democratic legitimacy for such changes would involve creating a much closer link between national and European politics and the practice of policymaking within the EU.

At present they diverge because of the transfer of competences in what the political scientist Vivien Schmidt well describes as a national “politics without policy” and a “policy without politics” at Brussels level.

She suggests they could be brought more into line by having the EU party groups nominate candidates for commission president, with alternative policies to be debated in the 2014 European Parliament campaign and with a commitment from governments that the majority tendency candidate would get the job.

That could be a transitional measure towards a much more accountable system whose shape needs intense debate; that emerges from this treaty but goes well beyond it. Strategic questions need to be asked as to whether political parties and the Yes and No sides agree this is the logic of the crisis, want to see an economic and political deepening of the EU and where Ireland would best be positioned.

Delaying the poll would not alter this pace of change. Rejecting it would endanger Ireland’s position as negotiations intensify during the final two acts of the drama, which would surely give us another opportunity to vote on the whole play.

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