Home truths on the treaty

 

‘THE LEFT must warn the people responsibly. Not only by telling them that the road away from the bailout is also the road that leads to exiting the euro, but also that it will be particularly painful...” Veteran Greek socialist MP Alekos Alavanos, who led Syriza before Alexis Tsipras, has words for his comrades in Greece that are sensible, honourable advice and which No campaigners on the fiscal treaty in Ireland would do well also to heed. The real alternative, he argues, is to imagine and embrace life outside the euro and what he sees as its possibilities, albeit in all their likely grimness. Wrong-headed, but honest.

In Ireland, the issue at stake is not leaving the euro, but there is a similar simplistic refusal among some No campaigners to acknowledge that the alternative to what they call the “austerity treaty” is also austerity.

And almost certainly austerity with spades. Some argue that our EU partners will surely see us right even if we vote No – a bit rich from those who have long decried the supposed malign influence that Berlin and Paris represent. Or that money forgone from a possible second bailout by the European Stability Mechanism (ESM) will be found elsewhere easily, notably by bleeding the rich. It is naïve, wishful thinking and an irresponsible feeding of fanciful narratives to a hurt people that desperately wants to believe comfortable truths. The left owes its constituency better, the truth.

A genuine dialogue on the treaty’s merits is also not helped by the wilful distortion of language that use of terms like “blackmail clause” represents. The suggestion that the requirement that future bailout funds from the ESM are to be conditional on acceptance of the fiscal treaty is an unnecessary, coercive and somehow expendable device designed purely to bully Irish voters to vote Yes is a nonsense and based on a profound misunderstanding of the whole project.

Back to first principles: the purpose of the fiscal treaty, its fiscal disciplines and supervision framework, is to provide the euro with the sort of bulwark or defence mechanisms all agree it lacked from its inception. Money mirrors the economy from which it issues, and a sound currency can only remain sound if the fundamentals of that economy are right, if deficits and debt are controlled, if a means is found collectively to manage the broad outlines of economic policy and to enforce its disciplines...

To that end we have come together with partners voluntarily to create the necessary structures for our common project. And, to enjoy the potential benefits of such a robust currency, not least the possibility of using its weight in the markets to create relatively cheap credit, we all agree to play our part.

ESM loan conditionality, the “blackmail clause”, is not an unnecessary added extra, but an essential pillar of the whole project, crucial to eliminating the “free rider” problem that Greece’s former financial shenanigans exposed and which so terrifies Germans with their memories of unbridled inflation. Blackmail it is not. It is an essential building block; reassurance.

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