Sir, – The Government in the coming months will seek to push through the Oireachtas an amendment to one of the two treaties on which the EU is based authorising the establishment of a permanent euro zone fund, the European Stability Mechanism (ESM), and the ratification of the treaty between the 17 states that are members of the euro zone to actually establish the fund.
The treaty, which has already been signed but not yet ratified, commits the Irish State to “irrevocably and unconditionally” contribute €11 billion in various forms of capital to the ESM when it is established in 2013 and possibly further sums after that at the behest of euro zone finance ministers when contributions come up for regular review. This will have to be borrowed on the international market.
Weaker economies like Ireland would have to put up cash immediately to cover any shortfall of paid-in capital that might arise while triple-A-rated economies like Germany and France would be put under less financial pressure by being able to fulfil their obligations by way of guarantees.
Assistance from the ESM will only be given on the basis of “strict conditionality” – these conditions being unspecified and potentially unlimited. If the Irish State were to receive loans or grants or favourable borrowing facilities from the ESM, these conditions could require the introduction of a balanced budget constitutional amendment or dropping the objection to the harmonisation of corporate taxes at EU level.
The treaty formally subordinates Ireland’s interests to those of “the stability of the euro area as a whole”, yet there has been an almost total media blackout on the implications and consequences of the ESM for the country.
The support of Fianna Fáil for the Government action has further contributed to the managed nature of the whole process.
The ESM is part of a package of measures that can only lead to fiscal union in the EU, beginning with stricter controls on budgets and public spending starting with the so-called Euro Plus Pact and soon moving on to a harmonising of taxes.
We believe that the legislation to enable the State to licence its establishment and ratify the treaty setting it up should be put to the Irish people in a constitutional referendum and we urge the Government to let the people decide on this matter of crucial importance for the future of our country. – Yours, etc,