Treatment of Ireland a disaster for European project
The EU has been driving the idea of a single European market for financial services since the 1960s, writes FINTAN O'TOOLE
EVEN IN the midst of an existential crisis, Irish politics can’t shake off its addiction to false alternatives. At the moment, there’s an apparent choice between two equally unpalatable approaches.
We can be “good Europeans” – take our medicine, behave responsibly and hope that somewhere down the road we will be rewarded. Or we can be “bad Europeans” – deny our responsibilities, kick up a fuss and cause trouble for our neighbours by talking of default.
What if, however, the real good Europeans are those who think that the crucifixion of Ireland is a disaster for the European project? What if the German philosopher Jürgen Habermas was right when he warned that present policies are leading to the “creeping death” of the EU and said that “we are currently going about sinking 50 years of European history”?
Does it not behove us as “good Europeans” to shout from the rooftops that the policies being imposed on Ireland are profoundly anti-European?
There is a grotesque irony at the heart of the European approach to Ireland. It relies entirely on the crudest form of nationalism. The basic proposition is that “the Irish” borrowed loads of money and “the Irish” must pay it back.
Each and every citizen of a particular nationality is responsible for the misdeeds of others who hold the same nationality. National identity trumps everything else. It doesn’t matter that you didn’t borrow the money or that you had no way of knowing what decisions private banks were making. You’re Irish, the banks are Irish, so you’re all guilty.
This applies even when none of the money originated in or was spent in Ireland. Take, for example, the way Anglo Irish Bank increased its UK loan book by a staggering £1 billion (sterling) in just six months between September 2004 and March 2005.
That billion quid was borrowed almost certainly from German and French banks. It was lent largely to British property funds such as St James Capital, Nomura and Warner Estate Holdings.
The money went from Germany to the UK, via an Irish intermediary. Somehow, this makes it “Irish” money, so the nurse in Ennis and the factory worker in Portlaoise have to pay it back.
The underlying assumption here is that of extreme nationalists everywhere: nationality defines everything. This is, in itself, extremely stupid. There’s no such thing anymore as Irish money or German money or British money. There’s just money, moving around the world in vast quantities. (Every day, about $4 trillion is traded on foreign exchange markets alone.)
The Irish bubble would not have been possible without the inflow of vast amounts of capital, including the €88.4 billion that German banks were owed by Irish banks and companies at the end of last year.
The idea that these international financial transactions carry a passport is, in the era of globalisation, innately absurd. But coming from the European Union, it is also staggeringly hypocritical. The EU has been driving the idea of a single European market for financial services since the 1960s.
The goal of creating an “integrated and efficient European capital market” was made central to the Lisbon Strategy approved in 2000.
But the process has been under way in earnest since the EU council directive on the liberalisation of capital movements in 1988.
The European Central Bank championed this project, claiming that it would increase efficiency by ensuring that “capital is allocated to the sectors that earn higher returns”.
And didn’t it just. The liberalisation of capital markets meant that German, French and British banks could earn “higher returns” by shovelling money towards Seánie and Fingers.
By doing so, they were behaving exactly as the ECB suggested they should.
They were being European bankers in a European banking system created and sustained by the two parts of the troika that now runs Ireland – the EU commission and the ECB.
But all of this is a dark secret, especially in Germany. The former German foreign minister Joschka Fischer pointed out last month that: “In the backrooms in Dublin it was our [state-owned] Landesbanks earning all the money to the delight of our state governments of all political persuasions. No one tells the people here that part . . . a bit of the reality is being kept from view.”
In order to keep it from view, however, the EU has to attempt an impossible trick. It has to insert a dumb nationalism (“the Irish” borrowed all the money) into the supranational narrative of globalisation it has been spinning for the last 50 years.
It has to create two Europes, one composed of the delinquent peripheral states (Ireland, Portugal and Greece), where nationality rules; the other composed of the remaining states which are still, in theory, living in a post-nationalist world.
These contradictions can’t be sustained. The EU can’t suddenly change its mind like this.
It can’t revert to a crude, essentialist notion of national identity, while maintaining its own identity as a collective transnational project.
Are we better Europeans if we play along with this destructive self-deception or if we force the EU to face up to its collective crisis?