Vote YES on Thursday

Predictions about the effect the referendum on the Fiscal Compact this coming Thursday will have on austerity in Ireland are meaningless.

Those who are trying to convince voters that it will have any bearing at all on household charges, septic tank inspection fees, water rates or anything else of that nature are either dangerously delusional or shockingly dishonest.

What is objectively true is that Germany (Bunds [German government bonds] approaching negative yields), Finland, The Netherlands, Austria (unemployment: 4%) have taken control of their finances and are all in favour of the fiscal compact. They simply want other countries to agree to it so that when stimulus measures are put in place for the EU as a whole there will be no free riders. It's hard to blame them for that.

And they're the countries I want to be aligned with in the EU - not the ones that allow UK and US commentators to put us into awful acronyms like PIIGS.

http://www.solarwave.ie/

Another reason to vote Yes

Francois Hollande

Socialist Francois Hollande has become the latest president of the Fifth French Republic. Much has been made of his apparent attitude to the EU Fiscal Treaty, about which we in Ireland will have a referendum vote at the end of this month. 

At this stage it is impossible to know how much of M. Hollande’s words represented electioneering rhetoric and how much will result in solid changes to the treaty, but there is reason to believe that, while the austerity aspects of the treaty will not change, they might now be accompanied by measures aimed at stimulating the economy of Europe.

This represents just one more reason for Ireland to vote Yes in the referendum. It was always a good idea to confirm our position as members in good standing of both the EU and the Euro zone, and voting Yes is the means to achieve that under current circumstances. Now we have an added incentive – as members that are fully committed to fiscal responsibility, which is what the treaty is about, we can take full advantage of whatever economic stimulus is brought into being by the influence of France under its new leadership.

OMG! A new referendum

There is a growing expectation that there will have to be a referendum in Ireland on EU treaty change, to allow for shared decision making on budgets and taxation by the countries within the Euro zone, which is known as fiscal union. Up to now the Euro zone has only had monetary union, which has meant that member countries have ceded their powers to set interest rates or regulate the money supply to the European Central Bank, but were left free to decide on such matters as taxation rates and whether or not the national budget should be balanced.

For some, like the current government, the need for a new referendum is unwelcome news. It is likely to be divisive and there is no guarantee it will be passed. Because of the attitude of certain of our Euro zone partners, most notably Germany and France, it is looking likely that Ireland’s not agreeing to fiscal union could create serious issues about the actual survival of the Euro as a hard currency and / or the part that Ireland might play in a re-designed European single currency system.

Readers of Stack Six will be aware that we follow an enthusiastic European line here. It is not too much to claim that the development of the European Union and Ireland’s place in it have been the most significant macro events that have occurred during this writer’s lifetime, having been born just a few short years after the end of World War II.

It is easy now to forget the changes that were forced upon the Irish Republic as a condition of entry to what was then known as the Common Market, and which evolved into the European Union. Some examples include: the end of the rule that meant that women had to resign from all Civil Service and many other jobs on getting married; the repeal of legalised discrimination that existed against gays; an end to corporal punishment in schools; a ban on capital punishment; and a general requirement to abide by the anti-discrimination measures of the Treaty of Rome, which set the whole thing off.

Even the NCT car test, which has contributed, along with a zero tolerance for drunk driving, to a halving of the annual rate of road deaths in Ireland since it was introduced in January 2000 [the actual reduction between 1999 (413 deaths) and 2010 (211 deaths), is 49%], was only established in Ireland because of an EU directive. It is easy to argue that we would have moved with the times in regard to these matters anyway but our history does not give any scope for comfort in this regard – we needed that external stimulus.

All relationships suffer from time to time. Those that are worth keeping are also the ones that are worth working on when difficulties arise. Ireland’s membership of the EU falls squarely into this category. An important element of our association with Europe, and a highly desirable facility in its own right, is our use of the Euro as the unit of currency. It has given us significant trade benefits, a defense against speculative attack on what would be our own ‘soft’ currency if we were not part of a currency bloc, very low mortgage rates, elimination of currency exchange costs and risk for travelers and businesses in the rest of the Eurozone, pricing transparency for same, and an additional incentive for US and other foreign direct investment into Ireland.

All of that is worth holding onto.