4 reasons the ESM Treaty is illegal

By Anthony Coughlan
Director, National Platform EU Research & Information Centre
Related Link: http://www.nationalplatform.org
First published online @ http://www.indymedia.ie/article/101936

 

Reasons to believe that the ESM Treaty as it stands is illegal under EU law and therefore unconstitutional in Ireland:

The proposal to ratify the European Stability Mechanism Treaty as it stands and to approve the Article 136 TFEU amendment to the EU Treaties as authorizing the Stability Mechanism envisaged in the ESM Treaty, are unlawful under the EU Treaties and are therefore unconstitutional in Ireland and the other EU Member States.

There are constitutional challenges to the ESM Treaty and the Article 136 TFEU amendment in Germany, in Estonia and in Ireland. In this country independent Dáil Deputy for Donegal Mr. Thomas Pringle has launched a constitutional challenge on these matters which opens in the Irish High Court on 19 June.
Deputy Pringle’s lawyers are seeking a constitutional referendum in Ireland on the ESM Treaty. They are also claiming that the EU Treaties should be amended under a different provision of the Art. 48 TEU treaty revision procedure than that currently used of the ESM Treaty as it stands is to be lawfully ratified under EU law.
Deputy Pringle’s legal action is seeking to defend the principle that the EU is an entity governed by the rule of law in face of a political attempt to change the EU treaties by subterfuge and to open a way to transforming the present EMU into a fiscal-political union for the Eurozone.
While my colleagues and I are not involved in Deputy Pringle’s action, we and many other Irish people share his concerns that the integrity of the existing EU Treaties and the Irish Constitution be upheld in face of the attempt by some Eurozone Governments effectively to take the Eurozone captive for their own ends and to organize the Economic and Monetary Union on quite different principles from heretofore by means of this ESM Treaty. We have respectfully requested several ambassadors therefore, to urge their Governments not to proceed with their country’s ratification of the ESM Treaty or approval of the Article 136 TFEU authorisation, until the Irish Courts have ruled on the issues raised by this constitutional action.
The reasons which lead us to believe that the ESM Treaty as it stands is illegal under EU law and unconstitutional in Ireland are the following:-

1. Article 3 TFEU of the EU Treaties which have been agreed by all 27 EU Member States provides that monetary policy for the countries using the euro is a matter of “exclusive competence” of the EU as a whole.

It is not therefore open to the 17 Member States of the Eurozone to attempt effectively to diminish the competence of the Union and to establish among themselves a Stability Mechanism entailing a €700 billion permanent bailout fund to lend to Eurozone governments as envisaged in the ESM Treaty. This ESM fund, to which Ireland would have to make significant contributions for the indefinite future, would trench profoundly on monetary policy for the euro area.
The Stability Mechanism envisaged in the ESM Treaty is effectively an attempt to find a way round the “no bailouts” provision of Article 125 TFEU, whereby it is forbidden for the EU to take on the debt of Member States or for Member States to take on the debt of other Member States.
It also breaches other EU Treaty articles. The ESM Treaty if ratified as it stands would effectively amount to an attempt to open a legal-political path to what France’s President Nicolas Sarkozy called for last November, namely “A Federation for the Eurozone and a Confederation for the rest of the EU“.
A radical step of this kind, which would transform the Economic and Monetary Union from what it has been up to now, may only lawfully be taken by means of the “ordinary” treaty amendment procedure of Art. 48.2 TEU. It cannot lawfully be done by means of a mere Decision of the European Council of Prime Ministers and Presidents under the “simplified” treaty amendment procedure of Art. 48.6 TEU. The latter procedure is meant to deal with minor technical amendments to the treaties, but is currently being used by the governments of the 17 Eurozone countries in an attempt to alter radically the character of the EMU by ratifying this ESM Treaty as it stands.

2. How can it be lawful for the ESM Treaty to permit a permanent ESM loan fund to be established for the 17 Eurozone countries when the express terms of the Article 136 TFEU amendment, agreed by all 27 EU Governments, authorises a Stability Mechanism only if that is established unanimously by the Eurozone States, as the general provisions of EU law require,

viz:
“The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole” (emphasis added).

The Art. 136 amendment to the EU Treaties does not say that “Member States”, meaning some of them, may establish a Stability Mechanism, but rather “The Member States” , namely all of them (In French Les Membres rather than Des Membres).
Yet the ESM Treaty which has been concluded among the 17 provides that the Stability Mechanism it envisages may come into being once States contributing 90% of the capital of the proposed fund have ratified the treaty.
The eight largest Eurozone States, a minority of the 17, can therefore establish this Stability Mechanism, while other Eurozone States that may need assistance from it badly are excluded.
How then can this be a Stability Mechanism “for the euro area as a whole“, as article 136 TFEU, which still has to be constitutionally approved by all 27 EU Member States, requires?
Likewise the so-called Fiscal Treaty – the Treaty on Stability, Coordination and Governance in the EMU – on which Irish voters have just voted and which cross-refers to the ESM Treaty, provides that it can come into force when it is ratified by 12 Eurozone Members.
Does not this treaty also require unanimous ratification by all 17 Eurozone Members before it can be lawfully binding on them under EU law?

3. How can the ESM Treaty be lawfully ratified by July 2012, as is the stated intention of the 17 Eurozone governments concerned, when the Article 136 TFEU amendment to the EU Treaties authorising a Stability Mechanism does not have legal effect, once if has been constitutionally approved by all 27 EU Member States, until 1 January 2013?

Does not this mean that any treaty purporting to establish an ESM before 2013 must be legally void? ESM Treaty No. 1 which was signed by Eurozone Finance Ministers in July 2011 but was never sent round for ratification, conformed to the 2013 time-frame set by the Art. 136 TFEU authorisation, whereas ESM Treaty No. 2 which was signed by EU Ambassadors on 2 February 2012 does not.
This shows again how the exigencies of a political response to the financial crisis by some Eurozone States puts them in breach of EU law and therefore of the Irish Constitution.

4. EU Member States may only sign international treaties that are compatible with EU law. The EU Court of Justice has made clear that intergovernmental agreements cannot affect the allocation of responsibilities defined in the EU Treaties.

The provisions of the ESM Treaty and the Fiscal Treaty which involve the EU Commission and Court of Justice in the implementation of the proposed ESM go well beyond what is permissible under the current EU treaties and are therefore unlawful.





Copies of this article are being released to the Irish and international media for their information regarding the concerns which are widely shared in this country that the proposed ESM Treaty is in violation of EU law and in breach of the Irish Constitution.
 
Anthony Coughlan
Director, National Platform EU Research & Information Centre

Related Link: http://www.nationalplatform.org

First published online @ http://www.indymedia.ie/article/101936

Last Post of Referendum: If you haven't yet voted, read this...

[youtube=http://www.youtube.com/watch?v=5CZr17HLH5U]

• John Corcoran (ICTA) writes in an email: At 8.25 am yesterday morning Paul Krugman and John Corcoran spoke simultaneously on BBC radio and advised the Irish people to vote No in the Fiscal Treaty Referendum.  John spoke on BBC radio ulster and Paul on BBC radio 4.  Both are distinguished former students of the London School of Economics.   Please join with John and Paul and ensure a No vote today.  If you click on the podcast link... you can hear the interview.
  John Corcoran, M.Sc. Economics London School of Economics and Political Science.
  Spokesperson, Irish Commercial Tenants Association;
• David McWilliams / Irish Independent - The fiscal treaty will only make things worse: The situation in the eurozone is not getting any better. The fiscal treaty, by imposing austerity on an already enfeebled economy, will make things worse, prompting more capital flight. Rolling the snowball down the hill is not an honest option.
  Mightn’t it be better to open the negotiations properly now?
• Forpras Financial Solutions - Why vote NO to the Fiscal Stability Treaty? Why are our Irish politicians telling us to vote YES? Are you aware that the ESM (European Stability Mechanism) isn’t even setup and yet Portugal, Spain and Greece need immediate bailing out? Where will all this funding come from? Well, more and more taxes will be needed to pay for all these bailouts and ofcourse the vicious circle of Ireland having to borrow to help bailout itself out and our partners. Every cent borrowed needs to be repaid with excessive interest rates. The government tells us not to worry as they have agreed with their collegues in the EU that we will be permitted to pay these loans over an extended timeframe. But nobody is agreeing to help reduce our debts or even write a portion off? Why? [...] It looks like Ireland and the Irish public will be left with mountains of debt. More and more Irish will be required to pay higher taxes (VAT 23%, property tax, water charges, higher car taxes, higher fuel taxes and the list goes on) resulting in the standard of living in Ireland falling, rising debt and a massive increase in the number of Irish unable to pay off their debts whether they be mortgages, credit cards, etc.
• Vincent Browne / Politico.ie - We owe it to ourselves to oppose a trajectory that will vandalise society: I will vote No to express indignation with the cavalier disregard of the procedures and protocols of the European Union itself of the sovereignty of its member states, in the conduct of the leaders of the EU institutions and of Germany and France, in their insolence in interfering with the internal affairs of Greece and Italy, in their disregard for “democratic” procedures of the Union - even in the way this Fiscal Treaty came about.
  I will vote No to defy the wishes of the German elite, which benefited so spectacularly from the emergence of the Eurozone and now makes modest redistribution of that generated wealth, conditional on adherence to its economic and budgetary diktats, diktats that disadvantage not only the mass of people throughout the rest of Europe but the mass of people in Germany itself. 
  I will vote No to give backbone to the government’s dealings with the EU on the promissory notes and the other bank debt.  
• TEEU - the power union - TEEU Executive Committee Urges Members to Vote No to Austerity: The inevitable result would be a further contraction in the size of the economy – already decreased by over a quarter since 2008 – with an accompanying increase in unemployment and decrease in government revenue. As Nobel laureate Paul Krugman simply put it, austerity “pushes depressed economies deeper into depression”. We, and others, have pointed out that a fiscal stimulus is what is required and have suggested, to no avail, a means of applying it.
  

EEU - the power union - Executive Committee Urges Members to Vote No to Austerity

The background

The (Fiscal) Austerity Treaty, which we will vote on..., is designed to tackle fiscal issues which were not an Irish problem, as we – unlike France and Germany - ran a fiscal surplus every year bar one between 1999 and 2007. It would employ severe austerity measures in order to ensure that we can continue to service the debts of the banks. This means cutting public spending, including infrastructural investment, selling off state assets, introducing new charges and levies and an acceleration of other measures that we are becoming increasingly familiar with.

The result

The inevitable result would be a further contraction in the size of the economy – already decreased by over a quarter since 2008 – with an accompanying increase in unemployment and decrease in government revenue. As Nobel laureate Paul Krugman simply put it, austerity “pushes depressed economies deeper into depression”. We, and others, have pointed out that a fiscal stimulus is what is required and have suggested, to no avail, a means of applying it.

How can we avoid this outcome?

As no Eurozone country can devalue, to ask each Eurozone country to balance the books by running an export surplus is empirically and logically impossible. The way out of the ‘debt trap’ is the same as the way out of recession: if the private sector won’t invest, the public sector must become investor of the last resort. It doesn’t matter whether new investment is financed by more government borrowing, quantitative easing or redistribution. What matters is growth, which brings jobs and increased government revenue.

Not through balanced budgets!

And, in a form of blackmail, loans from the yet to be ratified European Stability Mechanism (ESM) will be conditional on the adoption of the debt brake in the Austerity treaty! This requires the state to observe a balanced budget rule. Once the debt brake has come into full operation each state will be required in general to run their budgets in surplus or balance, and at a minimum to keep their structural deficit (a measure on which economists do not agree) below 0.5% of GDP.

Permanent Austerity

The debt brake in this treaty will lead to permanent austerity or as Angela Merkel put it, “The Fiscal Treaty is about inserting debt brakes permanently into national legal systems. They shall possess a binding and eternal validity“.

No wonder Jack O’Connor told us that, “It would be disastrous for the Irish people to insert the terms of the Fiscal Treaty agreement into the Constitution”.

And that’s not all!

In addition, the Treaty also requires states to keep their overall government debt below 60% of GDP.

Those who have exceeded this target are required to reduce their debt by one twentieth each year. The Irish debt to GDP ratio will be somewhere in the region of 120% by the end of this year thanks in the main to the bank bailout. So, a reduction of 60% - or 3% of GDP per year - will be required. This alone will take up to a further €4.5bn out of the economy each year.

As pointed out, one of the main positions taken by the government in support of the Austerity Treaty is one of blackmail: vote Yes!, or there will be no money from the (ESM) when we need it - despite their continued mantra that another bailout will not be needed.

The government set us up!

When the ESM was agreed last July, there was no mention of Member States being forced to implement aggressive deficit limitation measures. However, in January 2012 the Heads of Government agreed to insert a blackmail clause into the ESM Treaty. This must have been done with the collaboration of the Irish government against the interests of the Irish people, as that insertion required unanimity and is now to be used to try to frighten us into voting YES!

But where can we get the money if we need it?

But even if we Vote NO on May 31st and we can’t access the ESM, we are small but important for the EU financial system and so funds will be found elsewhere outside the ESM structures to lend to us, especially if, as the ESM says, they were: ‘indispensable to safeguard the financial stability of the euro area as a whole’ or to combat ‘contagion!’

But we are also entitled to apply to the IMF, whose interest rates are more favourable than those of the EU/ECB! More EU countries have already accessed IMF support than EU support:
ie Latvia, Lithuania, Poland, Bulgaria, Romania, Hungary, and Estonia.

Remember, Sweden and Britain advanced loans at a favourable rate to supplement our first bail-out loan. Norway has a pension reserve fund of €500bn - and others- might be similarly inclined. In the unlikely event that we get no loans and must close the deficit we can institute a progressive taxation system and a wealth tax – having over 20,000 declared millionaires. Any remaining money required can be found through renegotiating foreign debt which, it is generally accepted, will have to be renegotiated anyway. In the meantime, EFSF funds are guaranteed to us until at least mid- 2013.

Even Michael Noonan says we’re fine

Regardless of the Treaty vote, Michael Noonan, said recently,

“There is a commitment that if countries continue to fulfil the conditions of their programme the European authorities will continue to supply them with money even when the programme is concluded ... The commitment is now written in that if we are not back in the markets the European authorities will give us money until we get back in the markets”; 

a position confirmed by EU heads of state in on March 30th, while Tanaiste Eamon Gilmore at the recent Labour Party Conference reassured us that; ‘We are on course to return to the markets in 2013’.

ICTU policy 

A motion unanimously accepted at the last ICTU BDC called on ‘those in authority, in both jurisdictions and at EU level, to accept the complete failure of the austerity recipe as a response to the economic challenge’. But, ultimately, as David Begg has correctly pointed out, “Permanent austerity means that the debt we have will become even more unsustainable and un-payable.”
And that’s why the TEEU Executive Committee is urging you to reject this treaty on May 31st.

VOTE NO TO AUSTERITY

FINAL UPDATE: Citizen's Campaign South East - Fiscal/Austerity Treaty Referendum, Public Meetings (Counties Carlow, Kilkenny, Waterford, Wexford)

Source: Oisin.org for your information (please note: People's Movement is a non-party organisation)

Confirmed in Bold
Events in Italic are under the banner of the Austerity Treaty Road Show

--------------------------------------------------

FINAL UPDATE: TUESDAY 29th May           Wexford town

Wexford Sinn Féin @St Joseph's Community Centre, Bishopswater, Wexford Town

• John Corcoran (Irish Commerical Tenants' Association)
• Oisin Ó Conail (Co. Wexford Chairman of Sinn Féin)
• Cllr Anthony Kelly (Sinn Féin)

--------------------------------------------------

Friday 4th May:           Bridgetown

Wexford Sinn Féin @ AOH Hall, 8pm.

• Kevin McCorry (People's Movement)
• Oisin Ó Conail (Sinn Féin)
• Cllr Anthony Kelly (Sinn Féin)

Saturday 5th May:         Austerity Treaty Road Show, Wexford Town

(May Day Parade, Protest at SIPTU/Labour HQ)

Monday 7th May:           Ballycullane

Wexford Sinn Féin @ Tintern GAA Complex, 8pm

• Cllr Anthony Kelly (Sinn Féin),
• Kevin McCorry (People's Movement) &
• Oisin Ó Conail (Sinn Féin)

Saturday 12th May:       Austerity Treaty Road Show, Ferns,Gorey

Monday 14th May:            Enniscorthy

Riverside Park Hotel 8pm. Talk on Fiscal Treaty.

• Joe Higgins (Socialist Party)

Tuesday 15th May:         Gorey

Wexford Sinn Féin @ Loch Garman Arms, 8pm

• Professor Anthony Coughlan (National Platform EU Research & Information Centre)
• Fionntán Ó Suilleabheán (Sinn Féin)
• Oisin Ó Conail (Sinn Féin)

Wednesday 16th May:   Rosslare Harbour

Wexford Sinn Féin @ The Railway Club, 8pm

• Cllr Anthony Kelly (Sinn Féin),
• Kevin McCorry (People's Movement)
• Oisin Ó Conail (Sinn Féin)
• TBA

Thursday 17th May:      

Wexford Sinn Féin @ Ballagh Community Centre, The Ballagh

• Cllr Johnny Mythen (Sinn Féin)
• Oisin Ó Conail (Sinn Féin)
• others TBA

People's Movement at 8.00 p.m.Tower Hotel, Waterford

• Patricia McKenna,
• Kieren Allen,
• Kevin McCorry

Saturday 19th May:       Austerity Treaty Road Show, Bunclody, Enniscorthy

Tuesday 22th May:

Wexford Sinn Féin @ The Parish Pump, Rosbercon, New Ross

• Oisin Ó Conail (Sinn Féin)
• Emmett O’Connell (Financier, author of The Consequences of Monetary Union, 1972)
• Dominic Gaughan (Firefighter)
  
• TBA

People's Movement at 8.00 pm, Reddys Tullow Street, Carlow

• Patricia McKenna,
• TBA

Wednesday 23rd May:
People's Movement at 8.00, Club House, Patrick Street, Kilkenny

• Patricia McKenna,
• TBA

Thursday 24th May:

Wexford Sinn Féin @ St Senans Community Centre, Enniscorthy

• John Corcoran (Irish Commerical Tenants' Association)
• Cllr Johnny Mythen (Sinn Féin),
• Oisin Ó Conail (Sinn Féin)

People's Movement at 8.00, Park Hotel Dungarvan.

• Patricia McKenna,
• John Halligan TD,

Saturday 26th May:       Austerity Treaty Road Show, Castlebridge, Wexford Town

People's Movement Meetings in the South East

• 17th May at 8.00 p.m.Tower Hotel, Waterford - Speakers: Patricia McKenna, Kieren Allen, Kevin McCorry
• 22nd May at 8.00 pm, Reddys Tullow Street, Carlow - Speakers: Patricia McKenna, Kevin McCorry, TBA
• 23rd May at 8.00, Club House, Patrick Street, Kilkenny - Speakers: Patricia McKenna, Kevin McCorry, TBA
• 24th May at 8.00, Park Hotel Dungarvan. - Speakers: Patricia McKenna, John Halligan TD, Kevin McCorry

Other meetings are planned and details will be announced in due course

People’s Movement Referendum Campaign

Warning: Permanent Austerity Ahead!

The People’s Movement has opened an office in central Dublin for the duration of the referendum campaign on the Permanent Austerity Treaty. The office is at 5 Cavendish Row, directly opposite the Gate Theatre.

We are near intersection of Parnell & O'Connell Streets

Get involved!

The result of this important referendum will have a major influence on this country and the welfare of its people.

So why not become involved? You don’t have to be a treaty expert to deliver leaflets or put up posters—just a willing worker, and there are many more tasks in a campaign. It is a relatively easy way to participate in a process whose result will profoundly shape your future.

There are now only three weeks to go to polling day, and every effort, no matter how small, to boost the No vote counts.

So why not give us a call or send a text to 087-2308330, or drop a line to post@people.ie. 

Appeal

This is an urgent appeal for financial support to help us to wage a successful campaign against the Austerity Treaty. The treaty has been roundly rejected by such bodies as the European Trade Union Confederation and large swathes of opinion throughout Europe.

In Ireland we have a chance to decisively reject the treaty in a referendum. Our campaign is swinging into operation, but, as always, it is an uneven struggle with regard to resources. In the last Lisbon referendums the Yes side spent some €2.3 million, while the combined No side spent €1.2 million. In the second referendum the contrast was even greater: €10.206 million for the Yes side against €780,000 for the No side. All the indications are that vast resources will again be expended to engineer a Yes vote on 31 May.

We urgently need your help!

Opinion polls on voters’ attitudes show 30 per cent in favour, 23 per cent against, and 39 per cent still undecided.

Already non-partisan commentators have found the Yes campaign to be faltering, as four major trade unions decide to urge a No vote and the Irish Congress of Trade Unions declares that it will not be supporting the treaty.

Thomas Pringle TD, a patron of the People’s Movement, is challenging the constitutionality of the European Stability Mechanism (ESM) Treaty.

This treaty is closely linked to the Austerity Treaty, and he is asking the High Court to determine, among other matters, whether the Constitution of Ireland requires a referendum on that treaty also.

It will be a victory for democracy if he is successful; but it will also put a further enormous strain on our resources, as it will necessitate yet another referendum.

We earnestly ask you to respond favourably to this request.

Robert Ballagh print Mise Éire

A few copies of the limited edition of 250 copies of this fine-art print, signed, numbered and blind-stamped by the artist, Robert Ballagh, are still available. The print can be purchased for €250. Robert Ballagh is Ireland’s premier artist. All proceeds will go to the referendum campaign.

Contact post@people.ie or 087 2308330.

Related Link: http://www.irishreferendum.org

 

Reply to Dr Gavin Barrett’s article on the Fiscal Treaty referendum in last Friday’s Irish Times

By Anthony Coughlan, Director, The National Platform EU Research and Information Centre

“The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.”
- Proposed amendment to Article 136 TFEU of the EU Treaties by which the 27 EU Member States authorize the 17 Member States of the euro currency area to establish a Stability Mechanism

INTRODUCTION
This amendment to the EU Treaties has still to be approved by Ireland in accordance with its constitutional requirements under the “simplified” EU treaty amendment procedure of Article 48.6 TEU. The European Council decision to insert the Article 136 TFEU amendment into the EU Treaties comes into force on 1 January 2013 if by that time it has been approved by all 27 Member States in accordance with their constitutional requirements. The ESM Institution which the 17 Eurozone States seek to establish and which Ireland would become a Member of is set out in the ESM Treaty. This treaty cross-refers to the Fiscal/Stability Treaty on which we vote on 31 May. The ESM Treaty states that it is “complementary” to the Fiscal/Stability Treaty. The Government has promised the other 16 Eurozone Governments that it will have the ESM Treaty ratified by July, but without the necessary constitutional referendum being held on the Treaty and the Art. 136 amendment which authorizes it.

Q. Where will we get the money if we vote No on 31 May?

A. Where will the Government get the money to pay the €11 billion the ESM Treaty will require from us, with an open-ended treaty commitment to pay further sums thereafter without limit?

Q. But where will we still get the money ?

A. We will get it by holding a referendum on the Article 136 TFEU amendment and the ESM Treaty, as that is constitutionally necessary in order to authorize these proposals as they stand. The 16 other Eurozone States will have to persuade us to vote Yes in such a referendum if they are to establish the kind of Stability Mechanism which the ESM Treaty envisages. They can do this by agreeing to forgive the private bank debt they have insisted should be imposed on Irish taxpayers, plus the Anglo-Irish promissory notes etc. A referendum can also be used to press the Eurozone authorities to agree a growth strategy for the Eurozone instead of the present failed austerity policies.

———————————————

Sunday 6 May 2012
DEAR DR BARRETT,

It is quite wrong of you to state in your Irish Times op-ed article of last Friday that No-side advocates in the current referendum are “threatening to veto an institution as vital as the ESM”. Yet you make no mention of the €11 billion which the ESM Treaty requires Ireland to contribute in different forms of capital to the Stability Mechanism the ESM Treaty proposes – with €1.6 billion up front “irrevocably and unconditionally” (ESM Treaty Art.8) and a blank cheque in the treaty to paying in further sums without limit in future as required.

WHY IRELAND HAS A VETO ON THE ARTICLE 136 TFEU AMENDMENT TO THE EU TREATIES, AND THE ESM TREATY WHICH THIS AMENDMENT AUTHORISES

Those on the No-side who know what they are talking about are saying that the ESM Treaty and the Article 136 TFEU amendment to the EU Treaties which authorises a “Stability Mechanism” should be put to referendum in Ireland before we can either ratify the ESM Treaty or approve this Article 136 TFEU amendment in accordance with the provisions of EU law and the terms of our Constitution.

This is

(a) because a permanent commitment to the ESM as a new Eurozone Institution of which Ireland becomes a “Member”, together with its accompanying rules and its extraordinary legal and taxation immunities for its Board of Governors and personnel, entail a drastic surrender of most of what is left of Irish State sovereignty; and

(b) because if the amendment to Article 136 TFEU quoted above is lawfully to permit a Stability Mechanism for the Eurozone of the kind set out in the ESM Treaty – a Mechanism which would effectively contravene a number of existing EU Treaty articles – then a different method of amendment of the EU Treaties needs to be adopted than the method being employed in the present instance.

It is therefore the No-side people who are seeking to defend EU law and the integrity of the EU Treaties by pointing this out and calling for the Article 136 TFEU authorisation and the ESM Treaty which it purports to authorise to be ratified in the only manner that is lawful under the EU Treaties and constitutional in Ireland – namely, by way of referendum of the people. It is a pity that your article fails to acknowledge this.

WHY UNANIMITY AMONG THE 17 EUROZONE STATES IS REQUIRED TO APPROVE OR RATIFY ANY STABILITY MECHANISM FOR THE EURO AREA COUNTRIES

I am surprised that you do not acknowledge that the express terms of the Article 136 TFEU authorisation quoted above require unanimity amongst the 17 Euro area States for the establishment of any Stability Mechanism the latter may decide to set up.

If you look at the words of the proposed Article 136 TFEU authorisation, you will see that it does not say that “Member States”, meaning some of them, may set up a Stability Mechanism, but “THE Member States”, meaning all of them (In French it is “LES membres” as against “DES membres”). The ESM Treaty as it stands provides that it can come into force when Eurozone States contributing 90% of the capital have ratified it. The eight biggest of the 17 Eurozone States can do this, thereby bringing the Stability Mechanism into being, even though they would be a minority of the countries of the euro area. How then can the Stability Mechanism for the 17 that is envisaged in the ESM Treaty be for “the euro area as a whole”, as required by the Article 136 authorisation by the 27 EU Member States quoted above?

There are other, legally weightier, reasons for unanimity being required for ratification of an ESM Treaty of the kind the Government will be asking the Oireachtas to ratify in June, immediately our referendum on 31 May is over, but this point will do for now.

THE ESM TREATY IS THE WAY TO THE “FEDERATION FOR THE EUROZONE, A CONFEDERATION FOR THE REST OF THE EU” WHICH NICOLAS SARKOZY CALLED FOR LAST NOVEMBER

The ESM proposed in the ESM Treaty would radically restructure the rules of the Economic and Monetary Union which Ireland joined under the Maastricht and Lisbon Treaties. Having failed to obey the 3% and 60% of GDP “excessive deficit rules” set out in those treaties, Germany and France are now proposing to put the EMU on an entirely different basis than hitherto by means of this new EU Institution, the ESM. They thereby want to override the “no bailout” rule of Article 125 TFEU which forbids EU loans to Governments so that the proposed ESM can do this, something that is forbidden under the current EU treaties.

Germany and France, are seeking in this way to by-pass the rules of the current EMU and carve out a legal path to what French President Nicolas Sarkozy has called for, “A Federation for the Eurozone and a Confederation for the rest of the EU”. The ESM Treaty envisages this new ESM Institution with its giant €700 billion associated fund as becoming in effect a new Bank-cum-Finance Ministry for this Eurozone Federation of the future.

WHY THE WRONG TREATY REVISION METHOD IS BEING USED TO INSERT ARTICLE 136 TFEU INTO THE EU TREATIES IF THIS AMENDMENT IS TO VALIDATE THE ESM TREATY AS IT STANDS

The 27 EU Member States are of course legally entitled to amend the EU Treaties in order to permit the establishment of a Stability Mechanism for the 17 Eurozone States of the radical kind proposed in the ESM Treaty – as long as they do that by the legally proper method governing the revision or amendment of the Treaties as set out in Article 48 TEU.

It looks very probable that if Article 136 TFEU is lawfully to permit an ESM of the radical character envisaged by the proposed ESM Treaty, then the EU Treaties need to be amended by the procedure set out in Article 48.2 of the Treaty on European Union(TEU), the so-called “ordinary treaty revision procedure”, rather than by “simplified treaty revision procedure” of Article 48.6 TEU which is currently being used. As you know, this “simplified” treaty revision procedure was inserted into the EU Treaties by the Treaty of Lisbon. It allows the European Council of EU Prime Ministers and Presidents to amend the treaties by a “Decision” among themselves to do that – such a Decision being subject to subsequent constitutional approval by their respective Member States.

See a copy of the European Council Decision enclosed, taken from the EU Official Journal. The Prime Ministers and Presidents on the European Council did not sign anything when they took this Decision on 25 March 2011. They took that Decision collectively amongst themselves, but it must still be constitutionally approved by their National Parliaments or by referendum of their peoples. The constitutional process of approving that Decision is analogous to, but not the same, as the process of ratification of a treaty following its signature. The Decision may well not be constitutionally approved, just as a Treaty may not be ratified.

This EU “simplified treaty amendment procedure” is a form of legal short-cut which is meant to deal with minor technical amendments that do not require a full intergovernmental conference to amend the EU Treaties, followed by a lengthy treaty ratification process. This “simplified treaty amendment procedure” was however never meant to provide for such a radical scheme as the fundamental restructuring of the Economic and Monetary Union which the ESM Treaty as it stands proposes. This ESM Treaty is tantamount to an attempt to organize a legal-political coup to override the EU Treaty provisions on which the existing EMU is based. Hence the proposed Article 136 TFEU amendment is almost certainly being “approved” in the wrong way under EU law if it is taken as authorizing the ESM Treaty that Messrs Kenny and Gilmore want to ratify by July 2012.

I am informed that this is a central issue in the constitutional challenge to the amendment to Article 136 TFEU and the ESM Treaty which has been launched in the High Court by Donegal Independent TD Thomas Pringle. Thomas Pringle is seeking to defend EU law, the integrity of the EU Treaties and the Irish Constitution by his legal action. He deserves the support of every democrat and patriotic Irish person. It would be helpful if you would consider in some future Irish Times article the important legal and constitutional issues which Thomas Pringle’s brave challenge raises.

DR GAVIN BARRETT’S CONTENTION THAT THE ARTICLE 136 EU TREATY AMENDMENT IS “UNNECESSARY” FOR THE ESM TREATY’S STABILITY MECHANISM TO BE ESTABLISHED?

I am truly surprised to see such a distinguished exponent of European law as yourself write in your article that, “It is far from clear that the Article 136 TFEU amendment is really necessary in order to set up the ESM”.

If that is so, why do all 27 EU Member States think it necessary to insert the Article 136 TFEU amendment quoted above into the Treaties? The EU is a Union governed by law, The Member States do not amend the EU Treaties without cause. Why are all 27 EU countries currently going through their constitutional processes for approving the European Council Decision to amend the EU Treaties to permit the establishment of a Stability Mechanism for the Eurozone if, as you say in your article, ”it is far from clear” that this is necessary? Are you really suggesting that the legal advisers of 27 EU Governments are all wrong?

You mention in last Friday’s article that the ESM’s temporary predecessor, the three-year EFSF loan fund set up for Greece in 2010 and from which Ireland and Portugal later got their bailouts, was ”successfully set up” under another treaty article – Art.122 TFEU to be precise – but you are well aware doubtless that this article was never meant for such a purpose.

That EU Treaty Article deals with mutual aid between EU Member States in the event of natural disasters. It was clearly not meant to cover sovereign bailouts for Eurozone countries which had got into a financial mess because they failed to obey the 3% and 60% “excessive deficit rules” of the existing EMU. That is why an entirely new legal provision has to be inserted into the EU Treaties – namely, the proposed amended Article 136 TFEU – in order to provide a proper legal base for the proposed permanent ESM loan fund of €700 billion for the Eurozone, together with all the other radical things this new ESM Institution would do, of which the 17 Eurozone States would become “Members”. How does one become a member of a “Mechanism” by the way?

MONETARY POLICY FOR THE EURO AREA IS AN “EXCLUSIVE EU COMPETENCE” AND NOT SOMETHING AN EU SUB-GROUP OF 17 EUROZONE STATES CAN ARROGATE TO THEMSELVES

It is regrettable that your uncritical political commitment to further Eurozone integration should lead you to try to sidestep such a basic principle of EU law as Article 3 TFEU, which provides that anything to do with monetary policy for the euro area is an “exclusive competence” of the supranational EU as a whole. This competence cannot be arrogated to themselves by the 17 Eurozone States, just because that is what Germany wants, with France going along.

It is an ABC principle of the EU Treaties that the Eurozone States must abide by the existing provisions of EU law as regards anything they might desire or propose which would affect monetary policy for the euro area, because that is an “exclusive EU competence”. The establishment of an entity such as the proposed ESM with its associated €700 billion permanent fund for lending directly to sovereign governments would certainly affect that. Germany, France and the other Eurozone Members cannot lawfully do whatever they like with the EMU – although that essentially seems to be what they are seeking to do by means of this ESM Treaty.

THE ECJ DECIDES ON EXISTING EU TREATY LAW, NOT ON PROPOSALS FOR FUTURE LAW

The statement in your article that “The European Court of Justice has never said” that setting up a €700 billion Stability Mechanism for the Eurozone requires an EU Treaty amendment such as Article 136 TFEU is surprising. How could the ECJ possibly have made any judgement of this kind when Article 136 TFEU is a proposed amendment to the Treaties and not an actual Treaty Article? Article 136 is not yet part of the EU Treaties and will not have legal force until next January, if by then it is approved by all 27 EU Member States. The ECJ has therefore no jurisdiction with regard to it. It is a matter for the Irish Supreme Court to rule on if the Supreme Court choses to exercise its constitutional powers – which of course includes protecting the integrity of the EU treaties that now form part of Irish law.

I put it to you that the above considerations make it clear why we need to have a constitutional referendum in Ireland on the ESM Treaty and on the Article 136 TFEU on which the ESM Treaty as it stands is legally dependent.

USING IRELAND’S VETO THROUGH A REFERENDUM WOULD PUT US IN A POWERFUL BARGAINING POSITION VIS-À-VIS THE EUROZONE AS NOTHING ELSE CAN POSSIBLY DO

Those who want an ESM like that proposed in the ESM Treaty wish for that to be done in the legally and constitutionally right way, for it would profoundly affect our Constitution and it requires a referendum here.

It is quite incidental to the legalities of the issue that such a referendum would put Ireland in a powerful bargaining position vis-a-vis the Eurozone if the other Eurozone Governments press ahead with the kind of radical ESM Institution which is envisaged in the ESM Treaty as that stands at present.

A referendum on Article 136 TFEU and the ESM Treaty would nonetheless be an opportunity for Ireland. It would be a real chance for us to get radical relief on our State debts.

Standing by the Irish Constitution in face of German-led pressure and exercising Ireland’s veto in defence of EU law and the EU Treaties would of course require some gumption from Messrs Kenny, Gilmore and their fellow Ministers. Holding a referendum on the ESM would put Ireland in a powerful bargaining position by which we could rid ourselves of the enormous private banking debt and all that that entails.

May I therefore invite you to join me and my colleagues in calling for such a development.
Let us exercise the Veto that we have on Article 136 TFEU and the ESM Treaty and make our politicians stand up for Ireland and the Irish people who elected them, while at the same time defending EU law and the EU Treaties against Germany’s and France’s takeover-bid for the Eurozone.

With best regards,
Yours sincerely

ANTHONY COUGHLAN
Director
(Associate Professor Emeritus in Social Policy, TCD)
Source: nationalplatform.org

Europe-wide effects of Fiscal Treaty policies

International Impoverishment, Made in Germany

The German austerity dictate is leading to new economic and social turbulence in the indebted counties of the southern Euro-zone. 

Spain, compelled in late March to make financial cutbacks totalling 27 billion Euros, must extend its austerity program to a total of 37 billion Euros. An increasing number of debtors cannot repay their credits on time. With their backlog of 143,8 billion Euros, the country's banks, in fact, can only refinance themselves through the European Central Bank.

Italy is also slipping into the downward spin of cutbacks, growing unemployment, decreasing purchasing power and increasing social spending and, like Greece a few years ago, must already readjust its savings goals.

Greece has been fully drawn into this development. Last year, 68,000 enterprises went bankrupt - the volume of incoming orders has dramatically shrunk. A high number of bankruptcies is also expected this year.

This offers German enterprises good opportunities for acquiring the fillet morsels of state enterprises at rock-bottom prices. 

Compulsory Social Cuts 

Germany's political elite firmly insists on maintaining this disastrous austerity policy, imposed on European countries within the framework of the measures to overcome the crisis.

At the end of last month, Chancellor Merkel imposed the political line of march to be taken by Madrid in this crisis.

Spain will meet all of its deficit obligations, decreed Merkel in a newspaper interview as the right wing Spanish government announced 27 billion Euros worth of new social cuts and austerity measures, to ward off the continued growing budged deficit.[1] "I am optimistic that everyone will meet their obligations," Merkel stated, referring also to the reduction of Spain's budget deficit to below the 3 percent GDP-limit by 2013.

Ten Billion More 

A mere three weeks later, the situation in Spain worsened dramatically again.

The burden for Spanish government bonds' interests has increased once more, the budget deficit has again grown, the economic outlook has become even more somber. After Madrid was forced at an auction to pay 5.7 percent for ten-year government bonds, Prime Minister, Mariano Rajoy's government took headlong flight into even more austerity measures.

This time, around ten billion Euros would be saved on the health and educational systems - through measures including higher supplementary payments for medicine and more pupils to school classrooms. Madrid's "clean-shave" austerity program would add up to about 37 billion Euros, withdrawn from the domestic economy, already in a tailspin.

Record Payment Backlogs 

According to its Minister of Economics, Luis de Guindos' preliminary estimates, Spain has re-entered a recession, with the first quarter in 2012 having turned out just as bad "as the last quarter of the preceding year," showing an economic contraction of 0.3 percent.[2]

The uncompromising austerity course is being applied to a country wracked by crisis. Since the burst of the real estate bubble, which, for years, had served as the economic motor, the economy has been groaning under the weight of a gigantic mountain of debts and an unemployment rate of around 23 percent - the highest in all of Europe.

Spain's youth unemployment rate has risen to 50 percent. Due to the disastrous economic trend, a diminishing number of mortgage holders can still use their credits, contributing to a destabilization of the Spanish - and indirectly also the European - financial systems.[3]

In the meantime, 8.16 percent of all credits issued in Spain have a backlog in payments, which is an absolute record, corresponding to 143.8 billion Euros. It is, therefore, no wonder that Spain's financial establishments are being drip-fed by the European Central Bank and can only refinance themselves through the ECB.[4]

Italy also in an Downward Spin 

As a consequence, Spain is undergoing the same catastrophic crisis spiral as Greece had been forced into by Berlin and Brussels. Repeatedly, new austerity measures are permitting a collapse of domestic consumption demand, leading, in its turn, to an escalating recession.

In the end, this course generates massive poverty and an economic collapse, which places the targeted savings goals out of reach - because the recession causes a breakdown of tax intake while bloating the social expenditures.

The devastating down spin that has so ravaged Greece and is now gripping Spain, is also reaching Italy. Applying more comprehensive and more ruthless austerity measures, the Italian Prime Minister, Mario Monti, imposed by Merkel and her French junior partner, Nicolas Sarkozy at the head of a technocratic government, hopes to achieve a balanced budget by 2013.

In 2011, the new debts were still at the level of 3.9 percent. Now Monti must sheepishly admit that this year, Italy's recession will reach 1.2 percent - much worse than his previous 0.5 percent forecast. The Italian technocrat no longer wants to talk in terms of a "balanced budget." In 2013 he expects a 0.5 percent deficit.[5]

200 Bankruptcies Daily 

The example of Greece shows where the Europe-wide austerity measures are ultimately heading.

After applying a number of the austerity measures and suffering about four years of recession, the country has an unemployment rate of nearly 22 percent and is undergoing a comprehensive de-industrialization.

Since June 2007, incoming orders for the Greek industry, characterized by small enterprises, has dropped by 35 percent. London's Markit Financial Information Services predicts a "markedly lower production, new orders and the number of employees." Many enterprises will not survive. In 2011, approx. 68,000 small and medium enterprises went bankrupt, an average of 200 per day. Experts are predicting around 63,000 more bankruptcies this year.[6]

Sell Out 

The industry and infrastructure still remaining in state ownership is now being sold off under German supervision.

The comprehensive sale of public property, that Athens was forced to agree to as the price for receiving further credits, is being carried out by the Hellenic Republic Asset Development Fund (HRADF). The German Ministry of Economics' Germany Trade and Invest (GTAI) agency is serving as its advisor. (german-foreign-policy.com reported.[7])

GTAI's listed duties conveniently include the counseling of German companies in their foreign activities. The agency is explicitly seeking German buyers for the fillet morsels of Greek bankruptcy assets, according to the German Economics Ministry's "Checklist of an Investment and Growth Offensive for Greece."[8]

"Assistance in finding German investors and placing the German experience in the privatization and restructuring process of the new [East German] federal states" will be GTAI's contribution to its Greek counterparts. The latter chore listed is in reference to the German Treuhand (Trust Fund), which, in a chaotic process beginning in 1990, squandered the public property of the German Democratic Republic.

Bargain Hunting 

The time is right for cheap "bargain deals" in Greece. The disastrous economic situation is rapidly shrinking the value of public property now being put up for sale. Already last February, the Greek government was forced to radically reduce its original prognosis of expected receipts for 2015 from its privatization measures from 50 billion to merely 15 billion Euros.

Hence, it seems that particularly German companies are profiting from Athens' economic collapse, for which the austerity policy imposed by Berlin bears the brunt of the responsibility. 

[1] Merkel: Spanien wird Defizit-Verpflichtungen einhalten; www.stern.de 31.03.2012
[2] Rezession! Spanien steckt im Schuldenstrudel; www.abendblatt.de 16.04.2012
[3] Spanien: Doubtful Loans auf 18-Jahreshoch; www.querschuesse.de 18.04.2012
[4] Spanische Banken ersticken an ihren faulen Krediten; www.welt.de 18.04.2012
[5] Rückschlag für Super-Mario; www.ftd.de 18.04.2012
[6] Griechen stecken tief im Tal der Tränen; www.mainpost.de 03.04.2012
[7] see also Patterned after the Treuhand
[8] Ausverkauf: Deutschland hilft Griechenland beim Privatisieren; www.deutsche-mittelstands-nachrichten.de 20.04.2012

 First published online @ http://www.indymedia.ie/article/101774

Ireland has better options

The South East Region of People's Movement, which is a non party political organisation will be campaigning for a No vote in the referendum on 31st May next.

The grandly titled "Treaty on Stability, Coordination and Governance in the Economic and Monetary Union" is supposedly about "stability" in the Eurozone. Yet the treaty warns us that money from the new permanent European Stability Mechanism bailout fiund will only be given to States that have ratified it.  

The Economic and Monetary Union which Ireland signed up to under the 1992 Maastricht and 2009 Lisbon Treaties assumed that the 3% and 60% of GDP deficit rules for every Eurozone State would be abided by and enforced by means of the sanctions - warnings, special deposits, fines etc. - which are set out in those treaties.

If they had been and if the rules of the EU treaties had been enforced for all, there would have been no sovereign debt crisis in the Eurozone and no need for any Eurozone bailout fund. When Germany and France broke the rules of the EMU by running big government deficits in 2003, the EU treaty sanctions to enforce the 3% and 60% deficit rules were not applied against them, and they were thereafter effectively dropped for everyone else.

Ireland did not break these excessive deficit rules, yet now is being threatened that unless it votes to permanently hands over virtually the whole area of budgetary policy to the Eurozone we will not be able to access funding from the European Stability Mechanism should we require it in 2013. We have a gun to our head or so the supporters of the treaty would want us to believe.

In fact Ireland would have a number of options in this event: -

• regardless of the Treaty vote, Ireland is guaranteed funding under the current programme as long as it meets its targets. A No vote will not change this;
• there is no legal basis for punishing a state that doesn’t ratify, and to try to do so would damage the very Euro that the pact is supposed to defend;
• if we adhere to the existing Treaties we cannot be excluded from their benefits. As Mr. Michael Noonan, Minister of Finance said after the last EU Summit, 'There is a commitment that if countries continue to fulfil the conditions of their programme the European authorities will continue to supply them with money even when the programme is concluded . . . The commitment is now written in that if we are not back in the markets the European authorities will give us money until we get back in the markets.”;
• Ireland, if it should need a second bailout, could have access to funding sources such as the IMF, as well as our existing rights with Europe. This is the same insurance or back-stop that all EU countries are entitled to as members of the IMF. More EU countries have accessed IMF support than EU support in the last decade. These include Latvia, Lithuania, Poland, Bulgaria, Romania, Hungary, and Estonia.
  

Most economists regard a permanent balanced budget rule as absurdly inflexible. Governments need to run deficits on occasion to stimulate their economies and expand economic demand when that slumps heavily in their domestic or foreign markets.

In considering the possible implications of all this it is worth bearing in mind that in 2014, just two years time, under the Lisbon Treaty Germany's vote in making EU laws will double from its present 8% of total Council votes to 16%, while France's and Italy's vote will go from their present 8% each to 12% each, and Ireland's vote will halve to 1 %.This would be the context in which we had surrendered much of the stuff of national decision making and normal party politics from the arena of democratic consideration and debate.

For verification contact and further comment;

Kevin McCorry

086 3150301

For  information on People's Movement check out:
http://www.irishreferendum.org
http://www.people.ie
http://www.austeritytreaty.com

People’s Movement patron begins legal challenge on treaties

Thomas Pringle TD explains why he felt compelled to take a court case
on the proposed amendment to article 136 of the Treaty on the Functioning of
the European Union and the ESM Treaty.

As an Irish public representative and citizen I keep asking myself if it would not be absurd if Irish voters were to vote on 31 May in the referendum on the Fiscal Compact Treaty in favour of imposing austerity rules on ourselves in order to get access to a proposed permanent euro-zone loan fund when the separate but “complementary” treaty establishing that fund is arguably illegal under EU law, unconstitutional in Ireland, has not yet come into force, and indeed may never do so.

On 9 March last I wrote to the Taoiseach, the Minister for Finance and the Minister for Foreign Affairs explaining some of these very serious concerns. I have received no reply to this correspondence beyond the usual standard acknowledgement of receipt of the communication.

I have now been left with no other option but to initiate legal proceedings, challenging the Government on fundamental aspects of both the European Stability Mechanism (ESM) Treaty and the Stability, Coordination and Governance in the Economic and Monetary Union (Fiscal Compact) Treaty.

I believe that both treaties raise serious legal difficulties, at the level both of EU treaty law and of Irish constitutional law. My primary democratic concern as both a citizen and an elected public representative is the integrity of the Constitution of Ireland and the EU treaties, which now form such an important part of our constitutional framework. I believe that the matters on which I seek the clarification and assistance of the court are of crucial importance not only for the citizens of this country but for the future of the EU.

My contention is that the particular stability mechanism being set up under the ESM Treaty is in breach of article 29.4.4 of the Constitution of Ireland, under which “Ireland affirms its commitment to the European Union within which the member states of that Union work together to promote peace, shared values and the well being of their peoples.”

The proposed stability mechanism seems on the face of it to permit member-states to work not in solidarity and togetherness but rather towards separation and exclusiveness. This is because it allows only some member-states, and indeed only some members of the euro zone rather than all of them, to participate in an arrangement that will clearly have implications for all.

I am asking the court to examine the legality of the amendment to article 136 of the Treaty on the Functioning of the European Union before any further action is taken by the Government to approve that amendment. That amendment permits the establishment of a “stability mechanism” that would be able to grant financial assistance, “subject to strict conditionality.”

This amendment is being adopted under the so-called “simplified revision procedure,” which I believe is legally wrong. My argument is that the changes being proposed are so fundamental that they should go through the ordinary revision procedure to ensure proper democratic scrutiny. They also require the approval of the Irish people in a referendum.

I am also asking the court to consider whether the ESM Treaty is in breach of existing EU treaty principles that have been approved by the Irish people in previous referendums and that are now therefore part of our law.

In addition, I am asking the court to decide whether the state can ratify the Treaty Establishing the European Stability Mechanism without first having the approval of the people in a referendum.

The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, signed on 2 March 2012, is intertwined with the ESM Treaty. Each one depends on the other. Therefore, if I am right in my belief that the ESM Treaty is unlawful, there is a serious question over the validity of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union.

And the implications for Ireland are vast, given its present economic situation. Under the ESM Treaty, Ireland would be obliged to make capital contributions of up to €11,145,400,000 in various forms of capital to the new permanent €500 billion bail-out fund that is to be set up. For Ireland this is the equivalent of approximately a third of Government tax revenue for 2011.

I believe that my application to the courts is just one more manifestation of a growing concern within the EU about developments towards a political union for the euro zone along the lines of what President Sarkozy has termed “a federation for the euro zone and a confederation for the EU as a whole.” It is not a direction that I want the EU to take, and I am sure that I am not alone.

‘Ah, but where will we get the money if we vote NO?’

1. Even if we don't ratify the EU Permanent Austerity Treaty on My 31st and we can't access the ESM, we are small but important for the EU financial system and so funds will be found elsewhere outside the ESM structures to lend to us. This would certainly be the case if such assistance was in the words of the ESM; indispensable to safeguard the financial stability of the euro area as a whole. Remember ‘contagion!’

2. If the EU doesn't come up with the money, we are entitled to apply to the IMF and their interest rates and conditions were more favourable than those of the EU/ECB! This is the same back-stop that all EU countries are entitled to as members of the IMF. After all, more EU countries have accessed IMF support than EU support in the last decade: Latvia, Lithuania, Poland, Bulgaria, Romania, Hungary, and Estonia.  
 
3. Sweden and Britain both advanced loans at a favourable rate to supplement our first bail-out. Norway has a pension reserve fund of over €500bn and might be similarly inclined. When Argentina defaulted, it was kept afloat by a number of countries until it re-entered the markets.  

4. In the unlikely event that we get no loans and have to close the deficit we can do so through instituting a progressive taxation system, including a wealth tax - we have over 20,000 declared millionaires - to fund social services.
 
5. The remaining money can be found through renegotiating (partially defaulting on) foreign debt.  This would take courage and resolve but would ultimately be successful.  The debt will have to be renegotiated a few years hence anyway.

6. Regardless of the Treaty vote, Ireland is guaranteed funding under the current programme as long as it meets its targets. Michael Noonan, said recently, 'There is a commitment that if countries continue to fulfil the conditions of their programme the European authorities will continue to supply them with money even when the programme is concluded . . . The commitment is now written in that if we are not back in the markets the European authorities will give us money until we get back in the markets.

www.people.ie
Peoples Movement campaigns against any measures that further develop the EU into a federal state and to defend and enhance popular sovereignty, democracy and social justice in Ireland.
25 Shanowen Cres., Dublin 9.   087- 230 8330.  post@people.ie

First published online @ http://www.indymedia.ie/article/101689

EU austerity régime beginning to hurt German Economy

Germany is continuing to impose disastrous economic austerity measures all over Europe.


Senior German politicians and officials relentlessly plead for the continuation of the austerity policy, undeterred by the erupting recession in areas of the eurozone.


The policy became binding for almost all EU member-countries through the signing of the Fiscal Pact on 2 March. As the German Minister of Finance, Wolfgang Schäuble, declared on 6 March, by signing the pact Europe is on the “right path.” On 13 March the president of the Federal Bank, Jens Weidman, called for the southern euro countries, which are now slipping into recession, to apply “stiffer reforms” and additional austerity measures.


The austerity diktat is driving nearly all indebted southern European countries deeper into the recession, as shown by new data on the economic developments of Spain, Italy, Portugal, and Greece. 


According to this data, Portugal’s economy, for example, declined by 1.3 percent in the last quarter of 2011 and could shrink by up to 6 percent this year. Industrial production in Italy registered a sharp decline. In Spain, retail sales—an indicator of private consumption—declined by almost a quarter in comparison with 2007. Greece is approaching the economic level of countries in Latin America or south-east Asia, which up to now had clearly lagged behind European standards.


In the longer run the recession could have a backlash on Germany, because the massive slump is also affecting German exports. This could have serious repercussions. 


Where this austerity policy, imposed by the German government on Europe, will lead can be seen in Greece’s dramatic crash, which can simply be characterised as Greece saving itself to death. 


According to all predictions, in 2012 the country will remain in its fourth year of recession and continue to approach the economic level of the “Third World.”


The German business press predicts that if Greece’s economic contraction continues it will be bypassed by such countries as VietNam or Peru. A deeper recession could even saddle Greece with a GNP, in terms of buying power, lower than that of Bangladesh.


The German edition of the Financial Times speaks of a “historically exceptional” economic collapse.

"Some experts fear that the GNP for 2012 will again decline up to 8 percent, after an approximately 6 1⁄2 percent drop in 2011.”

This is “the worst recession that a western country has encountered since the war,” explains Barry Eichengreen, an economic historian at the University of Berkeley in California. 


In the end, Germany’s export industry will not escape the downward trend in the eurozone, despite its growing exports to so-called threshold countries. Orders from EU countries coming into German industry are dramatically diminishing. The business press reports, 

“Already since the middle of the year the quantity of new orders from countries of the monetary union has declined consistently, since the debt crisis resurged in the summer.” 

In other countries “a demand for German products has decreased also, because of their austerity measures.”


Berlin’s austerity diktat is ultimately threatening to push Germany’s export-dependent economy into a recession. Like the populations in Greece, Portugal, Spain and Italy today, the German population will most probably have to confront drastic austerity schemes. 

Promissory Notes: Negotiating or Play-Acting?

What other country in Europe is sticking 20 percent of its GDP on its national debt to support a completely bust bank? And how did we get into this position?

In a move clearly aimed at trying to upstage and divert attention from an extremely embarasing Sinn Féin private members’ motion on the ESM Treaty, the Minister for Finance, Michael Noonan, told the Dáil on 21 March that the Government is

“now negotiating with the EU authorities, and principaly with the ECB, on the basis that the €3.06 bilion cash instalment due from the Minister to IBRC [Irish Bank Resolution Corporation] on 31 March 2012 under the terms of the IBRC promisory note could be settled by the delivery of a long-term Irish government bond. The details of the arrangement have still to be worked out.”

What other country in Europe is sticking 20 percent of its GDP on its national debt to support a completely bust bank? And how did we get into this position?

The loan losses in the Irish banks following the financial collapse in 2008 were calculated in March 2011 at €75 billion. In the twelve months since then it has become increasingly apparent that mortgage loan losses will get progressively worse. Evidence is mounting that the total loan losses in Ireland could rise towards €10 billion.

The guarantee in September 2008 to six Irish financial institutions, and the subsequent €31 billion in IOUs given to Anglo-Irish Bank, were the starting-point on this road to modern financial servitude.

Anglo-Irish took these promissory notes, or IOUs, and lodged them with the Central Bank of Ireland. The Central Bank effectively created €31 billion, which was given to Anglo-Irish by a procces known as “exceptional liquidity assistance.”

The money given to Anglo-Irish was not borowed from the European Central Bank, nor was it created by the European Central Bank. It was created by the Central Bank of Ireland, as the creation of money is decentralised in the eurozone.

The Irish Nationwide Building Society later came into the scheme when, from 1 July 2011, its assets and liabilities were transfered to Anglo-Irish in a merger ordered by the courts that created the Irish Bank Resolution Corporation.

So as a one-off, money was created and pumped into the Irish banks to keep them solvent. Normally when banks collapse, their investors do not get all their money back. After 2008, as payments to bond- holders fell due, neither the banks nor the state had the resources to pay them. That is where the ECB stepped in. It lent approximately €135 billion to Irish banks to enable them to repay the bond-holders, with interest, and also to replace lost deposits.

That repayment schedule for this ECB-dictated madness is punishing:

€3.1billion every year until 2023, with smaller annual outlays due until 2031. 

€3.1 billion is about three times the size of Ireland’s austerity measures this year and represents about 2 percent of GDP. To do this it must borrow the money, and pay interest on it, raise taxes, and cut spending. This will destroy any hope of economic recovery.

The Government is afraid to rock the boat too vigorously in these negotiations, because of a belief that the billions of “unprecedented” lending to Irish banks will be placed at risk if the promissory notes are not repaid and that they cannot be reneged on, or indeed disowned by a country that has already shouldered such debt to bail out banks and non-Irish financial institutions.

The country is fighting for its very survival, and the Government needs to negotiate accordingly. The terms of the deal should have more to do with asserting national sovereign rights than trying to look good for the forthcoming referendum.

First published online @ http://www.indymedia.ie/article/101646