Stability Treaty

Deputy Olivia Mitchell: As there has been a widespread welcome for the fact that we are holding a referendum, I imagine most people are in favour of the Bill. A few might quibble about the actual wording of the treaty and what is proposed to be inserted into the Constitution because it is definitely minimalist. However, it has to be so because the treaty, fewer than a dozen pages long, is clear and unambiguous. Therefore, the wording to be inserted into the Constitution has to be equally clear. Most of us know what happens when wording in a constitution is not clear. The wording limits the impact of the treaty to what is included in the treaty and decisions made based on the treaty, rather than trying to anticipate in the Constitution what those decisions might be.
Ideally, the debate should be about the referendum, not about other extraneous matters. However valid people’s concerns are about these matters, considering the state in which the country finds itself, neither emotion nor rhetoric has any role to play in the decision we have to make. The debate should not be about whether we should be in or out of the euro or whether the treaty is a referendum on the euro because it is not. It is about giving security and providing certainty and confidence for the markets in our currency and economies. That is of most significance to us. We know what the lack of confidence has done to the economy and the lives of the people. The treaty is about putting in place common rules for those of us who use the common currency in order to ensure that whatever crisis we encounter in the future, it will not be the result of reckless overspending or overdependence on a property bubble or otherwise. If the markets are to have confidence in our currency, we must be able to demonstrate a commitment to fiscal responsibility and fiscal management. In fact, one wonders why we have to have a treaty at all. The reality is that fiscal responsibility is a requirement of a stable currency, no matter what that currency is, be it the euro, the punt, the pound or the yen. There are very few who question the benefits to Ireland of our participation in the common currency. It has given us huge advantages as a location for foreign direct investment, as well as enormous trading advantages for indigenous firms. We have seen huge export growth which is driven by the common currency.
Even at the peak of the greatest financial crisis, when the world media were speculating about the future of the euro, the value of stocks, shares, bonds and businesses were all evaporating, banks stopped lending to one another and even people in Ireland started queueing to withdraw their money from Irish banks, it is salutary to note that, against that background of a free fall, the value of the euro actually fluctuated very little. It held its value against other currencies and did so because of the inherent strength of the European economies and the commitment of the richer countries to support and express confidence in the currency in ways that really mattered to the markets. If we want to regain our sovereignty and cease dependence on the troika, we must be able to borrow on the markets at affordable rates. If the markets are to lend to us, they will want a reasonable certainty that they will get their money back. If we vote “No”, we will, in effect, be saying “No” to fiscal responsibility and “Yes” to more reckless spending. Whatever motivation people may have for voting “No”, the outcome would be, ironically and tragically, an inability to re-enter the markets and continued subjugation to the troika. We would then really experience austerity.
It is popular to blame the European Union for everything and easier to blame than to take responsibility. However, much as we might deny it and sometimes even resent it, the European Union has been good for us and good to us. We blame Germany for imposing its will on us and imposing decisions that we did not want. However, we also blamed it not so long ago for not showing leadership and taking stronger initiatives to stem the financial crisis.

Sometimes we have to remind ourselves that Europe is a club and we all have to pull our weight in that club and show mutual solidarity. Some have complained, implausibly I believe, that we should vote “No” because we only get access to the ESM if we vote “Yes”. How could anybody expect different? How could anyone expect the German taxpayer to continue to dish out money if we continue to overspend? We are still overspending. We are not in a period of austerity in the way that others have suggested. We are still budget deficiting and the position here does not begin to approach austerity on the scale that we would and could face if we did not have access to the ESM in future. I am not willing to take that risk.
In addition to that, the European club every day, through the ECB, supports our banks and secures our deposits by replacing inter-bank lending while the banks repair their balance sheets because they simply do not have the money or the competence to lend to one another. Without that support from the ECB every single day our banks would simply and catastrophically collapse. The Government guarantee, which gives great comfort to people, is not worth a jot without the support of the ECB. Ireland would not have the money to meet the demands if deposits were to be withdrawn tomorrow and if we lost the support of the ECB.
The European club is now making new rules to protect its members. The club will continue irrespective of whether we agree to keep to the rules but it is not hard to envisage the kind of future facing a club member that decides it will not agree to the new rules, particularly when rejecting those rules jeopardises all members and even the very existence of the club.
I do not believe the Irish people will reject the treaty. I am confident they will vote “Yes” and send a strong signal of support for the protection of our currency that means so much to us. It would be foolhardy to think it is the solution to all our problems. It is a necessary but not a sufficient condition for recovery, but it will restore confidence which is a precondition for growth. We have to deal with the problem of ensuring we have better competitiveness in dealing with our debt. Perhaps it will not be a long-term solution and further integration will be required in the future and we will have to have greater integration of taxes, but that is a matter for another day. For now, we must deal with today’s problem of a crisis in confidence. Ireland above any other country must know what a loss of confidence means to its future. We will be to the forefront in welcoming and upholding the new rules.