Vote Yes for a financial safety net

 

Europe is attempting to learn from its economic mistakes. It was unwise of Greece and Italy to maintain huge national debts since the introduction of the euro. It was wrong of France and Germany to flout the rules and spend far more money than they were raising in taxation. The Stability Treaty addresses these mistakes. If this Treaty had been in place when the euro was launched, Greece and Italy would have been forced to reduce their national debts during the calmer times of the past decade. This might have enabled them to weather the storm when the financial crisis spread to Europe. Germany and France would not have been able to abuse their position as large countries and ignore the rules because this Stability Treaty strengthens the rules.

 

 It contains two basic rules about how countries must manage their finances. National debts must be kept low and a strict limit is placed on the amount of money that countries can borrow. These rules force Eurozone countries to adhere to sensible housekeeping rules. It ensures that, over time, less taxpayer’s money will go towards paying interest on debt and more will be available for schools and hospitals. It compels countries like Greece and Italy to reduce their national debts so that their public finances cannot affect the stability of our currency.

 

Most importantly, voting Yes to the Stability Treaty provides Ireland with a safety net as we face into an uncertain future. Voting Yes guarantees Irish access to a new European bailout fund should it be needed in the future. Access to this fund is our insurance policy as we work our way out of the current crisis.

 

If we don’t vote in favour of the Treaty, we have no guaranteed funding for a future bailout should it be needed. We have already borrowed more than we are entitled to from the IMF. If the IMF agreed to provide us with further funding, the rate of interest on IMF loans would be higher than the interest rate on funds from the new European bailout fund. Furthermore, it is likely that we would only receive IMF funding for a brief period of time. This means that the budget would have to be balanced in a crash course short period. The level of cuts and tax hikes that would be necessary would almost certainly be on a scale incomparable with anything we have experienced before. The economic hardship entailed would be extremely sudden and severe.

 

It is important that foreign multinationals do not fear such an economic crisis in Ireland. Twitter, Intel, IBM, Coco-Cola, Apple, Pfizer, MSD, PayPal and Fidelity are among the global giants that have invested in Ireland since the general election. Voting Yes eases any fears these companies would otherwise have and will encourage further investment in Ireland.

 

The referendum shines a spotlight on Ireland over the next few weeks until 31st May. In this context, I commend Central Bank Governor Patrick Honohan’s recent comments that national governments shouldn’t be forced to pick up the bill for bailing out bank bondholders. This bill should be shared by our European partners. The Stability Treaty is a first step in addressing the enormous problems in the Eurozone. At the same time, all the leaders of Europe need reminding that the over-arching, imperative priority is resolving the European banking and financial crisis.

 

For Ireland, the referendum provides us with a timely opportunity to demonstrate that the ECB’s insistence that Irish citizens pay and suffer for the foolish investments of European banks was wrong and should be reversed. This is an opportunity we must not miss. We should use it in every possible way, by meetings and correspondence with the ECB and EU institutions, in public forums, in panel discussions, in the newspapers and on television and radio to drive this point home.

 

The choice facing us in this referendum can be put quite simply. Imagine a personal situation and the possibility that you may need a loan at some stage in the future. Voting Yes will ensure that you are pre-approved for a loan with a low interest rate that can be repaid over a reasonable time period. Voting No means that if you need a loan in the future, you would be forced to search for a lender, apply for a loan with a higher rate of interest that must be repaid within a much shorter period with no guarantee that the loan application will be accepted. This is the choice we face on 31st May.