A History of Iniquity, I: The EU and Eurozone Assault on National Democracy
The Political Basis of the EU and its effects on Ireland- Part 2 follows tomorrow
All States and aspiring States have their myths of origin. The myth of origin of the EU is that it is a peace project to prevent wars between Germany and France – as if a tendency to go to war is somehow genetically inherited.
The actual facts are however that the first step towards supranational economic integration, the European Coal and Steel Community of 1951, was to facilitate German rearmament at the start of the Cold War with Russia and to reconcile France to that fact. The US wanted a rearmed West Germany inside NATO. This greatly alarmed France which had been occupied by Germany just a few years before.
Jean Monnet, who was America’s man in the affair, came up with the solution. To assuage France’s fears he drafted the Schuman Declaration proposing to put the coal and steel industries of France, Germany and Benelux under a supranational High Authority as “the first step in the federation of Europe”. A federation is a State, so the political aim of establishing a State or quasi-superstate under Franco-German hegemony has been there from the start. The EU celebrates 9 May, the date of this Declaration, as “Europe Day” each year. Monnet became secretary of the supranational High Authority, the predecessor of today’s Brussels Commission.
Thus historically the EU is in its origin an out-of-date legacy of the Cold War, pushed by the USA in the 1950s to provide an economic underpinning to NATO in Europe.
Simultaneously “Europeanism” became the creed of a legion of intellectuals across the continent, disillusioned by the failed ideologies of the 20th century. They provided ideological arguments in support of their assault on all things national. Their central assertion was that conflict between Europe’s States could be prevented by putting their national democracies under the control of a supranational high authority of non-elected technocrats – namely themselves or people like themselves – while trying to merge their peoples in a kind of jellybowl of nations.
They developed the doctrine that by “pooling” sovereignty small States increase their influence over bigger ones, whereas in practical reality it is the other way round. Classically, the concept of sovereignty means that a State is the sole author of the laws prevailing in its territory. For EU members however most laws now come from Brussels. Talk of pooling sovereignty is like referring to a woman as being half-pregnant. Sovereignty “pooled” is sovereignty surrendered.
Forty years after the 1951 Coal and Steel Community, and the 1957 Treaty of Rome setting up the European Economic Community(EEC) which followed, another shift in Franco-German power, Germany’s reunification as a side-effect of the collapse of the USSR in 1991, led these two countries to establish the European Economic and Monetary Union (EMU) and its single currency, the euro.
The big increase in Germany’s population and territory on reunification greatly alarmed France. However France had nuclear weapons, which Germany was precluded from having under the post-War treaties. The deal between the two of them was EU Monetary Union for Political Union or, put crudely, the Deutschemark for the Euro-bomb. Germany would give up its national currency, the symbol of its post-war economic achievement, and share the running of a new supranational EU currency with France, while France agreed to work jointly with Germany towards a supranational EU political union with its own common foreign, security and defence policy.
This would give Germany a central role in running a potential EU world power, with its finger on a nuclear trigger in due time. France in turn hoped the euro would give it a political lock on Germany. “The two pillars of the Nation State are the sword and the currency and we have changed that,” exulted EU Commission President Romano Prodi. A Franco-German army brigade with joint officers and a joint command was simultaneously set up as a symbol and prototype of the EU army of the future. Belgium, Luxembourg and Spain have since joined this as contributors to a common “Eurocorps”.
France and Germany are said to share a common interest in being joint engines of the EU integration project. The conventional wisdom has been that if they stay together they can push through the Brussels institutions whatever policy suits their interests, while between them they are strong enough to prevent any other group of EU States from adopting policies they do not like. The reality is somewhat different however, as Germany was always going to be the big winner in moves towards an EU monetary and political union.
The Intoxication of Big Powerdom:
That political realist, Germany’s 19th century chancellor Otto Von Bismarck, once said: “I have always found the word ‘Europe’ on the lips of those powers which wanted something from others which they dared not demand in their own names.”
The rhetoric of Euro-federalism, talk of “the European ideal”, the requirements of “the EU project”, the supposed “necessity” of Europe’s unification and the like, is essentially political cover for the national interests of the States concerned, as mediated by their political and economic elites.
Norwegian sociologist Johan Galtung put the point succinctly:
“One formula for understanding the EU is this: Take five broken empires – Germany, France, Italy, Holland and Belgium – add a sixth one later, Great Britain, and try to make one grand neo-colonial empire out of it all.”
The founding members of the original EEC, apart from Luxembourg, had all been imperial powers for centuries. They were all defeated, occupied and ravaged during World War 2. After 1945 they found themselves in a world dominated by the two military superpowers, the USA and USSR. The European governmental elites, who were used to thinking in imperial terms, said to themselves: if we cannot be Big Powers in the world on our own any longer, let us try to be a Big Power collectively.
Germany in particular saw EU integration as the way back to world power following its reunification, with France ever more desperately pretending to be her equal partner in the process.
This is not the whole story of the EU, but it is fundamental to understanding its development.
Different countries had their own motives for embracing supranationalism. Britain wanted to prevent the continent being dominated by the Franco-Germans. She sought either to prise them apart or else be co-opted by them in running the EU as a triumvirate. Both aims proved illusory, and this is the root of British Euro-scepticism.
Spain, Portugal and Greece saw the EU as guaranteeing democracy following long periods of dictatorship. The East Europeans saw it as a way of moving out of Russia’s sphere of influence. Their representatives in the EU bureaucracy, the European Parliament, the Court of Justice, Central Bank etc. are paid salaries which are typically ten times higher than what they would get at home. This makes Brussels a specially attractive career prospect.
For them as for politicians, senior bureaucrats, media people and social science academics in the smaller EU States generally there is the sense of importance of having wider fields to conquer, side by side with representatives of the big countries, and the intoxication of helping to build a superpower. ”It is much nicer to be running Europe than running Slovakia,“ as one of them put it.
The Economic Basis of the EU:
The Franco-German economic deal which was embodied in the original 1957 Treaty of Rome offered protection for French farmers in return for free trade for German industry. The Common Agricultural Policy(CAP) kept European food prices high for decades by reducing food imports from the rest of the world. Farmers like high food prices. As CAP supports were tied to volume of production, this benefited big farmers most, French and Irish ones particularly.
On the free trade side the EU Treaties make it illegal under supranational EU law for governments to put obstacles in the way of the free movement of goods, services, capital and labour between the 27 EU Member States. National Governments are legally forbidden to discriminate in favour of their own citizens or business firms by adopting any such measures, whether liberal or restrictive, although the possibility of doing that if it is judged to be in the interest of a people’s economic welfare is one of the main reasons why countries want to have their own governments in the first place.
From the standpoint of private capital it is normal to want minimal interference by the State with private profit-making activities. EU law drastically limits the possibility of such interference. Any national law which seeks to enforce a national common good in the economic sphere must give way to EU law in areas covered by the Treaties.
This is what makes transnational capital, firms with branches in different EU countries, the principal lobbyists for ever further EU economic integration.
Most EU laws and court cases before the EU Court of Justice (ECJ) are concerned with enforcing these rules. The constitution of the EU, the Treaty of Rome and its amending treaties, is in effect the first State or quasi-State constitution in history to be drawn up entirely in the interest of big business, without the slightest popular or democratic input into its making.
The EU’s foundational “four freedoms” – free movement of goods, services, capital and labour – enshrine the basic principles of classical laissez-faire as constitutional imperatives which no government or elected parliament may legally change or violate, regardless of the wishes of their voters.
The Succession of EU Treaties:
Each successive EU Treaty was sold to the different peoples across Europe as a modest incremental step towards getting more jobs, growth and higher living standards. Yet each took powers away from national parliaments and governments and the citizens which elected these, turning the Nation States of Europe into provincial shells, subverting their national democracy and making their citizens subject to a supranational political and economic elite which runs an EU system whose workings most people poorly understand.
This is the “Great Deception” of the EU integration project, a constitutional revolution by stealth.
– THE 1957 TREATY OF ROME set up the European Economic Community(EEC) to complement the supranational Coal and Steel Community of 1951. This principal EU foundation treaty established the four supranational institutions, the European Commission, Council, Court and Parliament – the latter originally called an Assembly – to enforce free movement of goods, services, capital and labour among the original six Member States, and to manage the Common Agricultural Policy.
Over the next half-century membership of the EU went from the original six founding members – Germany, France, Italy and Benelux – to nine to twelve to fifteen to twenty-seven in 2012 and twenty-eight in 2013 with Croatia’s accession. Thirty years after the Treaty of Rome came the next major push to Euro-federalism, the treaty called the Single European Act.
– THE 1987 SINGLE EUROPEAN ACT (SEA) set up the so-called “single market”. This made non-tariff barriers to trade illegal under EU law, ranging from State aids to public purchasing to discriminatory health and safety measures at national level. The SEA led to a host of harmonization directives to iron out national differences in product standards and specifications. To enforce these rules, unanimity was replaced by qualified or weighted majority voting across most economic areas in the EU.
Brussels regards all sorts of unrelated issues as single market ones – for example working hours, emissions trading, driving tests, vitamin supplements – for this shifts what are essentially domestic matters to the supranational level where they can be decided by means of qualified majority voting.
The cost of such measures to national economies is enormous. Yet most economists tend to ignore them when working out whether a country is a net contributor to or a net beneficiary from the EU. They just subtract the flows of funds between national treasuries and Brussels.
Taking the onerous regulatory burden of the “acquis communautaire” into account greatly changes the calculation of the economic costs of EU membership. New EU Member States are compelled to adopt every single one of this vast superstructure of rules.
– THE 1992 MAASTRICHT TREATY ON EUROPEAN UNION required all EU Members apart from Britain and Denmark to abolish their national currencies and adopt a single EU currency, the euro. So far 17 of the 27 have done this. The internal “price” of a currency is the rate of interest, the external “price” the rate of exchange. So by joining the Eurozone the 17 countries concerned have abandoned national control of their rates of interest and their exchange rates. They have thereby surrendered vital economic tools for influencing the supply of credit and their economic competitiveness in the interest of the common good of their own peoples. The European Central Bank(ECB) decides credit conditions for the Eurozone as a whole. In practice this means what suits Germany and France, for they constitute half the Eurozone’s population.
– THE 1998 AMSTERDAM TREATY extended qualified majority voting to a number of new areas. It gave the EU its own code of human rights, its own external border and immigration policy, a harmonised approach to civil and criminal law across the EU and its own foreign and security policy.
– THE 2001 NICE TREATY increased the relative voting weight of the Big States in making EU laws. It abolished the national veto and extended qualified majority voting in a range of non-economic areas. It allowed sub-groups of Member States to integrate more closely among themselves, using the EU institutions for that purpose, thereby moving away from the original concept of the EU as a partnership of legal equals.
– THE 2009 TREATY OF LISBON embodied the provisions of the 2004 Treaty Establishing a Constitution for Europe, which sought to establish the European Union DIRECTLY on the basis of its own Constitution, just as with any State. When this was rejected in 2005 by French and Dutch voters in referendums its provisions were repackaged virtually unchanged and adopted INDIRECTLY in the form of amendments to the existing EU Treaties in the Lisbon Treaty.
Lisbon provided for the abolition of the European Community, which was the legal repository of supranational powers up to then, and its replacement by a constitutionally new European Union, with full legal personality separate from that of Member States for the first time. It made citizens of the different EU Member States into real citizens of this constitutionally new federal-type Union for the first time also, giving them a real second citizenship IN ADDITION TO their national citizenships, just as citizens of regional states like California or Bavaria are citizens also of their respective Federal States. EU law has primacy over national law and the claims of EU citizenship have primacy over the claims of national citizenship in any cases of conflict between the two.
Lisbon also provides that from 2014 law-making in the EU will be put on a population basis just as in any State. From that year a qualified majority for purposes of making EU laws on the Council of Ministers will consist of 55% of the States – which means 15 out of the then 28 – as long as that 15 comprise 65% of the EU’s total population of some 500 million.
Germany and France between them have half that percentage, which gives them a blocking minority vote. As Germany is the most populous EU State this means that from 2014 Germany’s voting weight in making EU laws will rise from its current 8% of Council votes – 29 votes for each big State out of a total of 345, Ireland having 7 votes – to 16% on a population basis. The voting weight of France, Italy and Britain will rise from their present 8% each to 12% each, and the relative voting weight of smaller States will fall, in Ireland’s case from its present 2% to less than 1%.
Lisbon also makes the “European Council” of Prime Ministers and Presidents into a formal EU institution for the first time, bringing this “intergovernmental” grouping within the ambit of the treaties and making it the constitutional driving force for ever further integration, especially for the Eurozone.
How the EU is Run… No Separation of Powers:
For the past three centuries the separation of powers and functions between the Executive (Government), Legislature(Parliament) and Judiciary has been acknowledged as the necessary basis of democratic states and fundamental to maintaining the liberty of citizens.
This principle goes out the window in the EU. There the exclusive power of proposing new supranational laws rests with the EU’s Executive or Government, the Commission in Brussels . . .
– THE COMMISSION is more a government than a commission. Its members are nominated by national governments, not elected. Thus a condition for proposing supranational laws in the EU is that one should NOT be elected. Once appointed Commissioners’ allegiance is to the EU, not their own countries. French President Charles De Gaulle once described this body aptly as “a conclave of technocrats without a country, responsible to no one”.
As well as administering the existing EU rules and having the monopoly of proposing new ones, the Commission has quasi-judicial powers as well. It can adjudicate on competition cases and impose fines on EU members. Even though there may be an appeal to the Court of Justice, the Commission acts as if it were a lower court. It draws up and administers its own budget, with minimal democratic control. Its president can hire, move and sack individual Commissioners. It is supported by some 3000 “secret” working groups, whose members are not publicly known, where most Commission decisions are actually made and where corporate lobbyists wield their influence. Only 2% of Commission decisions come up at meetings of the full Commission.
– THE COUNCIL OF MINISTERS is called a Council, but it makes laws just like a Parliament, on the basis of the Commission’s proposals. It makes these laws in secret, often in the form of package-deals between its members, and it takes some executive decisions. Approximately 85% of EU directives and regulations are agreed privately in some 300 committees of civil servants from the EU Member States which service the Council and they are approved without debate at Council level. Only 15% of EU laws are actually discussed or negotiated at Council level. The formal adoption of these laws now takes place in public, although the negotiations leading up to them are private. The Council of Ministers is responsible as a collectivity to nobody and is irremoveable as a body.
– THE EUROPEAN PARLIAMENT is more a Council than a Parliament. It cannot initiate any EU law although it can amend draft laws which come from the Commission and Council as long as the Commission agrees. If the Commission disagrees, all 27 Member States must agree to allow an amendment by the Parliament to be adopted. If the Parliament by an absolute majority of its members opposes a draft directive from the Commission it cannot become law, but this rarely happens. The Parliament has the final say over the EU budget except for agriculture. If it vetoes new budget proposals, the previous year’s EU budget is repeated.
– The COURT OF JUSTICE is not just a Court but is also a Constitution-maker, with constitutional powers similar to what some Parliaments have, as set out below.
It is easy to see from the above that the executive, legislative and judicial functions of government are not separated in the EU institutions, but are inextricably intertwined. There is none of the separation of powers which characterises normal democracies. Moreover, the Commission, the Parliament and the Court of Justice share a common interest in having ever more powers shifted from the national to the supranational level where the three institutions are involved together in exercising them.
The EU Court as Constitution-Maker:
The Court of Justice(ECJ) is a highly political Court. It continually interprets the treaties in such a way as to extend the legal powers of the EU to the maximum, moving the EU in directions which were never envisaged by the people originally involved. Here are some revolutionary verdicts of the ECJ:-
– Van Gend en Loos, C-26/62 of 1963: EU Treaty rules have direct effect inside Member States;
– Costa v. Enel C-6/64: EU law has primacy over national law;
– Internationale Handelgesellschaft C-11/70 and Simmenthal C-106/77: EU law has primacy over national Constitutions;
– AETR C-22/70: the EU may enter into common international agreements instead of Member States in areas where EU powers are internally exercised, bolstering its external powers;
– Van Duyn C-41/74: EU directives have direct effect inside Member States and national courts must enforce them;
– Dassonville C-8/74 and Cassis de Dijon C-120/78: the lowest national standards for product specifications can apply throughout the EU, leading to the Internal Market on the basis of qualified majority voting after 1987;
– Hauer C-44/79: Fundamental human rights form part of the supranational EU legal order;
– Les Verts C-294/83: the EU Treaties have the character of a Constitution;
– Frankovich C-6/90: Member States are financially liable for violations of EU law within their borders;
– Kohll C-158/96: Internal market rules entitle national citizens to get medical treatment in other Member States and be reimbursed on the same basis as the locals;
– Environment verdict C-176/03: The EU may decide on criminal sanctions for breaches of EU law;
– Pringle C-370/12: the amendment to the EU Treaty ostensibly authorizing a permanent bailout fund for the Eurozone, which comes into force during 2013, is redundant and legally unnecessary, for the 17 Eurozone States had the right to establish this fund “intergovernmentally” among themselves anyway, which they did the year before, in 2012, by means of the European Stability Mechanism (ESM)Treaty.
The Extent of EU Laws:
It is hard to think of a single area of national life nowadays that is unaffected by EU law. In most years the majority of laws and statutory instruments put through national Parliaments now come from Brussels. There are over 100,000 EU rules, international agreements and legal acts binding on or affecting citizens across the EU.
It is calculated that in 2013 there are in force
8,937 EU Regulations;
1,953 EU Directives;
2,948 Other Legal Acts;
4,733 international agreements;
4,843 non-binding legal acts, which may however bind if agreed;
52,000 agreed EU international standards from CEN, Cenelec, Etsi etc. and
11,961 verdicts from the EU Court of Justice.
The EU Treaties prevent voters at national level, their Parliaments and Governments from abolishing or amending a single one of these legal measures.
Why National Politicians Surrender Powers to the EU:
Every time new EU treaties abolish further national vetoes and shift law-making for new policy areas from the national to the supranational level, national Parliaments and citizens lose power correspondingly, for they no longer have the final say in the areas concerned.
Simultaneously individual Government Ministers, who are members of the executive arm of government at national level and must have a national parliamentary majority behind them for their policies, are turned into legislators for 500 million Europeans as members of the 27-person Council of Ministers which makes EU laws and rules. This body constitutes a committee of legislators, which is the classical definition of an oligarchy.
National politicians thereby obtain an intoxicating increase of personal power for themselves at the expense of their national Parliaments and voters, even though they may be open to being outvoted by a qualified majority on the EU Council. This is the reason Government Ministers tend to be so Europhile and to cooperate so willingly in denuding their own Parliaments and peoples of power.
The more policy areas shift from the national level to Brussels, the more power shifts simultaneously from national legislatures to national executives, and the more the power of individual Ministers and bureaucrats increases. Keeping on good terms with their fellow members of the exclusive Council of Ministers “club” of EU lawmakers becomes more important for national Ministers at EU level than being awkward in defence of their own peoples’ interests. Increasingly they have come to see their function vis-a-vis one another as delivering their national electorates in support of further EU or Eurozone integration.
The EU’s Assault on National Democracy:
A Member State on its own cannot decide a single European law. Its people, parliament and government may be opposed to an EU law, its government representative on the Council of Ministers may vote against it, but they are bound to obey it nonetheless once it is adopted by qualified majority Council vote. This devalues the vote of every individual citizen. Each policy area that is transferred from the national level to the supranational level devalues it further.
This reduces the political ability of citizens to decide what is the national common good and deprives them of the most fundamental right of membership of a democracy, the right to make their own laws, to elect their representatives to make them, and to change those representatives if they dislike the laws they make.
European integration is therefore not just a process of depriving Europe’s Nation States and peoples of their national democracy and independence, within each Member State it represents a gradual coup by government executives against legislatures and by politicians against the citizens who elect them.
What was once national politics becomes provincial politics. Citizens more and more sense this and it depoliticizes them in turn. The EU has hollowed out the Nation States of the EU, leaving their traditional institutions formally in place but with their most important functions transferred outside, to the external EU level. It turns the State itself into an enemy of its own people, while clamping a form of financial feudalism on Europe.
From EU to Eurozone:
Seventeen of the 27 EU Member States in 2012 have adopted the euro. Ten EU Members retain their national currencies. The Eurozone rather than the overall EU is now the main terrain of Franco-German ambitions to establish a European superpower with themselves in the driving seat although, as stated above, it is increasingly obvious that Germany is the real driver, with France occasionally helping with the steering. Their leaders are frank in stating their ambitions:-
Here is Germany’s Chancellor Merkel on the current debt crisis:
“We have a shared currency but no real economic or political union. This must change. If we were to achieve this, therein lies the opportunity of the crisis… And beyond the economic, after the shared currency, we will perhaps dare to take further steps, for example for a European army” (Karlspreis speech, May 2010).
Here is French President Sarkozy a year later:
“By the end of the summer Angela Merkel and I will be making joint proposals on economic government in the eurozone. We will give a clearer vision of the way we see the Eurozone evolving. Our ambition is to seize the Greek crisis to make a quantum leap in Eurozone government…The very words were once taboo. (Now) it has entered the European vocabulary” (Irish Times, 23 July 2011).
And Sarkozy again in November 2011:
“There are 27 of us. Clearly, down the line, we will have to include the Balkans. There will be 32, 33 or 34 of us. No one thinks that federalism, total integration, will be possible with 33, 34 or 35 states. Clearly there will be a two-speed Europe: one speed that moves towards a Federation for the Eurozone and one speed for a Confederation within the European Union.”
Chancellor Merkel backed him up the same month:
“The debt crisis is a decisive moment, a chance to go a new way. The time and opportunity is there for a breakthrough to a new Europe … That will mean more Europe, not less Europe” (10-11-2011).
No EU “Demos” Which Could Democratise the EU:
There is no example in history of a lasting monetary union which was not part of one State, and therefore also a fiscal union. And there are of course many examples of States that were at once monetary unions, fiscal unions and political unions, which existed for long periods and which have disappeared into history. Where now is the USSR rouble, the Czechoslovak crown, the Yugoslav dinar or the Austro-Hungarian thaler?
A fiscal union means that a State has common taxes and public spending programmes whereby the richer areas and social groups within that State transfer resources to the poorer on the basis of a sense of common citizenship and an accompanying national solidarity. The Eurozone is a monetary union but not a fiscal union. It has no income transfer system comparable to that which exists within national States.
Within the monetary union there are big gaps in living standards, public sector deficits, balance of payments positions and competitiveness levels between the North European Eurozone countries and the so-called PIIGS countries – Portugal, Ireland, Italy, Greece and Spain. It was always economic folly to try to establish one interest rate and exchange rate for such diverse national economies, political cultures and institutional traditions, but that is what the political project of “Union-building” requires.
Yet it is obvious that there is no underlying EU or Eurozone “demos” or people, no sense among voters of a common European “We” which would make citizens in richer Eurozone countries willing to bear higher taxes to finance resource transfers to poorer ones in the name of a pan-EU or cross-Eurozone solidarity. The mutual identification and fellow-feeling among citizens which exists at national level and gives democratic legitimacy to National States, does not exist supranationally. Democratising the EU in the absence of a European people or “demos” is impossible. And such a demos cannot be artificially created.
This has always been the fundamental flaw in the European integration project. That however does not stop the EU elite, and particularly the Germans and French, the Brussels bureaucracy and their acolytes in the different Member States, from frantically seeking to get the peoples of the Eurozone countries to give up what is left of their democracy at national level in order to “save” the euro-currency.
Hence the current calls for direct EU supervision of national budgets and for a Eurozone Banking Union, Fiscal Union, Tax Union and Political Union, to take advantage of the current financial crisis to centralise more power in Brussels, Frankfurt and Berlin.
The more European integration is pushed ahead and the more the national democracy of the EU member states is undermined in the process, the more the EU loses legitimacy and authority in the eyes of ordinary citizens.
Consequently the greater and more certain the eventual popular reaction against it. To align oneself with such a misguided, inevitably doomed project is to be out of tune with history. It is to side with a supranational elite against the democracy of one’s own people, to spurn genuine internationalism for the heady illusion of building a superpower.
Adopting the Euro the Biggest Mistake Ever Made by the Irish State:
The value of an independent currency for Ireland was shown clearly in the years 1993-2000. This was the only period in the history of the Irish State that it followed an independent exchange rate policy and let the currency effectively float while it gave priority to the real economy of maximising output and employment rather than maintaining a particular exchange rate.
The highly competitive exchange rate of those years was the principal factor underlying the 7% average annual growth rates of the “Celtic Tiger” period, although supporters of the euro project rarely mention this for obvious reasons.
In 1999 Ireland’s ultra-Europhile politicians decided to join the Eurozone on the assumption that the British would shortly do the same, which they did not and will not. In a step of utterly irresponsible folly the State’s main political parties decided to adopt the currency of an area with which Ireland does just one-third of its trade (40% of exports, 25% of imports).
At the time the State needed higher interest rates to restrain the “Celtic Tiger“ boom. But Eurozone interest rates in the early 2000s, which were now decided by the European Central Bank, were low to suit Germany and France, then in recession. This made the Irish boom “boomier”, as Taoiseach Bertie Ahern put it. The ECB looked on with blithe indifference. Unsuitably low interest rates stoked the Irish property bubble of those years, as they did also in Spain.
When the bubble burst in 2008 and Anglo-Irish Bank and other Irish banks became effectively insolvent, the ECB and the Brussels Commission forbade the Irish Government from letting them go bust, thereby imposing the burden of paying their bad debts on the Irish State and on Irish taxpayers who were not responsible for them. In that way the German, French, British and other banks which were the principal creditors of the Irish banks were assured of getting their money back.
Preventing bust Irish banks from suffering the consequences of their foolish borrowing would not therefore be copied by the other PIIGS countries and the “contagion” of putting national interests first in face of the debt crisis would not spread to them, thereby putting the very survival of the euro-currency in question.
In 2010 when the Irish Government’s burgeoning public sector deficit consequent on taking on this private bank debt threatened to shut it out of the international bond markets, the ECB pressurized Dublin into a Eurozone bailout programme. A foreign Troika representing the ECB, the Commission and the IMF took over the effective economic running of the Irish State to enforce that programme.
After ninety years existence of the Irish State the bankruptcy of its party political elite stemming from their uncritical Europhilia could not be more obvious. In May 2012 the State’s main political parties pushed through the Fiscal Treaty referendum to meet Germany’s demand that basic fiscal deficits for Eurozone countries should never henceforth be greater than 0.5% of GDP.
Later that year the Irish Supreme Court established retrospectively that the Government had in effect used unconstitutional means to do this by financing a partisan referendum information campaign out of public funds to secure a Yes result. This had happened likewise in the two Lisbon Treaty referendums.
One important effect of Irish Eurozone membership is that as Germany and France push for more integration to “save the euro”, the UK, including Northern Ireland, has no intention of joining the Eurozone and may well move towards a looser relation with the EU as a whole. This must lead to the political-economic divide between the North and South of Ireland growing deeper and a new dimension being added to Partition.
The above are some of the pleasures of “our currency the euro”, to use a favourite phrase of Europe Minister Lucinda Creighton. Yet in 2016 these same Irish politicians will seek to identify themselves with the men and women of the 1916 Rising who set out to achieve “the unfettered control of Irish destinies” and establish a State which would be “a beacon-light to the oppressed of every land” !
How the Eurozone Prevents Us Dealing Sensibly With Our Debt Crisis:
Logically there are only three ways of dealing with the immense burden of debt which now rests on the governments, private citizens and business firms in the PIIGS countries:
(a) to pay off the debt out of real economic growth;
(b) to forgive it or remit it or restructure it wholly or in part – these are all euphemisms for the same thing; or
(c) to inflate it away by printing money and depreciating the currency in which debtors pay back creditors. In practice the best course may be a mixture of the three.
But Eurozone membership is a major obstacle to each one. The austerity measures insisted on by the ECB, the Germans, Finns, Dutch and Austrians are causing recession throughout the Eurozone, so there is virtually no economic growth. Debt forgiveness means that Governments and taxpayers in the creditor countries pay the bills of the PIIGS countries, but the pan-EU solidarity and fellow-feeling which would be required for that to happen does not exist. Inflating the euro-currency would require the ECB to do the opposite of what it is charged with doing under the Maastricht Treaty and would outrage opinion in Germany and elsewhere.
So Eurozone membership rules out all sensible ways out of the crisis. Consequently the prospect ahead is one of years of stagnation as long as the Eurozone holds together.
Contrast Iceland, a small country which Ireland and the other PIIGS countries should take as exemplar. Iceland’s debt crisis in proportion to its population was much worse than Ireland’s. Its banks had borrowed much more abroad than the Irish ones had. Iceland let its insolvent banks go bust and set up new clean banks to keep credit flowing.
It forced its foreign creditors to take a €60 billion loss on their improvident loans and came to an agreement with them on longterm repayment of the remainder. Iceland kept its own currency and restored its economic competitiveness by allowing its value to fall, imposing capital controls to assist it in the process.
Since the crisis broke in 2008 Iceland has entered and exited an IMF lending programme and returned to borrowing on the international bond markets. Instead of the Icelandic State taking on past private bank losses as the ECB pressurized Ireland into doing, foreign investors see Iceland as facing the future rather than the past and the State there as being in a much better position to repay future borrowings.
Iceland’s economic growth in 2012 is estimated to be 3% – Ireland’s being virtually zero.
Iceland’s unemployment rate is now 5%, one-third of Ireland’s near 15%, which would be 20% but for heavy emigration – over 80,000, mainly young people, in the year to April 2011 alone. Compare Portugal’s 16% unemployment rate, Spain.s 20% and Greece’s 25%.
In the initial panic in 2008 Iceland’s Government applied to join the EU in the hope of a quick fix, but Icelandic public opinion has now turned strongly against that course. Back in autumn 2008 the joke used be that the only difference between Ireland and Iceland was one letter and six months, but that joke is now on us. The economic experts who predicted doom for Iceland and salvation for Ireland by following their very differen courses, have proved catastrophically wrong.
Tackling the EU/Eurozone Leviathan:
The project of EU/Eurozone integration is at bottom an attempt to overturn the democratic heritage of the French Revolution, the right of nations to self-determination, national independence and national democracy, across much of Europe in the interest of powerful political and economic elites.
As the world moves towards 200 States and more, this collective right to democracy within a State is now accepted as a basic principle of international law and the foundational value of democratic States and democratic politics within them – but not by the elites of the EU, who have subverted their own national democracies.
The Euro-integration project therefore makes the classical “national question”, the issue of national independence, of who makes the laws and rules of a society, whether the elected representatives of Europe’s different national communities, or unelected rulers and elites from outside, the key issue of European politics in our time. This is true even for countries like France, Germany, Britain, Spain etc. which were imperial powers themselves not long ago, with centuries of history behind them in which they dominated and laid down the law for others.
At year’s end 2012 Mr Dan O’Brien, Economics Editor of the Irish Times, a paper which editorially has for decades been a missionary for Euro-federalism, wrote:
“A banking union for the Eurozone has been agreed in mid-summer and it became increasingly obvious that the next change to the EU treaties will have to create something akin to a united states of Europe if the euro is to last” (28-12-2012).
Of course people were not told this when they agreed to adopt the euro in the first place.
So the vision of the Eurocrats is that the 17 peoples of the Eurozone must completely abandon their national independence and democracy, reversing centuries of European history in the process, in order to save the ill-starred euro-currency.
And assuming that that objective is attained, what happens then? Does European history come to a halt? Will the European Army of Chancellor Angela Merkel’s Karlspreis speech hold the resultant rickety edifice together? Can anyone seriously imagine that the PIIGS countries will rest content with being turned into the collective Mezzogiorno of a fully federal Eurozone?
The more the EU-elites and bureaucracy push ahead with the integration project, the more national voters everywhere dislike it and resent it. The more hostile will be popular reactions against its proponents when it implodes, as eventually it must. The ever-growing numbers of opponents of EU-integration across Europe now constitute an international movement in defence of national democracy and the Nation State as the locus of that democracy.
That is why genuine democrats everywhere who wish to advance the common good of their respective peoples, need to oppose every step towards further EU integration and to have as their objective the winning back of the State powers their governing elites have cooperated to take from them. This holds whether people are on the political Right or Left or Centre on other issues. This is now the guiding principle of progressive national and international politics for our time whether in Ireland or the other EU countries.
Good Sources of Information on the EU:
http://www.EUobserver.com – daily news for free ;
http://www.EUabc.com – an EU dictionary with 1200 index words and thousands of links ;
http://en.euabc.com/upload/books/lisbon-treaty-3edition.pdf, with Index, Glossary and links to individual provisions, edited by former Danish MEP Jens-Peter Bonde, at en.euabc.com ;
Christopher Booker and Richard North, “The Great Deception, Can the European Union Survive?” ISBN: 0-8264-8014-4, probably the best book in English on the historical development of the EU.
This document has been drafted for public information by Anthony Coughlan, Director of the National Platform EU Research and Information Centre, 24 Crawford Avenue, Dublin 9; Tel.: 01-8305792; Web-site: nationalplatform.org It is issued to mark the 40th anniversary of Ireland joining the then EEC in January 2013. Please feel free to adapt it wholly or or in part and circulate it to others if one wishes without need of reference to or acknowledgement of its source.
Related Link: http://www.nationalplatform.org
Posted on February 20, 2013, in buisiness, EU, Government, International affairs, Ireland, politics and tagged Banks, Brussels, Cold War, Eu and Ireland, European Economic and Monetary Union, European Union, France, Franco-German, Germany, Member state of the European Union. Bookmark the permalink. 1 Comment.