Ireland to vote on austerity

Submitted by Matthew on 7 March, 2012 - 7:51

Irish Taoiseach Enda Kenny has bowed to pressure and announced a referendum on the European Union’s fiscal treaty.

The ensuing campaign is likely to turn into a battle over the wider issue of austerity and threatens to become a plebiscite on both the EU and the Fine Gael-Labour coalition.

The fiscal treaty will place severe restrictions on governments’ abilities to run budget deficits. Not only does it entrench the Maastricht debt limit of 60% of GDP, but will also place tight limits on EU members’ budget deficits. It is a neoliberal charter and must be opposed.

Ireland’s trade surplus reached €4.3 billion last November on the back of increased exports.

But this disguises the profound weakness of the domestic economy. The European Commission forecasts GDP growth of 0.5% for 2012, a 0.4% fall on last year. Ireland’s unemployment is running at just over 14%. A survey of 400 members of the Irish Business and Employers Confederation (IBEC) showed plans for further wage cuts and freezes despite predictions of higher productivity.

Given Ireland’s previous rejection of the European Constitution and the Lisbon Treaty, the referendum will be eyed nervously in Brussels and by the bond markets. However, unlike Lisbon, the “fiscal compact” does not require unanimity; ratification by 12 out of the 17 Eurozone governments will suffice. This removes a potential source of leverage from the government if it wants to use the referendum to barter concessions from Europe.

Nevertheless, a “no” vote would embolden opponents of austerity Europe-wide, including in Greece, so Brussels would rather avoid the prospect of rejection.

With even the International Monetary Fund (IMF) insisting that the repayment terms of Ireland’s “promissory notes” (guarantees) to Anglo-Irish Bank and Irish Nationwide Building Society are unsustainable, it is possible that Brussels with agree to some restructuring.

On the fundamental issue of the treaty, the three establishment parties — Fine Gael, Labour and Fianna Fail — are united. All want the treaty ratified so that Ireland can access funds under the new European Stability Mechanism. They are likely to be joined in the “yes” campaign by IBEC which spent €150,000 on the second Lisbon referendum. The Irish trade unions will meet on Friday and divisions are expected to emerge on whether or not to campaign actively for or against.

Opinion polls show a majority in favour of passing the treaty. A Sunday Independent poll showed about 37% for and 26% against, with a further 36% of voters who “don’t know” or whose votes are conditional on some other factor. But opinion polls were positive up until a week before the rejection of the Lisbon Treaty in 2008.

The vote will not be until May or June and scheduled payments of €3.1 billion set to go to the AIB shareholders at the end of the month will provide a focus for popular anger.

The worried Labour Party, now polling below both Sinn Féin and Fianna Fail (at 16%), is contradicting Kenny’s insistence that the issue of possible concessions from Europe is separate from the referendum. Labour Minister for Social Protection Joan Burton has said that a restructuring of the promissory notes would be useful “not just in the context of the referendum but also in the context of our recovery”.

Most prominent the “no” camp is Sinn Féin, which is currently second in the opinion polls, ahead of Labour and Fianna Fail but behind Fine Gael. Although the party is implementing austerity north of the border, Sinn Féin are seeking to pick up support from opposing the treaty and are framing the debate in terms of “national independence and sovereignty.” Sinn Féin’s nationalism and opportunism offers no real answers to the problems facing Irish workers.

Also opposing the treaty is the United Left Alliance (ULA).

Socialist Party/ULA MEP Paul Murphy said: “The government must not engage in scaremongering about this Treaty. The question is not whether Ireland will stay in the Euro or the EU. The question is whether we sign up to an Austerity Club. This is people’s opportunity to reject austerity at the ballot box and strike a blow for those suffering under the reign of the Troika’s austerity across Europe.”

These criticisms are perfectly correct.

But the ULA must now develop a positive programme for a workers’ government which goes beyond vague nods towards “a Europe of social solidarity and fairness” or merely rejecting the treaty.

Add new comment

This website uses cookies, you can find out more and set your preferences here.
By continuing to use this website, you agree to our Privacy Policy and Terms & Conditions.