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Fiscal Stability Treaty: The socialist case for a no vote

As the date (31 May) of the referendum on the European Fiscal Stability Treaty draws closer there are increasing indications that the outcome is far from certain. It can no longer be assumed that there will be an overwhelming yes vote.  A series of recent polls suggests that there has been a shift of opinion away from the yes camp towards the no camp and those who are undecided.  The most comprehensive of these, the Irish Times/IPSOs MRBI poll, puts the current yes vote at only seven percentage points ahead of the nos (30 to 23 per cent) with the undecided making up 39 per cent.   These figures are similar to poll findings prior to the first vote on the Lisbon Treaty in June 2008, which gave the yes camp a 17 per cent lead, with the undecided making up 40 per cent.  Only a few weeks later in the referendum vote the Treaty was rejected by 53 to 47 per cent. On the basis of the most recent polling evidence and historical precedent there is certainly all to play for in the referendum campaign.


While there has always been solid core of opposition to the EU within the Irish population, which has been shown up in the various referenda held over the years, more recently there has been growing dissatisfaction with the way the union is being run.   The Irish Times/Ipsos MRBI poll suggests that support for the EU has fallen from four in five, to two-thirds since early 2009.  It is no co-incidence that this fall in support is closely associated with the financial collapse and the savage austerity demanded by ECB/IMF bailout.  The EU is no longer seen so much as the guarantor of prosperity and minimum social standards (a view most strongly identified with the trade unions) as it was in the past.  An element of the discontent with the EU is undoubtedly reactionary, but the basic premise that it was instrumental in the Ireland’s financial debacle and the austerity that followed is still a correct one.  The expansion of credit within the Irish economy and the ensuing boom and bust would not have been possible, or would not have taken on the extreme form that it did, without the support of European banks and institutions.  The Irish capitalist class was certainly culpable but the EU must bear equal responsibility.


One of the most consistent complaints from the supporters of the Fiscal Treaty is that people are wrongly associating it with the current programme of austerity being pursued by the Government when there is no connection.  The fact is that the EU, the Fiscal Treaty and austerity are all bound up together.  Measures such as the household charge, water charges and cuts in public spending are specific elements of the bailout package. The terms of the Fiscal Treaty, which place even stricter limits on spending, promise to prolong the period of austerity into the indefinite future.  A socialist no campaign needs to hammer this basic point home.  Unfortunately some on the left are not making the direct connection and are even trying to downplay it.  There is obviously a fear that an endorsement of the Fiscal Treaty would be taken, certainly by the governing parties, as support for austerity and used to undermine the campaign against the household charges.  However, this just cannot be avoided.  The campaign against the household charges should not be elevated above the referendum.  Indeed, the referendum is probably more important as it raises broader political questions over not just austerity but also democratic rights and the whole direction of the eurozone.  A political defeat for the Irish government on this, and by extension the capitalist parties across Europe, would have far greater significance, serving to boost the confidence and legitimacy of those struggling against austerity imposed by unaccountable institutions.  To erect artificial barriers between anti-austerity campaigns and opposition to the Fiscal Treaty is a mistake and will ultimately be self-defeating.  It is a concession to the supporters the Fiscal Treaty and an insult to the intelligence of the Irish people. 

Trade unions

Another weakness on the left has been its failure to challenge the trade union leadership on the Fiscal Treaty.   While ICTU have not explicitly endorsed the Treaty they have conceded that there is no alternative, which in effect amounts to an endorsement. Their approach was set out in a briefing document on the Treaty that listed the various objections to it but in conclusion conceded that while “wrong from our economic and social perspective” it was “hard to oppose” as “access to the ESM is crucial to our economic survival.”  SIPTU president Jack O'Connor’s complaint was that the provisions of the Treaty were “unnecessarily severe”.  By not giving an explicit endorsement of the Treaty the trade union leadership hope to preserve the illusion of the “A Better Fairer Way” alternative while effectively endorsing the austerity and anti-democratic measures contained within it.  Indeed, this is what they have done throughout the crisis.  The problem is that the left have allowed them to get away with this posturing and even indulged it rather that recognising the fact that the trade union leadership is one of the major obstacles to building an opposition movement. 

Second bailout 

The trump card of the yes campaign, which has been accepted by ICTU, is the proposition that the Fiscal Treaty provides a lifeline of future funding for the Irish state.   It has been claimed by Taoiseach Enda Kenny that the terms of the Treaty provide an “insurance policy” for the future.   The implication here is that Ireland will need continued funding from the European Stability Mechanism (ESM) beyond the period of the current bailout. Of course Government ministers don’t state this explicitly as it assumes the failure of the current bailout, which was supposed to get Ireland back to the financial markets by 2014.  Indeed, anyone who suggested that the Irish state would need a second bailout has been roundly condemned. 

The advocators of the Fiscal Treaty are in the perverse position of assuming the failure of the bailout in order to win support for it and the continuation of a policy that is failing.  These seeming contradictions arise out of the fact that the bailouts and the various ad hoc agreements, up to and including the Fiscal Treaty, are not solutions to the crises in Ireland or across Europe.  At best they achieve some temporary respite just for a new crisis to erupt a few months later.  The bailout has not resolved the Irish banking crisis.  The banks are still insolvent, continuing to post losses and holding massive liabilities, while the debt burden that the state has taken on to save the banks continues to grow.  At the same time the economy, weighed under by this burden, falls back into recession. 

This is the general situation across Europe as Governments and EU institutions pursue the policies of austerity.  Indeed, the crisis is recast not as one caused by an excess of private debt created by financial institutions, but as a result of high public spending.  The basic premise of this argument, which is repeated in Ireland, is that the financial class must never suffer a loss while the working class must be made to bear whatever the cost of that guarantee may be.   The Fiscal Treaty gives this basic principle of the European ruling class an institutional form.  It is nonsense to argue that voting for the Treaty will give Ireland leverage in negotiating more favourable terms on the bank debt.   It demands the very opposite - that the debts be honoured in full.   As ECB President Mario Draghi has stated clearly – Ireland must meet its “standing contracts and commitments”. 

The fall back argument is that there is no alternative to the Fiscal Treaty and the bailout. But there is and there always has been.   The banks didn’t have to bailed out, we didn’t have to accept the Troika agreement and we don’t have to support the Fiscal Treaty.  Even within a capitalist framework there are alternatives and we have seen with other countries, such as Iceland where the banks were allowed to collapse or Argentina where bondholders were forced to take a loss, how those alternatives can be pursued. 

Part of the reason such alternatives are not discussed is the massive domination of Ireland by imperialism, the role of local capital as agents for imperialism and the subordination of the workers movement to capital. However, if Ireland remains locked into the terms of the bailout it will be slowly bled dry over the next period and stripped of all its public wealth.  Debt is being used as a political and economic weapon against the Irish people to make them permanently poorer.  This is why it is so important to raise the demand for a renunciation of that debt.  It is the only way to decisively break out of the current status quo.  Of course this is not without its risks, and there is no easy road out of the crisis, but there really is no alternative to the self-organisation of the workers and to advancing a working-class alternative which would begin with debt repudiation.

A political defeat for the plans of the capitalist class through a rejection of the Fiscal Treaty would provide a significant boost to workers struggles not only in Ireland but also throughout Europe. 



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