Fiscal Austerity Pact: A new European tyranny
As in previous referenda campaigns the
Irish government has portrayed the Fiscal Pact treaty as something other
than what it is and predicted dire consequences of what will happen if
it is rejected. So Labour leader Eamonn Gilmore claims that that
the referendum is an opportunity to vote for "economic stability and economic
recovery" and “to go beyond casino capitalism” while Fine Gael’s Leo Varadkar
declares that if the Treaty is not accepted it 'there's a risk that austerity
may have to be faster, and quicker and deeper". To get an accurate
understanding of what the Treaty is about we have to examine what it says.
And when we do examine the Fiscal Pact we can see two clear and related
elements – the first is a projection of austerity policies into the future,
and the second is a further dilution of democratic rights.
The Fiscal Pact intensifies the policies
of austerity by imposing strict rules on state spending. Under its
terms the so called “structural deficits” (the difference between revenue
and expenditure after taking into account cyclical and exceptional factors)
run by governments will be restricted to a limit of 0.5 per cent of GDP.
When we compare this to the current 3 per cent deficit target contained
in the Stability & Growth Pact, which accompanied the introduction
of the euro, we get a sense of the budgetary tightening that this represents.
Importantly, this will not just be a target, but a legally enforceable
The most far reaching aspect of the Fiscal Pact is its proposals to change the political structure of Europe. It is not the case that the Pact is a response to the current Eurozone crisis. Rather it is a means to institutionalise polices and structures that will create a single economic programme for Europe. The provisions set out in the Pact are not time limited but intended to have a “binding force and permanent character”. Under its terms Governments will have to submit their budget plans to the European Commission for approval and to harmonise polices within its guidelines. The provisions of the Pact will have a constitutional status within each state. Independent bodies that have the power to censure any Government that doesn’t adhere to them are to be established within member states. This power of legal censure will be backed up at a European level through an expansion of the powers of the European Court of Justice (ECJ). If a state does not comply with the terms of the Pact the ECJ can impose fines of 0.1 per cent of GDP. (In the case of Ireland, a fine would amount to €155 million.)
The Fiscal Pact is an assault on national and democratic rights. It seeks to tie the hands of current and future governments by locking them into a predetermined political and economic framework. The power to make policy will be shifted from national governments to unelected and unaccountable bodies, most likely staffed by lawyers and economists, which will have the legal authority to override the will of the people. Any party elected to government, even on a Keynesian never mind socialist programme, would find itself effectively subjected to a coup when the mechanisms created by the Fiscal Pact are triggered. The anti-democratic nature of the Pact was made clear by German Chancellor Angel Merkel in her declaration that its provisions “will be binding and valid forever. Never will you be able to change them through a parliamentary majority.”
The examples of Greece and Italy, where governments have be replaced by unelected bureaucrats who have imposed ever-fiercer austerity policies, have given us a clear indication of how the Fiscal Pact will operate. Only in Ireland do workers have the opportunity to say No. That is what they should do despite the threats and lies, and by so doing begin to resist the suspension of democracy and a future of limitless austerity.