Will More Austerity Work for Ireland?

Contrary to some Irish pundits who indicate that the referendum’s results are up in the air and that Irish citizens may say ​“no,” people I talked with over a week along the western coast feel that the treaty’s ratification is inevitable. Opinions varied on whether or not the treaty is actually a good thing for Ireland.

An innkeeper on a tiny harbor on the Berea peninsula, where sheep and mussel farming are the main economic activities, is angry and exasperated that regular citizens have to pay for the malfeasance of politicians and big banks who got Ireland into its current dilemma. She thinks people will suffer because of the austerity measures, but she says the government is dead-set on passing the treaty and she believes it will get its way. A cab driver in Ennis said, ​“It has to pass; we don’t have a choice.” The proprietor of a gift shop in the bustling town of Killarney plans to vote ​“no,” saying, ​“We’ve given enough away already. You don’t get out of a recession that way.”Sinn Fein politicians, including party president Gerry Adams, have been holding town hall meetings around the region – advertised on hand-lettered posters saying ​“all welcome” – to drum up support for a ​“no” vote. They are framing it as part of the party’s Defend Rural Ireland Initiative, and they stress that they are not against the EU or Eurozone and that Ireland can continue its membership without ratifying the treaty. They are also framing a ​“no” vote as part of a larger resistance movement to ​“big bullies,” which includes opposition to fracking for natural gas in Ireland, ire over new household taxes and controversy over bans on cutting turf in bogs for environmental reasons (many small farmers cut their own peat to burn for heating and cooking).

Irish Taoiseach Enda Kenny was among the 25 European leaders who signed the treaty earlier this year, but each country still needs to ratify it through their own legislative procedures, with 12 ratifications out of 17 Eurozone countries needed for it to take effect in January 2013. The treaty limits the size of the deficit and debt a country is allowed to accrue, which opponents say will gut their potential for important government spending and hence economic growth in these tough times. So far, only Portugal, Slovenia and Greece – under the former government – have ratified the treaty.

Newly elected French leader Francois Hollande said the country would not ratify, and the political turmoil in Greece means its ratification there is also highly in doubt. Now there is much talk of a ​“Grexit” – Greece’s leaving the EU and the Eurozone altogether – and Germany has canceled its own scheduled May treaty ratification vote, given the developments.

At a press conference on May 15, Sinn Fein jobs spokesperson Peadar Toibin said:

Only Government led investment in job creation will tackle the unemployment crisis and lead to growth and recovery….The fact is the government can’t have it both ways. You cannot have a twin track approach. The choice is austerity or investment in jobs. This Treaty would prevent the type of government led investment which is needed for economic recovery in this State.

In March, Ireland’s unemployment rate was at 10 percent, with its youth unemployment rate among the highest in Europe and many young people planning to emigrate. (Its unemployment rate is still notably lower than Spain and Greece, which were at 24 and 21 percent, respectively.) A recent report by the group Social Justice Ireland found that more than 700,000 citizens are living in poverty, a 13 percent increase from two years ago.

The Irish parties pushing the treaty say it will mean less austerity in the long run because it will give private investors and lenders confidence in Ireland. Joining the treaty is essential to securing loans or other financing through the intergovernmental European Stability Mechanism (ESM), an in-the-works and trouble-plagued successor to similar international lending bodies.

In an address Fianna Fail TD Michael Martin said:

Voting Yes will ensure that Ireland has access to the cheapest and most secure funding for our public services - and it is an essential part of the agenda to restore growth and job creation to Ireland and Europe. In two years’ time Ireland will need to raise at least €18bn from somewhere. We want Ireland to be able to borrow that money at affordable rates on the open market.

Ireland is the only country putting the treaty to a popular referendum, with the results playing a significant symbolic and pragmatic role in the overall outcome of the treaty. Other countries’ parliaments need a simple or super majority to ratify.

A website about the treaty published by the Institute for International and European Affairs says that Ireland will not be forced to leave the Eurozone or EU if it votes ​“no” on the referendum, but that ​“a ​‘no’ vote risks diminished influence for Ireland and potentially a second tier status for Ireland within the Eurozone.”

There were calls for the EU to relieve some of Ireland’s bank debt to help build support for the austerity treaty in the referendum, and a group of Irish TDs (members of Ireland’s lower house of parliament) called for the vote to be delayed until fall to see how events on the world stage shake out and to see if economic growth measures could be added to the treaty. Meanwhile, treaty proponents are calling for a second vote if the treaty is voted down on May 31.

Some have argued that Ireland can survive on its own without bailouts, in part because of its attractiveness to U.S. and other high-tech companies. This is how Fintan O’Toole described the debate over the austerity treaty in an editorial in the Irish Times:

One way of putting the referendum that I like is that Brussels and Germany are the mother and father of the EU and the rest of the countries are kids. And some kids spend the money wisely but some, like Ireland, spend it on crazy things. ​“So the mum and dad keep giving the kids more and more money. But eventually they put their foot down and say, ​‘Right, you can keep borrowing our money – if you sign this form to let us know what you’ll use it for.’” This, apparently, is what we’re teaching our kids now – that we are all children, subject to our strict but benign parents in Brussels and Berlin.

Like Sinn Fein, the Irish Congress of Trade Unions has called for a massive government investment in creating jobs. This month, Congress general secretary David Begg called for a ​“New Deal” instead of the European austerity treaty. He also pushed for the delay of the ratification vote, given developments in France and Greece. A press release from the Congress quoted Begg saying:

Ireland has been a poster child of globalisation and, more recently, a poster child for austerity. Let us seize the opportunity to be a beacon of something good for a change.

It is of course widely believed that the best hope for ​“change” lie in a country’s youth, but since the economy crashed Ireland’s youth have been leaving the country in droves, with the number of young emigrants increasing three-fold since 2008, according to the April report by Social Justice Ireland. (That report also chronicled the country’s income inequality, noting that ​“the poorest 10 per cent of households have an average disposable income of €210 a week, compared to an average of €2,276 a week for the richest 10 per cent.”)

The Irish Times quoted Social Justice Ireland director Father Sean Healy on the likely impact of increased austerity measures on Ireland’s youth:

The austerity programme is contributing to Ireland’s loss of young people, the implications of which are stark as this loss will pose significant problems for economic recovery…The emigration ​‘brain drain’ which in some quarters is being heralded perversely as a ​‘safety valve’ is in fact a serious problem for Ireland and may well lead to a skills deficit in the long-term.