18 April 2014

Correct past mistakes, vote no to the treaty

11:00, Declan Ganley

Towards the close of the politically tumultuous 18th century, Edmund Burke, the Irish intellectual giant of European and North American politics, assessed the modern era's first attempt at unifying Europe under Napoleon's Grande Armée.

Burke, the vociferous defender of the values inspiring the American struggle for independence and individual liberty, recoiled at what he saw as the product of the French Revolution, the very antithesis of liberty.

Burke saw Europe, under the spell of Jacobin France, falling under despotism disguised as shallow political promise, the cynical hijacking of *liberté, égalité* and *fraternité* wrapped in the mantle of the all-powerful centralised state. Burke could see that the Jacobins were totalitarian.

They claimed to know all, and to be the sole arbiters of all of that was right and all that was wrong. If you opposed them, you were the enemy. Loyal opposition was an alien concept.

Constructive criticism of the Jacobin system was more likely to result in you losing your head to the guillotine than being appreciated for seeking improvements in government.

Thus, intolerance for those that challenged it became the hallmark of the all-powerful centralised state.

Burke saw those who challenged the consensus and the status quo differently, saying: "He who wrestles with us strengthens our nerves and sharpens our skill. Our antagonist is our helper."

In recent times European politics has once again turned Jacobin. It proactively rejects the idea of a loyal opposition, and its bureaucracy is quick to label as "anti-European" all that dare question it.

An environment has been fostered in which political parties and governments across Europe must subscribe to this 'group think' that is almost always reduced to the lowest common denominator.

The achievement of excellence in any field of pursuit is thus stifled by the very design of the European Union.

It has resulted in the shrinking of democracy, the silencing of loyal opposition, the devaluation of the individual over the collective, the diminution of competition, of merit and innovation; and now, even the start of an asset stripping of current and future generations of Europeans in order to subsidise the failure of private corporate interests. Those interests benefit from the symbiotic relationship between some large insolvent financial institutions and many large insolvent member state governments throughout the EU.

The fact is that Europe, unluckily saddled with unfit leadership, finds itself suffering from a grey-suited tyranny of the mediocre. This is manifest in the failure of the union's leadership to construct those proper institutions and laws so urgently required to save Europe from the economic spiral into which it currently descends.

Following the farce that was the Lisbon Treaty - a treaty that even outgoing French president Nicolas Sarkozy recently admitted had failed and is not fit for purpose - the latest fiscal treaty is another exercise in empty posturing.

It quite simply will not come remotely close to solving Europe's economic crisis, designed as it was in the halls of Berlin and Paris with one primary objective in mind - to placate electorates being fed stories of "lazy Greeks" by the tabloid press.

Rather than level with their electorates, these so-called leaders continued a charade to feed Europeans the placebo of a treaty with rules that are already in place under Maastricht but transferring so much sovereignty from individual states to the union that even euro-devotee Peter Mandelson last week called it "the largest measure of sovereignty that European leaders have so far contemplated collectivising".

That such sovereignty can be transferred so cavalierly without regard to the democratic accountability owed to you, the citizens of Europe, is, in a word, shameful.

And it is bitterly ironic that transferring this power to the centre and its entity, the ESM, which is literally above the law will do nothing to solve Europe's economic crisis. It is instructive to quote the ESM treaty on legal immunity, from Article 32.

"The ESM, its property, funding and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of judicial process except to the extent that the ESM expressly waives its immunity for the purpose of any proceedings or by the terms of any contract, including the documentation of the funding instruments."

The fiscal treaty is the definition of bad law and, in the words of Burke, "bad law is the worst sort of tyranny".

Europe is in dire need of courageous leadership. We need to get back to the business of taking risks, of being prepared to embrace "the freedom to fail", both in our banking and private corporate institutions and in our politics. The siren cry of French president-elect François Hollande's "growth" is just another false promise.

Growth does not come from governments protecting failed companies or imposing more taxes or expanding themselves even further. Destroying competition and distorting markets by suffocating innovation and stifling broad-based SME job creation are always the end result of such a policy.

The fact is that Europe has reached a point of insolvency, so realistically we must choose either to unite in a true federal democratic union, or see Europe unravel in an unpredictable manner that has the potential to turn dangerously ugly.

In scenarios that start with certain member states leaving the euro, we may see a release of uncontrollable centrifugal forces that could ignite underlying tensions and awaken the proverbial "sleeping dogs" that are strewn from the Balkans to the Baltic to the Iberian Peninsula. Even Europe's founding anchor states would not be immune from turmoil.

So the risks of continuing down the present perilous path of unaccountable leadership are more likely higher than the risks of calling a halt to the current charade and actually doing something that at least has some prospect of working.

**So what are those worthwhile risks? These are the measures that should be taken:**

* A liberal union-wide bankruptcy law should be passed, allowing for an 18 month (or shorter) beginning-to-end bankruptcy.

* Every financial institution that cannot repay taxpayer bailout funds recently injected, should be put through an insolvency purge, their assets sold to the highest bidder, their non-recoverable liabilities written off.

* No private company should receive state financial aid, nor should it be afforded any protections, direct of indirect, from the full force of competition.

* The EU should move immediately to a one-off full federalisation of state debts similar to the broad blueprint used by Alexander Hamilton to federalise the debts of the individual American colonies.

* A European Union bond should be issued to finance the needs of the Federal Union government and, where necessary, provide financing to supplement individual member states under specific loan criteria setting terms.

* Member states will be free to borrow directly from the markets on the understanding that they will be forced into bankruptcy, with full losses incurred by lenders, if they fail to meet repayment terms.

* These state borrowings would be tied to a requirement that any bond offering will only be offered with attachment to the specific means by which the debt will be paid down/extinguished.

* The position of president of the European Commission and president of the European Council should be merged into one office-holder and should be subject to a popular democratic election to be held not later than December 2013. This office will be a highly sought-after role and will probably attract high-calibre candidates; it will also force competing visions of Europe to be put to voters for their ultimate choice.

* Voters should be weighted in an 'electoral college' type format so that the voters of smaller member states are not made irrelevant. This president would serve for one six-year-term only, and would be chief executive in the same manner as the president of the United States.

* An accommodation could be made to remaining European monarchies in respect of their historic traditions, to allow for some ceremonial roles.

* The commission should become the servant of the executive arm, and its members nominated by the democratically-elected president, and ratified by a newly-created upper house of the European Parliament.

* An upper house or senate should be created, with four representatives of each member state, with each such state holding equal voting power. That is to say, Ireland will have four senators, as will Germany and other states. This upper house will be given the co-right to initiate legislation along with the lower house, the current EU Parliament.

* The European Parliament should be reformed to give greater balance for population (which would favour larger member states) and should be given the power (along with its upper house) to initiate legislation.

* All lobbying of the executive and legislative branch must be registered and transparent.

* A full insolvency purge of all European financial institutions should be immediately undertaken. A liquidation and asset sale of all unhealthy institutions should take place forthwith. A write-down of significant size, together with a Hamiltonian scale re-negotiation should take place on all distressed EU member state debts.

* The federalising of all remaining state debt should immediately follow, backed by the issuance of union bonds which are in turn backed by the entire tax revenue of the eurozone.

* The union civil service should be kept small and highly efficient; this should be enshrined in Europe's new constitutional arrangement. A debt ceiling will also be set constitutionally.

* The union should have monopoly of external action both in soft and hard power.

* The ECB should be guaranteed full independence and a low inflation policy be pursued.

* The official working language of the union should be English. We understand the major sensitivities involved, but it is necessary to have one official language among so many, so as to remove any scope for ambiguity in laws and regulations or their interpretations.

* The automatic right of secession for any member state should be provided for with a two-thirds majority of the acceding polity.

* An EU-wide pension plan is needed, placing citizens' pension assets beyond the reach of future potentially-insolvent and irresponsible governments, implemented per the highly successful Chilean model.

We are now in the midst of the modern historic era's third attempt to unite Europe, Napoleon being the first, and Hitler being the second.

This latest attempt, for the first time founded to achieve noble and peaceful aims, should be given the chance to succeed but only on condition that it subjects itself now to democratic accountability, lest it depart on a road to something far less bearable.

One risk that must not be taken is to transfer any more sovereignty to Europe (as would be the case in the fiscal treaty) without first constructing the means to hold it democratically accountable, keeping in mind Benjamin Franklin's words of warning: "Those who would give up a little freedom, to gain a little security, deserve neither and will surely lose both."

For Ireland's part, we are, for the short term, burdened with the failed debts of certain fake risk takers, some of them large German, French and British financial institutions that we have no moral duty to bear. This is a gross injustice. It is anti-market.

It is an abrogation of all of the rules of capitalism and it is the most exploitative exercise in corporate welfare in the history of the world. It is beyond unacceptable that anyone would even consider asking Ireland to pass a treaty that does not cut this bank debt burden.

Expecting Irish ratification of such a patently bad deal is an insult to the intelligence and common sense of the people of Ireland. We must not entertain saying Yes to this bad law.

More importantly, we must do our part to bring Europe to its senses and face the hard choices that it must make.

As for the empty threats that we in Ireland will not be able to raise funding, consider that even Iceland, having gone through a massive bank default, is now welcomed back in the markets.

Any Irish government claiming that it would be barred from markets for years would clearly be admitting that it is incompetent to hold office. So we would be well advised not to listen to the fear mongers advocating surrender to such an already outdated, vacuous and abysmal treaty formula.

Take the advice of Edmund Burke, who said: "No passion so effectually robs the mind of all its powers of acting and reasoning, as fear."

In this treaty, we have no bank debt relief nor have we the means to repair the crisis of democracy at the heart of Europe. Do not reward mediocrity.

On May 31, do the reasonable thing for Ireland and Europe's current and future generations - say No to the fiscal treaty.

Ireland and Europe need a better deal - or at least a deal that has some faint prospect of actually working. To accept anything less would be an historic error for which our children would not forgive us.

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*Declan Ganley is an entrepreneur and chair of the Libertas Institute*

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