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The Fiscal Treaty Demystified

The Fiscal Treaty Demystified


One of the tricks that the rich play on ordinary people is to exclude them from real decision making processes. Typically, this is done by monopolising the airwaves and speaking in a technical language that is almost impossible to understand. So-called ‘experts’ replace real democratic discussion and the elite consensus is then reinforced by being trotted out endlessly.

Along with stoking up fear and intimidation this tactic helps to persuade people to vote against their better judgement. So the aim of this article is to combat elite spin with some key information about the up-coming Fiscal Treaty. Once this is done it should by crystal clear that there are at least three reasons why ordinary people should say NO.

(1) Saying yes means austerity forever

Despite all of the technical mumbo jumbo the issues are actually surprisingly simple. At its core the austerity treaty is about forcing governments into a straightjacket which emphasises reducing the national debt through savage cuts in public spending.

Ireland currently has a debt of around 120% of GDP and a budget deficit (taxes minus spending) of around 13.4%. If we sign up to the new rules we will have to reduce the overall debt by half over the next 20 years and get our deficit down to 3% of GDP by 2015.

This will mean savage cuts of around €4 to €5 billion every year on top of the interest payments and adjustments that the government has already committed to. This will make the household charge look like ‘loose change’ as people are squeezed for decades to come. Not only is this barbaric, it will never work as all of the economic demand will simply evaporate.

So why should we vote for decades of misery that will never succeed in bringing recovery?

(2) Saying yes undermines democracy

In capitalism most of the key decisions about how to use society’s resources are currently made by unelected corporations. This means that capitalism already has a problem in accommodating real democracy. But at least elected governments traditionally retained some level of control over their national economies.
If we sign up to these rules almost all of this control will be lost to a bunch of unelected bureaucrats who continuously defend the interests of the bankers and the speculators.

Under the terms of the treaty all governments must make their current austerity policies legally binding. This locks austerity into national law and leaves even less room to get out of the crisis.

(3) Saying yes is extremely risky

The elites are currently engaged in a campaign that is full of contradictions. On the one hand we are told that the new rules are ‘no big deal’ as they already apply under the terms of the Maastricht Treaty. On the other hand we are told that if we fail to accept the treaty the ‘sky will fall in’ and there will be no money in the hole in the wall. This is blatant scaremongering.

Indeed, it is far more risky to accept the fiscal treaty than to reject it as the European elites are attempting to head into very dangerous territory. Throughout the long history of capitalism, governments have never met a serious crisis by insisting on cut backs. During the Great Depression, for example, capitalism only recovered when governments pumped money into the economy.

And the current crisis has already seen China and the USA throwing trillions of dollars into stabilising the system. Capitalism is incredibly unstable and governments have always realised that they need some ‘wriggle room’ to stimulate the economy when it gets into trouble. This treaty throws out 70 years of economic thinking in order to tie our hands and copper fasten austerity. This is sheer madness.

And the idea that if we say No we will lose access to another so-called ‘bailout’ is patently untrue Over the last four years, European rulers have bent over backwards to protect their precious financial system.

This is their only real concern, and if Ireland ever struggled to pay off its debts, not only would the Eurocrats fail to exclude the State from a second bailout - they would actively insist on one like they did with the Greeks. Over the next six weeks we will be told many lies by the elites across Europe.
But for ordinary people the reality is that this treaty represents nothing but hardship.

If you value public services Vote NO.
If you value democracy Vote NO.
If you believe in a fairer solution to the economic crisis Vote NO.
For more information about how you can get involved in the campaign phone 0876574100 or visit

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