Voting No but have an open mind - feedback?

einshteen

I'm voting No for the following reasons. I am still doing my research however so I'd like some feedback and discussion on the points below.


1. I have many questions that I can't find answers to, like:
a) I can't find out what parts of the Treaty are unconstitutional that we need a referendum for, and find it worrying that the wording in the constitution is such that it gives a free pass for whatever legislation is required by the treaty, while previous referendums have been much more specific about the changes. As far as I know the Attorney General's report is not publicly available, or very difficult to find.
b) I don't know if the wording of the constitution is such that any amendments to the treaty can be approved without another referendum. Given Hollande's comments on wanting to change the treaty, the collapse of the Dutch government, the election sitution in Greece and the forthcoming ousting of Merkel and the CDU, how would I know what it is I'm agreeing to with my vote?

I have many other questions about the meaning of certain passages in the treaty, but don't have ample time to find out the answers before the referendum

2. Rather than getting an extra source of emergency funding, we're tying ourselves to one. We're told by the government that we won't be able to borrow if we say No. Yet our current debt to GDP is well over 60%, so agreeing to the terms would prevent us from borrowing anyways, except from the ESM, to whom we would be paying €11 billion to set up (a huge figure given that Budget 2012 sought to make cuts of €3.6bn).

3. By voting on the Fiscal Compact, we're also voting to be bound by the ESM treaty. Few have realised that this is the case, and so the relatively innocuous Fiscal Compact is the subject of scrutiny while the ESM treaty sneaks past unnoticed. Some things in the ESM treaty are really worrying. Article 35 makes the board and director immune from legal prosecution, and gives them the power not to disclose any of their official documents to 3rd parties. It could be argued that this is necessary for the independence of the ESM, but it also means that their actions are not subject to any scrutiny, which is extremely dangerous. The ESM also has the power to increase their authorized capital on demand (Article 10), and we would have to pay up within 7 days (Article 9.3).

4. It misrepesents the cause of the financial crisis, which was a failure to regulate banks. This treaty legitimises the practice of bank bailouts, by setting up a bailout fund for governments which in most cases will be used to "recapitalise" banks in future financial crises. It legitimises austerity as a solution to a financial crisis. It is said that we need this treaty because of misbehaving governments, but it was never government expenditure that was the main problem, it was the lack of regulation. Why don't we have a treaty agreeing on bank regulations instead of austerity? (The answer, I suspect, is that there are too many hardcore free-marketeers in government for that to ever happen).

5. The government is undermining democracy. The Fine Gael/Labour government paid for the pro-treaty "Stability Treaty" website and booklet through the Department of the Taoiseach using public funds (the figure I've heard is €2 million, though we'll have to wait for Sinn Féin's legal challenge to find out the real figure). They undermined the Independent Referendum Commission, who said that the time given for them to perform their functions was "grossly inadequate" (Irish Times, April 25th). The Stability Treaty booklet also omits the text in the constitution on which we will be voting, which is one of the most controversial parts.

Scofflaw

einshteen wrote: »

I'm voting No for the following reasons. I am still doing my research however so I'd like some feedback and discussion on the points below.


1. I have many questions that I can't find answers to, like:
a) I can't find out what parts of the Treaty are unconstitutional that we need a referendum for, and find it worrying that the wording in the constitution is such that it gives a free pass for whatever legislation is required by the treaty, while previous referendums have been much more specific about the changes. As far as I know the Attorney General's report is not publicly available, or very difficult to find.

The AG, unfortunately, does not publish her advice to the government, for the very simple reason that she's the government's legal advisor, and her advice to them is confidential for exactly the same reason as any legal advisor's advice to their client is confidential.

So the question of which bit of the Treaty gives rise to the need (or preference) for a referendum is largely unanswerable. The triggering of a referendum here is a very arcane and subjective process - the Crotty judgement, for all it gets lauded at times like this, and for all I personally want to vote on these issues, is about as clear on why we should have such votes as a riddle wrapped in an enigma and buried in mud.

The question you have about the "free pass", on the other hand, is answerable, because it's a piece of boilerplate text that has been used for every EU Treaty since the SEA. It has been well tested in the Irish courts, and it's actually a very narrow exemption. For a piece of legislation to avail of the protection it offers, the legislation must pass two tests:

1. it must be required by the Treaty - not desirable or handy or implied or possible - actually required.

2. the Irish legislation that implements it must be as constitutional as possible - if there is another way of meeting a Treaty obligation that is more constitutional than the one the government chooses, the government's choice is not protected and can be struck down as unconstitutional.

So it's not a free pass by any means.

einshteen wrote: »

b) I don't know if the wording of the constitution is such that any amendments to the treaty can be approved without another referendum. Given Hollande's comments on wanting to change the treaty, the collapse of the Dutch government, the election sitution in Greece and the forthcoming ousting of Merkel and the CDU, how would I know what it is I'm agreeing to with my vote?

The wording of the amendment we're voting on is specific:

The State may ratify the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union done at Brussels on the 2nd day of March 2012.

For the Treaty to be amended, it must be signed again by all the contracting parties, and is no longer therefore the "Treaty...done at Brussels on the 2nd day of March 2012".

Attaching a Protocol is possible without prejudice to our amendment, but amending the Treaty itself cannot be done and then be said to have been accepted by our amendment, because our amendment names a specific version of the Treaty.

einshteen wrote: »

I have many other questions about the meaning of certain passages in the treaty, but don't have ample time to find out the answers before the referendum

2. Rather than getting an extra source of emergency funding, we're tying ourselves to one. We're told by the government that we won't be able to borrow if we say No. Yet our current debt to GDP is well over 60%, so agreeing to the terms would prevent us from borrowing anyways, except from the ESM, to whom we would be paying €11 billion to set up (a huge figure given that Budget 2012 sought to make cuts of €3.6bn).

We don't pay €11bn to set it up - that figure is the maximum liability we have to the ESM as it stands. The set-up payment is €1.26bn or so, payable in three equal tranches over three years - the money to do so is already factored into our bailout arrangements.

And since we are already signed up to a 60% limit by virtue of the Stability & Growth Pact (1992), signing up to the Fiscal treaty does not in fact preclude any sources currently available to us.

einshteen wrote: »

3. By voting on the Fiscal Compact, we're also voting to be bound by the ESM treaty. Few have realised that this is the case,

...because it isn't. Ratifying the ESM is separate from ratifying the Fiscal treaty, and something the government intends doing no matter which way we vote on the Fiscal Treaty, just as we signed up to the EFSF (with a liability slightly higher than our proposed ESM liability, at €12bn).

Ratifying the Fiscal treaty gives us access to the ESM as a source of bailout funding. To have that access does not require us to sign up to the ESM. But being part of ESM, as opposed to just tapping it for money, requires us to separately ratify the ESM Treaty.

einshteen wrote: »

and so the relatively innocuous Fiscal Compact is the subject of scrutiny while the ESM treaty sneaks past unnoticed. Some things in the ESM treaty are really worrying. Article 35 makes the board and director immune from legal prosecution, and gives them the power not to disclose any of their official documents to 3rd parties. It could be argued that this is necessary for the independence of the ESM, but it also means that their actions are not subject to any scrutiny, which is extremely dangerous.

Actually, it doesn't. It does mean they're not subject to any kind of FOI, but the Board of Governors of the ESM, who will have access to all ESM material, are government appointees. The governments of the ESM countries will have powers of scrutiny.

Nor does Article 35 make the board and director "immune to legal prosecution" except in respect of the performance of their jobs. Again, this is a well-trodden legal path. Such immunity does not, for example, protect you from a rape accusation, as in the Dominique Strauss-Khan case, and it does not protect you if your actions are not part of your job - for example, the actions of fraud, corruption, peculation or favouritism are not part of one's job (they are private actions, not official functions), and such 'functional immunity' does not provide any protection from prosecution for such actions.

If there is some other reason for an ESM government wanting to prosecute an ESM official for actions taken in the course of their job, what is required is the agreement of the other governments - not all of them, either, but a qualified majority of them.

einshteen wrote: »

The ESM also has the power to increase their authorized capital on demand (Article 10), and we would have to pay up within 7 days (Article 9.3).

That conflates two or three different things in the ESM Treaty. Increasing the authroised capital, or calling in authorised capital is possible only by unanimous vote of the Board of Governors, which is to say the ESM governments. Ireland cannot be made to pay up some amount decided by the others - it can only be called on to pay up an amount it has agreed to provide, and can veto any such raise or capital call it doesn't agree with.

The seven day period applies to a call on already agreed capital in specified circumstances, not to either a general capital call, or to an increased capital call. Again, the period of payment for the calls you're referring to are set by unanimity - that is, with an Irish veto.

einshteen wrote: »

4. It misrepesents the cause of the financial crisis, which was a failure to regulate banks.

No, it deals with bank bailouts as something that results from financial crises. The ESM Treaty ascribes no causes to the crisis - a Treaty isn't an analysis.

einshteen wrote: »

This treaty legitimises the practice of bank bailouts, by setting up a bailout fund for governments which in most cases will be used to "recapitalise" banks in future financial crises.

It makes it possible, but doesn't require it. And I'm afraid the practise of bank bailouts is entirely legitimate already, and is a standard response in financial crises. Our bank bailout is not our first, and the history of bank bailouts is as old as capitalism.

What it does do, on the other hand, is route bank bailouts via the sovereigns, rather than directly bailing them out from the fund. That would have the advantage of spreading the load of bank bailouts across all of Europe jointly, rather than leaving them to whatever country happens to be responsible for the bank in question. On the other hand, it has a disadvantage that you've already raised - if regulation of banks is left at the national level, but they're bailed out by all of Europe, it becomes advantageous for a country to indulge in very light bank regulation, secure in the knowledge that when they eventually go boom everyone in Europe will have to chip in. Cynically, one might well observe that Ireland's support for this idea is based on exactly such a perception of opportunity - after all, the reason we've had the biggest bank bailout per capita is because we had the most lightly regulated banks. The idea that we could do it again, this time knowing everyone else is on the hook for 98.4% of the costs, must have them salivating in the financial planning department.

einshteen wrote: »

It legitimises austerity as a solution to a financial crisis.

..by making it possible to borrow when you otherwise couldn't? That's actually contradictory.

einshteen wrote: »

It is said that we need this treaty because of misbehaving governments, but it was never government expenditure that was the main problem, it was the lack of regulation. Why don't we have a treaty agreeing on bank regulations instead of austerity? (The answer, I suspect, is that there are too many hardcore free-marketeers in government for that to ever happen).

Heh - see above re the bank bailout mechanism in the ESM. As it happens, though, regulation of banking is moving more to the European level - see for example here:

IRISH banks and the Financial Regulator will face much closer scrutiny by EU watchdogs from January next year under a landmark deal sealed in Brussels last night.

The deal will see three EU-level agencies set up to police stock markets, banks and the insurance sector.

It's not something that triggered a referendum in Ireland, that's all. But the Fiscal Treaty, which happens to trigger a referendum here, is only part, and a relatively small part at that, of a very much broader suite of new regulations aimed particularly at controlling risks in the financial sector.

einshteen wrote: »

5. The government is undermining democracy. The Fine Gael/Labour government paid for the pro-treaty "Stability Treaty" website and booklet through the Department of the Taoiseach using public funds (the figure I've heard is €2 million, though we'll have to wait for Sinn Féin's legal challenge to find out the real figure). They undermined the Independent Referendum Commission, who said that the time given for them to perform their functions was "grossly inadequate" (Irish Times, April 25th). The Stability Treaty booklet also omits the text in the constitution on which we will be voting, which is one of the most controversial parts.

Those are political observations and claims rather than facts that can be clarified, though. On the other hand, I can't help but point out that you have apparently pre-judged Sinn Fein's legal challenge. If their challenge fails, then the law has in fact been observed. Your view assumes that their legal challenge has already been successful, which is incorrect.

I'd agree the RefComm should have put the amendment text into the booklet, if for no other reason than to scotch the claim we're putting the fiscal limits themselves into the Constitution.

cordially,
Scofflaw

einshteen

Great reply, thank you. A few things in response:

For a piece of legislation to avail of the protection it offers, the legislation must pass two tests:

1. it must be required by the Treaty - not desirable or handy or implied or possible - actually required.

2. the Irish legislation that implements it must be as constitutional as possible - if there is another way of meeting a Treaty obligation that is more constitutional than the one the government chooses, the government's choice is not protected and can be struck down as unconstitutional.

Do you know where I can verify that info?

And since we are already signed up to a 60% limit by virtue of the Stability & Growth Pact (1992), signing up to the Fiscal treaty does not in fact preclude any sources currently available to us.

So is the reason that the 60% is contained in the treaty so that it becomes a condition of entry to the ESM?

From the Oireachtas Committee Report sticky you posted: "In the past, Germany did not respect the Stability and Growth Pact, but it will do
everything it can to keep the euro together in the present crisis." Is this anything more than rhetoric? What prevents bigger countries who wield more power from ignoring it again?

It does mean they're not subject to any kind of FOI

Why is this a good thing?

I'd agree the RefComm should have put the amendment text into the booklet, if for no other reason than to scotch the claim we're putting the fiscal limits themselves into the Constitution.

I'm not talking about the Referendum Commission's publications, I'm talking about the pro-yes booklet paid for by the government, with public funds, through the Department of the Taoiseach.

Those are political observations and claims rather than facts that can be clarified.

I don't see how anything except the amount paid isn't fact, and that €2 million figure comes from the Irish Times just for reference. If you want to confirm it for yourself, whois stabilitytreaty.ie and you can see that it is registered to the Department of the Taoiseach.


Finally, your comment on the ESM giving an incentive for light regulation at the national level, is this cause for concern? More broadly, should we accept that periodic bank bailouts are inevitable and that there is no alternative?

Ozymandius2011

einshteen wrote:

So is the reason that the 60% is contained in the treaty so that it becomes a condition of entry to the ESM?

As a no voter I will say that the difference is that the Stability and Growth Pact was never part of an EU Treaty, though it was based on Articles 121/6 of the TFEU.

Scofflaw

einshteen wrote: »

Great reply, thank you. A few things in response:

Do you know where I can verify that info?

Sure: https://docs.google.com/viewer?a=v&q=cache:qW0L6vw7e6wJ:www.jsijournal.ie/html/Volume%25204%2520No.%25202/4%255B2%255D_Tomkin_Implementing%2520Community%2520Legislation%2520into%2520National%2520Law.pdf+&hl=en&gl=ie&pid=bl&srcid=ADGEESixKDY_rI__EVH-t6uIVfYeyVGayA8oEDhM2zaghjbBreVHygR95iOPvz0n6G6E0JV7PQxZRWlrT7thgfL3YTF0CxGUJ7ANU6CTpixzo6Yd_OYOfghkAByBj8Fj1Epa2mbcwJhX&sig=AHIEtbTwsep8f5__dcZ9Q789-tEazdxHAg

or: http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/irishslr2&div=9&id=&page=

einshteen wrote: »

So is the reason that the 60% is contained in the treaty so that it becomes a condition of entry to the ESM?

Ratification of the Treaty is a condition of entry to ESM. The 60% in particular is not. It's in the treaty because various references to it as a debt benchmark are necessary.

einshteen wrote: »

From the Oireachtas Committee Report sticky you posted: "In the past, Germany did not respect the Stability and Growth Pact, but it will do
everything it can to keep the euro together in the present crisis." Is this anything more than rhetoric? What prevents bigger countries who wield more power from ignoring it again?

From a Treaty perspective, the change in voting rules on whether an excessive deficit exists and whether an excessive deficit procedure should be started against a country. In the current Pact, those require a qualified majority to support the proposal or recommendation for an excessive deficit to be recognised or an excessive deficit procedure to be started against a country - in the Treaty, a qualified majority is required to block the recognition or procedure.

einshteen wrote: »

Why is this a good thing?

It's not - never is. The question is whether there are any good reasons for it, and the answer, I think, is yes.The ESM isn't, say, a body charged with governing a nursing home - it's going to be a very large market actor, responsible for billions, or hundreds of billions, in European taxpayers' money. While that's obviously an argument for transparency, it's also an argument for opacity, because the fund will be raising that money, investing that money, and disbursing that money. Making the fund transparent makes its financial actions and market calls transparent, which means that every trader on the planet will know what the fund is going to do, what it's thinking, and the only question becomes how much money you'd like to make off the European taxpayer by betting with or against it.

einshteen wrote: »

I'm not talking about the Referendum Commission's publications, I'm talking about the pro-yes booklet paid for by the government, with public funds, through the Department of the Taoiseach.

Ah - fair enough. I admit I wouldn't find the wording controversial.

einshteen wrote: »

I don't see how anything except the amount paid isn't fact, and that €2 million figure comes from the Irish Times just for reference. If you want to confirm it for yourself, whois stabilitytreaty.ie and you can see that it is registered to the Department of the Taoiseach.

The question of whether it's biased is very much a matter of opinion. The question of whether it was done legally is up to the courts. If it's legal, you may still find it objectionable, but that, again, is a matter of personal opinion. I'd agree that if the government have used government funds, and are relying on the fact that the referendum bill hadn't been published at that point to make it legal, then that's very much against the spirit of the McKenna judgement, if not against the letter.

einshteen wrote: »

Finally, your comment on the ESM giving an incentive for light regulation at the national level, is this cause for concern?

Not currently, in that sense, because the ESM is currently set up to bail out sovereigns, and any bank bailouts must go via the sovereign:

15.1. The Board of Governors may decide to grant financial assistance through loans to an ESM Member for the specific purpose of re-capitalising the financial institutions of that ESM Member.

As you pointed out, this means that the sovereign must take the bank debt onto the state's books before money from the fund can be used to recapitalise the county's banks.

So, currently, the moral hazard of lightly regulating your banks remains firmly with your national government, because if your banks need rescuing, the costs will be borne by public finances.

If the ESM was modified to permit direct rescue of banks, then it does become a concern. Say Ireland knew that it could repeat the 'light-touch' bank regulation of the Celtic Tiger period, and repeat the property boom and the "global success story" that was Anglo - but this time, when it all inevitably went bang, instead of forking out €70bn, Ireland would only have to stump up the proportion of its ESM contribution - €1.1bn, while the rest of the cost would be carried by the rest of the ESM membership. What's not to love about that? Why would you not go for the very feather-lightest of bank regulation? Sure, the "Irish" banks would then be owned in common by the European taxpayer - they'd be 'nationalised' by Europe rather than Ireland - but we're currently hoping to sell them to the highest bidders anyway, wherever they come from.

Of course...if everybody else did the same, and the result was a race to the bottom in bank regulation all across the eurozone...so that everybody's banks were like Anglo...then...well, urgh, really.

einshteen wrote: »

More broadly, should we accept that periodic bank bailouts are inevitable and that there is no alternative?

They're politically inevitable, I would say. The main determinant of whether banks will go bang is fundamentally prudential policy. If banks lend (and borrow) conservatively and cautiously, there's no real reason why they should suffer the kind of crisis we're seeing in Ireland and Spain...and the UK, and Iceland, and the US...

Unfortunately, banks create money, and money is required for investment, and investment is required for growth - at least the way things are currently structured. Conservative lending practices are thus a brake on growth - which leads to the obvious temptation for politicians to listen to the bankers saying that if some awfully burdensome red tape was just pruned away, they'd be able to lend more, and to more exciting and adventurous projects, and the economy would grow faster, and everything would just be the bestest thing.

So, roughly every, what, second generation or so, electorates vote for politicians who tell them that the banks are suffering from excess red tape, and that growth would be better with bank deregulation, and that they've definitely learned the lessons of the past, and they're sure they don't apply this time...and the economy booms, and everyone is happy. And then the public realises they can get bigger mortgages, or cheap loans to buy dot com sticks,or tulips, and a bubble starts to form.The banks spot the opportunity for rich pickings, and start lending into the bubble, exacerbating it. The politicians and regulators face a choice - they can turn off the money taps sharpish, raising everyone's mortgage rates and making all their voters cry, or they can convince themselves that it's different this time, and that the fundamentals are sound, and....you can see where this goes.

So, yes, basically inevitable, on account of us being a bunch of tailless apes whose instincts are geared towards avoiding real tigers rather than metaphorical ones.

cordially,
Scofflaw

antoobrien

einshteen wrote: »

2. Rather than getting an extra source of emergency funding, we're tying ourselves to one. We're told by the government that we won't be able to borrow if we say No. Yet our current debt to GDP is well over 60%, so agreeing to the terms would prevent us from borrowing anyways, except from the ESM, to whom we would be paying €11 billion to set up (a huge figure given that Budget 2012 sought to make cuts of €3.6bn).

I don't know if there are any limitations in either this or the ESM treaty that limit us to just the ESM, so I'd question this point.

We are currently be funded by the EFSF, IMF, Cash reserves (NPRF) & normal government borrowings (long term binds that were borrowed in 2010 & earlier).

AFAIK the EFSF closes to applications next June and will continue to disburse funds until the current Irish and Portuguese programmes finish. This will be replaced by the ESM.

Our borrowings from the IMF are currently a lot higher than we normal would normally be allowed. The IMF have said that this is due to the backing of the EU. It's unclear if the IMF will fund Ireland without the backing of the EU.

The bond markets are out of bounds and if we were forced to go to the bond markets we'd be paying extortionate rates.

The NPRF is almost totally committed to various capital initiatives, so we don't have much left to spend (and it's dubious how legal it would be to spend it on current spending).

Access to the ESM requires ratification of the current treaty.

So, I'd say that what will actually happen is that instead of limiting us to just one source of funding, we will be replacing a potential source of funding.