We are now trapped like rats inside the Eurozone, although it is only a matter of time before the Eurozone breaks up and some or all of its Member States leave it and reestablish their national currencies, for its structural faults are irremediable. The only question is how soon will this occur and in what circumstances – whether it will be done in an organised or disorganized fashion. In the meantime Germany, with France holding on to its coat-tails, plans for Ireland and the other peripheral Eurozone countries a punishing regime of austerity and national asset sales that could go on for years.
On 24 March the European Council meeting of EU Prime Ministers and Presidents is expected to agree an amendment to the Lisbon Treaty to set up a permanent EU bailout fund from 2013 – the European Financial Stability Mechanism. Ireland will be expected to contribute to this, but it will not have retrospective effect or alleviate the pain for the Irish people of last December’s EU-IMF stitch-up. The EU authorities are very anxious to avoid a referendum in any EU State on the establishment of this Fund even though it will entail an amendment to the EU Treaties. The EU Summit meeting will seek to push through this amendment by using the “self-amending provision” of the Lisbon Treaty (Article 48 TEU). Messrs Kenny and Gilmore will be under pressure to push it through in Ireland without a constitutional referendum on the grounds that it is only a minor technical change and does not increase the powers of the EU.
The Opposition TDs in Leinster House will need to consider a Court challenge to this likely course, if the incoming Government seeks to follow Fianna Fail’s policy of denying the Irish people a referendum on this EU Treaty change. At the same time there is likely to be an attack on Ireland’s 12.5% Corporation Profits Tax rate and a scheme for a common cross-EU Tax Base which would fundamentally subvert Ireland’s attractiveness for foreign investors. The Common Tax Base idea, which the Brussels Commission is proposing, is a scheme for so-called “destination taxes”. It envisages Corporation Tax being calculated centrally at EU level so that firms pay profits tax to the governments of the different countries in which they sell their goods, and not to the Government of the country where those goods are originally made.
The new Irish Government needs to coordinate its responses to the crisis with the governments of the other so-called PIIGS countries in the Eurozone – Portugal, Italy, Greece and Spain – and resist the Franco-German dictation now taking place. This depends on Messrs Kenny and Gilmore overcoming the decades-old habits of Irish deference and political kow-towing to the EU and our EU “partners”. It needs them to show some political backbone and willingness to stand up for Irish interests. Up to now Irish policy is to keep as far apart from the other PIIGS countries as possible. This is in line with the Iveagh House people’s policy of always seeing Ireland as being the “good boy” in the EU class, happy as long as it receives pats on the head for good behaviour from Franco-Germany!