ICTU’s Macdara Doyle argues that Europe was wrong in thinking that the debt crisis was contained in peripheral countries and that a European-wide solution is needed, rather than unpayable bailouts.
As the deepening debt crisis confirms, Europe is currently suffering from a contagion that is rooted in its banking sector and for which the citizens of Europe have been handed the bill.
Some would prefer it was otherwise, not least the ideologues of the right who are using the crisis to attack and downgrade public services – thereby creating more opportunities for private companies – and roll back protections won by working people over many years.
The ongoing battle over joint labour committees is but the latest manifestation of this assault. How far this Government has bought into that campaign – to which the previous administration was fully subscribed – will be revealed when the details of the proposed legislation on JLCs are published.
Earlier this summer, Congress General Secretary David Begg participated in the Brussels Economic Forum, an annual gathering organised by the EU Commission’s Economic and Financial Affairs Directorate.
If nothing else, the forum provides a prime opportunity to hear first hand and unmediated the thinking that informs policymaking in Brussels and Strasbourg. The keynote address at the 2011 forum was delivered by Dr Wolfgang Schauble, the German Finance Minister.
Mr Begg has described Dr Schauble’s address as “chilling”, from an Irish perspective. Schauble insisted that there was no crisis in the eurozone, rather there simply were problems in some peripheral economies, Ireland included.
And his concept of solidarity was to ensure that the problems were ‘contained’ in those countries and that the contagion was prevented from spreading.
In other words, he saw the ‘bailout’ programmes for Portugal, Greece and Ireland as no less than a form of financial quarantine designed not to solve the problem and restore health to those afflicted, but simply to prevent bigger economies becoming infected.
There can be little doubt but that this view, which was prevalent in Brussels and Strasbourg before the outbreak of contagion in Spain and Italy, proved Dr Schauble so spectacularly and so seriously wrong.
Indeed the misdiagnosis of the problem – mistaking an EU-wide problem for local difficulties specific to some smaller economies – and the fact that it was prevalent at a senior EU level has almost certainly contributed to the gradual worsening of the crisis over recent months.
A failure to recognise the true nature of the problem has seen the wrong options consistently chosen and serious errors made.
As events in both Madrid and Rome have since demonstrated, the crisis requires greater solidarity, not the isolation of anyone who displays symptoms. That is why the bailout programmes will not work.
Instead, recognition that we are in the throes of an EU debt crisis should result in a Europe-wide solution, the ‘Europeanisation’ of the debt, so to speak. In that context, the concept of eurobonds – as formulated by Professor Paul De Grauwe of Leuven University – appears to be the most viable option at the moment.
Equally, the idea that a small economy of 1.8 million people can or should repay debts of perhaps €250 billion is laughable. It is doubly so in relation to that portion of our debt that was run up by private banks.
Respected financial commentators suggest that Ireland may need to see up to 50 per cent of its debt written off, in the context of a wider EU rescue plan. Thus far, that level of realism and honesty has been absent from the debate.
And the same could be said of the official insistence that we must adhere to an unworkable austerity plan, particularly when Ireland has already undergone one of the harshest financial adjustments in post-war European history.
Already some €20.6 billion has been extracted from the economy with a further €3.6 billion projected for the coming budget.
Yet the results to date have been dismal: a collapse in domestic demand of some 25 per cent, with retail sales falling for 37 consecutive months and the highest numbers out of work in our history.
That is not a sign of success, in any language.