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Democrat January-February 2012 (Number 127)

New European Fiscal Pact is a Treaty that won’t solve the eurozone crisis

Another Treaty won’t solve the eurozone crisis. The European Fiscal Pact is the new political device for the eurozone being patched together by the Merkel- Sarkozy duo. The guts of this new treaty, will be the European Stability Mechanism (ESM) already agreed*. This new device is due to be finalised by 24 January and signed in March.

The Euro-federalists are in a hurry to take full advantage of the eurozone crisis and prop up capitalism and the EU. The immediate objective is to get as many as possible of all EU Member States to sign the new Pact before it is put in place on 1 January 2013 and after 12 eurozone Member States have signed up. This conveniently avoids unanimity and sidesteps any eurozone Member State which has governmental or parliamentary difficulties in signing. Referendums may have to be held in several eurozone and other Member States. Ireland is due to have a referendum and the Czech President has stated he will not sign the Treaty.

Britain has to date declined to sign up to the Pact. In a deliberately confusing statement around the infamous “veto”, Government ministers have said that to use EU institutions for eurozone purposes is “out of order”. However, the new Treaty "constitutes a special agreement between the Contracting Parties within the meaning of Article 273 of Treaty of the  ... European Union".  Article 273 states a dispute can be submitted to the European Court of Justice under a “special agreement between parties” which just happens to fit the Fiscal Pact.

Any contracting party involved with the Fiscal Pact can refer another contracting party they feel has infringed the Pact’s rules to the European Court of Justice (ECJ). In practice that means any EU institution or Member State can take action against any other including Commission reports of misdemeanours.

In other words the use of the ECJ, although limited, can be used for eurozone business. This rubbishes the “veto”. A function of the veto is to prevent legislation being put in place. Nothing has been stopped especially as Britain is attending the talks as an ‘observer’ and has made no public objection. The ConDem Government’s objective is to protect the City as a world financial centre, the banks involved and to go along with the Merkel-Sarkozy eurozone plan in full support of a two tier EU.

The Fiscal Pact is to reinforce the already rigorous rules of the EU’s Stability and Growth  Pact which has limits on public sector spending and government borrowing. Additional conditions  to be added include an even more impractical 0.5% excess deficit above GDP. The current 5% limit has been broken by nearly all EU Member States. Fines are to be imposed if this limit is broken and paid to the European Stability Mechanism fund. Fining somebody because of debt just makes things worse and of course has to be paid by yet more austerity or by taking out yet another loan.

Under successive governments Britain has carried out the Stability and Growth Pact rules which are behind privatisation and attacks on the public sector. This is the condition for being in the penultimate stage of joining the eurozone and leaves only a small step for Britain to sign up to the Fiscal Pact. Consolidation of the Fiscal Pact is a test for Cameron’s public stance on his so-called veto. Will the British Government go along with all the proposals in using the EU institutions? If not, what will the Government do?

It should be carefully noted that deputy prime minister Clegg has stated he expects this Pact to be folded into the current EU treaties and be applicable then to all 28 EU Member States including Britain. The Lib-Dem position clearly indicates the display of a split which persists in the Con-Dem government over the EU is for public consumption. In addition there are grandee Tories who want Britain to join the eurozone for the benefit of the financial and transnational corporation interests they represent.

The very last article of the Pact states: “Within five years at most following the entry into force of this Treaty...the necessary steps shall be taken...with the aim of incorporating the substance of this Treaty into the legal framework of the European Union.” In other words this is Con-Dem Clegg’s folding the new Treaty into the EU.

Even if this European Fiscal Pact runs through the gauntlet of problems thrown up by national interests, the eurozone crisis will remain unresolved. Unless of course the objective is to form an inner tier of 17 different Nation-States who are kicked screaming and impoverished into a single State. Any currency must have the support of a State. The euro is the only currency world-wide that does not have a State.

The eurozone monetary union is unstable: there is no common taxation system, common language or history and there is no eurozone or EU people. A taxation system within a democratic Nation-State has support from the people who give solidarity and legitimacy for the payment of taxes to transfer monies from rich to poor areas and people. This legitimacy is non-existent in the eurozone and wider EU and why it is impossible to establish a eurozone fiscal union to keep the euro.

The revenue and expenditure to run a Nation-State requires around 30% of GDP. Currently the EU has just 1% of GDP. It is pie in the sky for the Euro-federalists to kid themselves that the peoples in the eurozone are going to let themselves be taxed by a common eurozone-federalist government. However, despite all the misery, deprivation and austerity endured by millions of people, that remains the objective of the governments of Germany and France using the Fiscal Treaty and the European Stability Mechanism.

We have now entered a period where a stand must be taken to expose and oppose the disastrous implications of this new EU Treaty and prevent Britain being ensnared. Better still would be for Britain to withdraw from the EU altogether in a planned manner to re-establish fully the right to self-determination, independence and all forms of democracy. That stand must be taken led by the labour and trade union movement and would be an act of solidarity with those labour movements and peoples of Greece, Ireland, Italy, Portugal and Spain opposing the IMF and EU imposed draconian austerity programmes.
See press statement of People's Movement of Ireland