The Fiscal Treaty Files: The OR ELSE Defence

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Colm McCarthy was quick out of the traps with an opinion piece on the Fiscal Treaty.  And what does he make of it?

‘As an exercise in addressing the Eurozone’s twin banking and sovereign debt crises, the fiscal compact makes no worthwhile contribution.’

Wow, no worthwhile contribution (read: no contribution at all).

‘ . . . the treaty instead addresses a non-problem.’

A non-problem?  But what about the new structural deficit targets we will have to adhere to?  Won’t that help us back to recovery and fiscal stability?

‘The measurement of structural deficits is more or less impossible and the inclusion of an un-measurable concept in an international treaty is a reckless piece of drafting.’

Reckless!  Wow, again.

‘Macro-economic experts have concluded that it is essentially an evasion, designed to provide political cover, particularly in Germany . . .’

This is getting really interesting – an evasion, mere political cover.

‘If the new treaty had been in place since the euro’s launch in 1999, would it have prevented the crisis? Will the new treaty prevent a second crisis, assuming the common currency survives this one?  The answer in both cases is no . . ‘

Colm goes on to claim that this a ‘bad treaty for Europe’, it is inadequate, that our European partners ‘behaved in bad faith’, and that ‘the current generation of European leaders are in denial about the genesis of the crisis . . ‘.

Well, Colm has convinced me – this Treaty is really not a good idea at all.

So should we expect to see Colm chairing the launch of the No Campaign to the Fiscal Treaty?  Well, here’s the funny thing.  Colm, after making a convincing case against the Treaty, recommends that we . . . vote for the Treaty.

‘ . . .  the electorate would be well-advised to swallow hard and vote yes . . .’


‘There are treaty provisions which could be interpreted as restricting access to the EU’s permanent bailout fund to countries which adopt the treaty . . . there is no percentage in running the risk of losing support from official lenders, even if that might not be needed . . . Moreover, a rejection of the treaty would antagonise the ECB . . ‘

So there you have it – the ‘Or Else’ defence.  Essentially, supporters of a yes vote cannot argue the merits of the treaty because, as Colm has so expertly shown, there are no merits.  When considered in its own right, the Fiscal Treaty cannot stand up – either for Ireland or the Eurozone.

The only defence that supporters of the Yes campaign can advance is ‘we either vote for the treaty OR ELSE‘.  OR ELSE can mean anything – angering up the ECB, being locked out of the EU’s permanent bail-out fund, annoying partners who have acted ‘in bad faith’, ‘getting kicked out of the Eurozone, the EU, the Federation, etc.

Colm has done the opponents of the Fiscal Treaty a useful service.  He has shown that there is no positive reason to vote for the Treaty.   Indeed, there is no concrete reason at all to vote Yes.  The debate has barely begun and the supporters of the Treaty have conceded considerable and valuable ground.

There is only one reason to vote for the Treaty – a hypothetical OR ELSE.  I will return to analyse this hypothetical.  But in the meantime, thank you Colm – you have provided some of the best arguments for voting No so far in the campaign.

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