Have the Irish seized their last chance to fight back from the fracturing euro?

Have the Irish seized their last chance to fight back from the fracturing euro?

By Simon Heffer

PUBLISHED: 18:12 EST, 31 May 2012 | UPDATED: 03:17 EST, 1 June 2012

Debt-ridden Ireland went to the polls yesterday as it faces its biggest crisis for at least a generation.

SIMON HEFFER asks, will a country that spent the best part of a millennium trying to break from British shackles today accept a European Union fiscal treaty that will force them to adopt more of the same from Brussels?

You do not have to go all the way to Greece to witness an economy devastated and a people demoralised by the European dream: a short hop across the Irish Sea, to the fair city of Dublin, will show you the same thing far closer to home, and in a language we can all understand.

The Irish spent 800 years trying to shake off the English yoke. Barely 50 years after doing so, they chose to accept another one, from Brussels. A decade ago, they made the worse mistake of joining its German-driven single currency, which bore no relation to the fundamentals of the Irish economy, and so distorted it by offering a stream of cheap money for use by foolish speculators.

Crunch: Taoiseach Enda Kenny and his wife Fionnuala vote yesterday in Castlebar, Co. Mayo as Ireland considers the biggest issue for a generation

Big issue: Carmelite nuns cast their votes on the European Fiscal Treaty Referendum at a polling station in north Dublin which will dictate whether Ireland will accept a strict financial diktat from Brussels

As a result, Ireland almost went broke four years ago, after the debt-fuelled boom that won it the now embarrassing sobriquet of the Celtic Tiger. Like many such beasts, it is now well and truly stuffed â€" or flat on the floor and being walked all over.

Since the crash of 2008, when the Government had to save the country’s banks from imminent collapse, things have only got worse. As with Greece, the route to recovery â€" devaluation and orderly default on debts â€" was barred.

Ireland is a country on the brink. Today, we shall learn whether the Irish have voted to ratify the European Union fiscal treaty, which imposes stringent new guidelines on members of the eurozone, in an attempt to bolster the dying currency.

Twice in the past decade, Ireland has rejected EU treaties, only to un-reject them in a second referendum in the face of blackmail from Brussels. Huge amounts of EU money have poured into Ireland, and no one wants that to stop.

Vote: About 3.1 million people have the right to vote in the only referendum being held across the EU on the controversial agreement to impose stricter budget controls

All smiles: The nuns have their say but Ireland is gripped by severe financial problems

Big day: Millions had a chance to vote but disenfranchised people may have shunned the chance, experts say

Unusually, Brussels appears to have made only half-hearted attempts to exert the blackmail this time.

They haven’t needed to: most of the Irish political establishment have urged the Irish citizenry to accept the treaty.

Decisions: Taoiseach Enda Kenny arrives with his wife Fionnuala at a school to vote in the European Fiscal Treaty referendum

The Prime Minister, Enda Kenny, has warned that the country’s credit rating could slip if there is a No vote. Why this should worry a people already so punch drunk with the blows of austerity that they could barely care less is an interesting point.

You might argue that it hardly matters whether Ireland endorses the treaty or not. The economy is so shattered already that the terms of the treaty are effectively already in force, as a condition of the EU bailout in 2010.

Also, the EU has announced it will proceed with the treaty whether Ireland ratifies it or not, provided a dozen other countries do ratify. There is no longer even a pretence of democracy in the face of continent-wide economic meltdown: Britain and the Czech Republic, which refused to sign in  December, have already been  discounted, and the normal rules of unanimity scrapped.

Of course, the irony is that the progress of the fiscal treaty will make no difference to the survival prospects of the euro. All that can save the single currency is a full political and economic union in which every country has the same tax and spending policies, and mutualised debt.

The Germans, as the only seriously credit-worthy country in the euro, would have to underwrite it.

That would effectively mean the creation of the Fourth Reich.

Big issue: Sinn FÈin's Gerry Adams votes at Doolargy National School in Ravendale, Dundalk

Why are the Irish politicians, sunk in austerity and sinking further, and with even fewer signs of growth than Britain, still endorsing this fantasy? It is almost as if they have a sort of economic Stockholm Syndrome, and have fallen in love with their abusive captors in the European Central Bank and in Brussels.

To stroll around Dublin now evokes memories of the serious economic hardship there in the 1980s, when the deeply corrupt Charlie Haughey and the unworldly Garret FitzGerald fought over who would run Western Europe’s only extant banana republic.

All the economic swagger of the Celtic Tiger of a decade ago has entirely evaporated. Property prices are in the tank. Where there used to be shops selling high-value goods, there are now fast-food outlets, purveying cheap and cheerful gut-busting muck to the unfortunate locals.

Choice: The Irish people have been faced with a unique decision. If they say 'No' then the effects will be felt far wider than Ireland

Beggars are everywhere â€" and, ironically, given the European dream to which Ireland so completely subscribed, many appear to be Romanian. Whole families, whether from Dublin’s sink estates or the Balkans, go around St Stephen’s Green and Grafton Street holding out begging bowls.

Hotels and restaurants have that on-the-turn feel. Many passers-by in the city’s streets are shabbily dressed. The oppressive air of poverty is all around.

Ireland is drowning in debt. When the collapse came, in 2008, household debt was 93 per cent of income. It is now 220 per cent. The unfinished, decaying housing estates around the Republic â€"  new homes whose potential purchasers ran out of jobs and money three or four years ago â€" relate another chapter of this economic disaster.

Many Irish have assets, such as land or property, but with every day that passes they decrease further in value, whereas the debts incurred to buy them do not.

Desperate: Beggars have packed the streets, many of whom appear to be Romanian

There is worse evidence still of the demoralisation and ruin of the country. An Irish economist wrote this week that retailers are desperately cutting prices to try to drum up trade, but this has had the reverse of the normal effect by driving demand down.

The minute people see prices falling they hold off making a purchase, in the usually justified belief that they will fall yet further.

Without selling more of their goods, the Irish cannot recover. Britain remains the country’s second biggest export market after the U.S., but until the recent devaluation of the euro relative to sterling, Irish goods were prohibitively expensive â€" and are still not cheap. Unemployment in Ireland, meanwhile, has trebled in four years. Among young people it is 29 per cent.

The country strains to afford its social security system, its generosity unsustainable given the state of its economy.

There is growing resentment at the number of fore igners, notably from Eastern Europe, who have come to enjoy its comforts.

None of this would change as a result of signing the fiscal treaty, because there is nothing in the treaty to stimulate growth. Ireland is condemned to years more austerity, and years more decline, so long as it stays in the euro. As in the 1980s, bright young people are heading for the exit. There are few decent prospects for them.

Hope: Enda Kenny high fives young Cillian Malanaphy after casting his vote in the poll that is said to be incredibly tight

Should a No vote be announced later today, it will have an effect beyond Ireland.

As with the Greek rejection of austerity a month ago, it would be a statement by the people to their rulers that they understand the realities of life, even if the euro-obsessed political class does not.
In previously rejecting the treaties of Nice and Lisbon, the Irish briefly offered some leadership to Europe, until they bowed to blackmail and changed their minds.

This referendum was another chance to show the rest of Europe the way, and make it clear that Ireland believes the economy-killing euro cannot survive.

In remote County Monaghan, businesses have already gone back to the punt, the currency abandoned in 2002 when Ireland joined the euro. The experiment has been a great success.

It anticipates the inevitable. If Ireland raises two fingers to the political class that has betrayed it, and votes No, it would be the start of its natio nal salvation. If it votes Yes, it must prepare for things to become even worse.

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