Tackling the EU Empire: basic critical facts on EU/Eurozone – a handbook for European Democrats

TACKLING THE EU EMPIRE    

Basic critical facts on the EU/Eurozone

handbook for Europe’s democrats, whether politically Left, Right or Centre                

“Sometimes I like to compare the EU as a creation to the organization of empire. We have the dimension of empire.”   –  EU Commission President Jose Manuel Barroso, 2007

Readers are invited to use or adapt this document in whole or in part for their own purposes, including changing its title if desired, and to circulate it to others without any need of reference to or acknowledgement of its source.

Contents

  • The EU’s myth of origin
  • EU ideology: supranationalism v. internationalism
  • A spin-off of the Cold War
  • The euro as a response to German reunification
  • The intoxication of Big Powerdom
  • EU expansion from six to 28; “Brexit”
  • The economic basis of the EU
  • The succession of EU treaties: the 1957 Treaty ofRome
  • The 1987 Single European Act (SEA)
  • The 1992 Maastricht Treaty on European Union
  • The 1998 Amsterdam Treaty
  • The 2001 Nice Treaty
  • The 2009 Lisbon Treaty: the EU’s Constitution
  • EU Powers and National Powers
  • The “doctrine of the occupied field”; Subsidiarity
  • More voting power for the Big States under the Lisbon Treaty
  • How the EU is run: the Brussels Commission
  • The Council of Ministers
  • The European Council
  • The European Parliament
  • The Court of Justice (ECJ) as a Constitution-maker
  • The EU Charter of Fundamental Rights
  • The extent of EU laws
  • Is Another Europe, a Social Europe, possible?
  • How the EU is financed
  • Why national politicians surrender powers to the EU
  • The EU’s assault on national democracy
  • EU Justice, “Home Affairs” and Crime; Migration, Schengen
  • The Common Foreign and Security policy: EU militarization
  • The euro: from EU to Eurozone federalism
  • The euro, the bank crisis and the sovereign debt crisis
  • Two treaties for the Eurozone: The Fiscal Compact and the ESM Treaty
  • No European people or demos to provide a basis for an EU democracy
  • How the Eurozone prevents the “PIIGS” countries overcoming the economic crisis
  • The benefits of restoring national currencies
  • Contrast Iceland
  • Tackling the EU Leviathan
  • Democrats on Centre, Left and Right for national independence and democracy
  • Conclusion: Europe’s Future
  • Ireland’s EU membership
  • Abolishing the punt and adopting the euro
  • Ireland’s experience of an independent currency 1993-1999
  • The 2008 bank guarantee and the 2010 Eurozone bailout
  • Reestablishing an independent Irish currency
  • Some political consequences of Ireland’s EU membership
  • An independent democratic future
  • Useful sources of information on the EU
  • Reference Notes
  • An invitation

 

THE EU’S MYTH OF ORIGIN:  All States and aspiring States have their “myth of origin” – that is, a story, true or false, of how they came into being. The myth of origin of the European Union is that it is essentially a peace project to prevent wars between Germany and France, as if a collective tendency to go to war were somehow genetically inherited.  In reality the EU’s origins lie in war preparations – at the start of the Cold War which followed the end of World War 2 and the possibility of that developing into a “hot war”, a real military conflict between the two victorious post-war superpowers, the USA and USSR.

Tuilleadh

The Crisis of the Euro: “Apart from that, Mrs Lincoln, did you enjoy the play?”

“The member states whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionality.”
– Amendment to Article 136 of the EU Treaties (TFEU) which was decided on by the 27 EU Member States at the March European Council summit and which licensed the 17 Eurozone States to sign the European Stability Mechanism Treaty on yesterday week, 11 July.
This ESM Treaty would establish a permanent EU bailout fund from 2013. The ESM Treaty and the Art.136 EU Treaty amendment which authorises it now go around for ratification by the Member States. The Government has decided not to put it to referendum here even though it means more power to the EU. The ESM Treaty can be downloaded from the internet.

The Irish Coalition Government, supported by Fianna Fail, intends in the autumn to get the Oireachtas to approve the decision to make the above amendment to the EU Treaties and then to ratify the consequential ESM Treaty for the 17 Eurozone countries.

They do not intend to hold a constitutional referendum, even though the wording of the Art.136 TFEU amendment and the ESM Treaty that derives from it would formally subordinate Ireland’s interests to those of “the stability of the euro area as a whole” … Even though there are no Treaty limits laid down as regards the “strict conditionality” which can be imposed on recipients of financial bailouts from the permanent ESM Fund envisaged … And even though Ireland will be required to contribute some €11 billion in paid-up and callable capital and guarantees once this Fund is set up in 2013.

The Irish Government thereby hopes to circumvent the 1987 Crotty judgement of the Supreme Court that new EU Treaties which extend the scope and powers of the EU and entail further surrenders of Irish sovereignty to Brussels/Frankfort, can only be made if the Irish people agree to them in a constitutional referendum. It is only the sovereign people themselves can decide on further significant surrenders of sovereignty to the EU – not our politicians or our TDs and Senators.

On 12 July Irish Finance Minister Michael Noonan said on RTE that were it not for Spain and Italy he would have been “euphoric” about what happened at the meeting of EU Finance Ministers the day before, when they spoke about the possibility of lowering the penal 6% interest rate being charged for the giant EU/IMF loan that was pushed on Dublin last November.

That was a bit like saying “Apart from that, Mrs Lincoln, did you enjoy the play?” The reason Minister Noonan was (almost) euphoric was because (as he said) the euro crisis is no longer about Ireland, Greece or Portugal but about core Europe.

The ultra-Europhiles in Ireland’s Establishment do not care what happens to Ireland, the euro or the EU, as long as they are not blamed.

The lack of self-confidence on the part of Ireland’s “Federalistas” is astonishing.

The powers-that-be bang on about the loss of Irish “economic sovereignty”, but they all want to have the euro debt federalized so that they can brandish an interest rate reduction on the current EU/IMF loan as a superlative political achievement.

Federalizing the debt means the end of the State’s 12.5% Corporation Profits Tax, which is crucial for attracting foreign investment in the Irish economy, and a lot more besides, as Berlin takes over permanently Ireland’s detailed budget decision-taking under the permanent EMS Treaty.

The Irish State is caught between a rock and a hard place, so far as Ireland’s “Federalistas” are concerned. It is bye-bye euro or bye-bye to what is left of Irish sovereignty.

On 16 July the Irish Times called for an EU fiscal and political union in its lead editorial. “This has always been the project’s ultimate end-point,” it stated.

But there was no mention of that being the “ultimate end-point” as Ireland’s paper of record championed passionately and uncritically every step of EU integration down the decades.

What a catastrophe the Eurofanaticism of Ireland’s “Federalistas” has brought down upon the Irish people:

* Pushing us in 1999 to join a monetary union with an area with which we did only one-third of our trade…

* Leading us to adopt totally unsuitable low interest rates in the early 2000s because these suited Germany at the time, so making our “Celtic Tiger” boom “boomier”, as Bertie Ahern put it, and inflating the property bubble…

* And since 2008 turning us into debt peons of the European Central Bank, whose Jean-Claude Trichet told Messrs Cowen and Lenihan at the time of the infamous blanket bank guarantee of 29 September 2008 that Anglo-Irish Bank must on no account be let go bust and that the foreign creditors/bondholders of the Irish banks must be paid every cent in full.

Which EU country had the highest economic growth rate last year? It was Sweden, at 5.5% . . . In the EU but happily outside the Eurozone. Its people sensibly rejected Eurozone membership in 2003 in a referendum vote of 56% to 44%, even though most of that country’s politicians supported abolishing the Swedish kroner at the time.

Angela Merkel now has to find a way of telling her own people that Germany is about to achieve the ambitions for which they fought and lost two World Wars, but that it will cost them money.

She also has to find a way of saying that without the rest of us noticing! And the other Heads of Government have to find a way of telling their electorates that the price of a continuing Eurozone of 17 is permanent German hegemony plus an austerity economic regime with all that that entails.

The only longterm solution of the current crisis is either federalizing the euro sovereign debt or the break-up of the Eurozone of 17. There are now likely to be moves to try to federalize some of the debts. There will be developments pointing to Trichet’s hoped-for EU Finance Ministry and much else besides, but one wishes that the proponents of the EU developing into a United States of Europe would ask themselves what happens after that. Such a logical end-point of the “great EU integration project” would not be the end of European history.

* Do the Euro-federalists really think that the many peoples of the EU would submit to effective German-French economic rule for the indefinite future?

* Do they really believe that they can institute a European democracy without a European “demos”? …

* Or that the latter can somehow be artificially created? …

* Or that people will submit indefinitely to administration by Brussels-Frankfurt technocrats, fronting for Berlin, no matter how benevolent these regard their own intentions?

These quite unrealistic assumptions have been subscribed to by the EU integrationists from the start. These people are now being exposed for the arrogant blunderers and fantasists they are, but millions are suffering terribly, and will suffer further, as they seek to impose ever more austerity on the PIIGS countries in the hope of saving their grand euro-currency “project”.

History has many examples of failed currency unions even though they were also fiscal and political unions.

The Irish State left the British monetary union after a century of membership. An independent Irish currency was seen by successive generations of Irish nationalists as an indispensable part of an independent Irish State.

Where now is the USSR rouble, the Yugoslav dinar, the Czechoslovak crown or the Austro-Hungarian thaler – all currencies of multinational federations that were monetary, fiscal and political unions for three-quarters of a century or longer, and all now vanished into history along with their creators?

Europe is a Europe of the Nations and the States or it is nothing, as Charles De Gaulle once said. That statement of democratic principle of course is internationalism, not nationalism. We need to adopt it as part of the ABC of political realism in face of the current crisis.

Democrats need to work towards a Europe of independent democratic cooperating Nation States, and abandon the fantasy of turning the EU into a world power under effective Franco-German hegemony, with the elites of small countries like Ireland serving as their well-paid local acolytes.

Anthony Coughlan Director The National Platform EU Research and Information Centre

Ireland after it’s 2011 General Election

Statement from the National Platform EU Research and Information Centre, March 2011

1. FIANNA FÁIL DOWN, FINE GAEL AND LABOUR STILL TO GO

One big party – Fianna Fáil –  that supported Ireland’s blanket Bank bailout, the EU/IMF stitch-up last December,  the 2009 Lisbon Treaty, the 1992 Maastricht Treaty which abolished the Irish púnt,  and every other step towards EU-integration over decades, bit  the dust in the February General Election. We must now wait some time to see the two other big parties that did exactly the same thing, namely Fine Gael and Labour, bite the dust also as they impose on us the savage rigours of the EU-IMF deal over the next few years.  This should open the way for the new political forces that were reflected in the success of the Independent TDs, the trebling  of Sinn Féin’s Dáil representation and the advent of the United Left Alliance, to become the genuine opposition force in Irish politics that is so obviously needed

2. IRISH LABOUR AS THE MUDGUARD OF FINE GAEL

If the Labour Party were really to act in the “national interest” which it prates so much about and in accordance with the programme it sought the votes of the people on, its leaders would let Fine Gael form a government on its own, with Fianna Fail and other support from outside.  Fianna Fail would not dare to vote against a Fine Gael minority government for several years, so that such a government would be quite stable.   Instead, as Sean O’Casey said of Labour at the time of the first Fine Gael-Labour Coalition of 1948-51: “Their posteriors are aching for the velvet seats of office.” Instead of Labour being the largest element in opposing the Fine Gael/Fianna Fail implementation of the EU/IMF stitch-up, Messrs Gilmore, Rabbitte, Quin and Howlin and Joan Burton have assumed Irish Labour’s traditional role of “mudguard of Fine Gael rather than advance-guard of the workingclass”!  It used be said that Labour struggles with its conscience, and Labour always wins. . . Except that on this occasion a handful of ageing Labour leaders were so desperate to get into office for their own benefit that there was not even the pretence of such a struggle.

Since 1948 Labour’s role in Irish politics has been periodically to revive Fine Gael from near terminal decline by putting it into office, simultaneously enabling Fianna Fail with virtually identical policies to revive itself in opposition. Thus the Irish Establishment could afford the luxury of having two big parties to champion its interests rather than one. Labour Ministers got big jobs, good salaries and pensions for their services, while the Labour Party was decimated in the subsequent election. This has happened on four occasions since 1951. The difference on this occasion is that Fianna Fail’s electoral defeat has been so great that it may not be able to recover in opposition. There is no real objective social basis for its continuance as a political party, now that the impact of the financial crisis and the huge increase in its vote has enabled Fine Gael to morph into becoming Ireland’s “natural” conservative party.

Whether this will actually happen depends on the non-Fianna Fail forces on the Opposition benches working together in the period ahead to make themselves into a cohesive, credible and radical opposition, cooperating  with one another at least on fundamentals.  It is inevitable that there will be a major reaction against Fine Gael and its Labour junior partner in the next general election, as they spend years as the local administrators of German-sponsored EU-IMF austerity.  The next election may also come about much sooner than five years because of the continuing national and international financial crisis.

3. THE EUROZONE FRAMEWORK OF IRELAND’S ECONOMIC CRISIS

The Irish State’s economic crisis stems fundamentally from its folly in joining the Eurozone in the first place in 1999, impelled by the longstanding uncritical Europhilia of the Fianna Fail, Fine Gael and Labour parties and others. By abolishing the national currency at that time, Ireland adopted the currency of an area with which it did only one-third of its trade (i.e. exports and imports combined).  Another third of its trade was with the UK and the other third with the USA and the rest of the world.  Last year two-thirds of the Irish State’s foreign trade was still outside the Eurozone!  Moreover, joining the Eurozone led Ireland to adopt negative real interest rates at the height of the “Celtic Tiger” boom and thereby inflated the property bubble which has now burst, leaving both  the State and its State-guaranteed banks objectively insolvent.

The 10 EU Member States outside the Eurozone  – Denmark, Sweden, Britain, Poland, the Czech Republic etc.- have nothing like the Irish State’s problems. These EU Member States are thanking their stars these days that they avoided the course of folly that Ireland’s political elite pushed its people on to. A little thought will show one that abolishing the púnt was by far the worst decision ever taken by an Irish Government. It was far worse than the 2008 blanket Bank guarantee by Taoiseach Cowen and Finance Minister Lenihan, for if the Republic had not joined the Eurozone in the first place, there would have been no need for that guarantee.  It was the European Central Bank which insisted that it be given:  namely, that no Irish bank must be allowed to fail in case the German-French banks from which the Irish banks had borrowed, would not be paid back.

If we had stayed outside the Eurozone there would have been no ECB to bother us.  The Eurofanaticism which led Fianna Fáil, Fine Gael and Labour to push through the Maastricht Treaty and push us into the Eurozone initially has been the most outstanding historical delinquency of Ireland’s political Establishment. Yet deference to the EU is so ingrained in 26-County official and media opinion that many who should know better are too timid even today to recognize and draw attention to these obvious points.

There are calls for a public enquiry into the infamous blanket bank guarantee of September 2008 and why it was continued last September. More relevant and useful would be an enquiry into the folly that led the Irish State to join the Eurozone in the first place, from which the financial collapse and the bank guarantee have both stemmed.

4. SACRIFICING IRELAND’S CHILDREN TO HOLD THE EUROZONE TOGETHER : THE 24 MARCH EUROPEAN COUNCIL MEETING

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!

5. HOLDING THE ECB TO RANSOM

The ECB has lent the Irish Banks some €150 billion. If the Irish banks all closed tomorrow morning, the ECB would not get its €150 billion back because that money is now in the system in Ireland. The ECB knows that Ireland’s banks have not got the money to pay it this vast sum. From the ECB’s point of view its best plan to recover the money it advanced to cover the reckless lending of the banks is to shift the burden of repayment on to the Irish taxpayers. Therefore the political and media suggestion that the ECB will close down the ATM machines so there will be no money in the system, is so much scaremongering to intimidate the public into agreeing to take on these debts it is not responsible for. The central issue at present is that the ECB wants the Irish State and taxpayers to take on the burden of paying this €150 billion back to the ECB as rapidly as possible, so that instead of the Irish Banks owing the ECB this vast sum of money, the Irish State/taxpayers will do so and will pay it back over years by flogging off the Banks themselves to foreign owners, selling off the NAMA loans at knockdown prices, privatizing State assets systematically and screwing Irish taxpayers for this purpose.

This is essentially what the EU/IMF Memorandum of Understanding commits the Irish Government to doing.  The Irish public needs to be warned that what its political leaders are planning is a massive fire-sale to foreigners of the recapitalized Irish Banks and State assets generally – the NAMA loans, Coillte, An Post, the ESB, Bord Gais etc. and Ireland’s natural resources, so that we can pay back the money the ECB is putting in  the Irish Banks, essentially in order to ensure that private banks in Germany, France and Britain do not suffer losses on their Irish operations. Until this fire-sale is completed, the ECB depends on us and we can in effect hold it to ransom.  Hence the new Irish Government should be in no hurry to comply with the ECB’s wishes.  It should act in accordance with the old truism: If you owe the Bank a million you are in trouble, but if you owe it a hundred million it is the Bank that is in trouble!  The ECB stood irresponsibly by while the German, French and British banks punted huge sums on the Irish property market for years and made big profits thereby.  As the Eurozone’s lender of last resort the ECB should now pick up the tab.  The Irish State needs to repudiate the horrendous private Bank debts that it has so foolishly guaranteed, if it is to be able to repay its legitimate sovereign debts and return to the international bond markets at an early date in order to borrow at reasonable interest rates.

6.  MONETARY UNIONS, FISCAL UNIONS, POLITICAL UNIONS

One cannot have an independent State unless it has its own currency, and with that control of either its interest rate or exchange rate policy, for these are fundamental  economic instruments for advancing a people’s welfare.  Those who fought for an Irish Republic historically took for granted that national independence meant that an Irish State would have its own currency and the related economic instruments.  The rate of interest is the internal  “price” of money, so to speak, and the currency exchange rate is its external “price”. A Government cannot control either unless it has a currency of its own in the first place.  That is why former EU Commission President Romano Prodi exulted when the Monetary Union was set up for a minority of EU States in 1999: “The two pillars of the Nation State are the sword and the currency and we have changed that.”

The fundamental problem for the Eurozone and its 17 Governments is that there cannot be a stable, lasting monetary union that is not also a tax and public spending union, and hence a Political Union, so that its component Member States are compensated for loss of their  ability to influence their competitiveness by varying their exchange rate – for they have no independent currencies any longer – by automatic  transfers from richer to poorer States through a common federal-style Eurozone tax and public service system. The latter means a Political Union like the USA, and the dream of building a United States of Europe on similar lines to the US has for decades been a dream/fantasy of the Euro-federalists, of whom there are many in the leadership of the Fine Gael and Labour parties.

A system of common taxes and public services exists within national States, but it does not exist cross-nationally.  It cannot exist cross-nationally because the social solidarity, the sense of community and mutual identification, the sense of being a common political “We”, which is what makes people pay taxes freely and willingly to a common Government because it is “their” Government, does not exist at EU level.  A democracy or democratic State is impossible without a “demos”, a people; and there is no EU or Eurozone “demos”, in contrast to its component Nation States.

This is the fundamental fallacy of the EU integration project, the attempt to turn the EU into a quasi-State, even though already half or more of the legal acts made in each of the 27 EU Member States each year are on average of EU origin. Free trade is one thing, and is normally a good thing.  A common currency, credit and exchange rate policy for very different economies is something totally different. The resistance of German public opinion to financing Greece, Ireland, Portugal etc. in the current  Eurozone crisis is but one small example of this. The solidarity needed for such continual resource transfers between the Member States of the Eurozone to enable it hold together does not and cannot exist. Nor can it be artificially created.

7. REESTABLISHING IRELAND’S NATIONAL CURRENCY

The advantage of a country having its own currency is that it enables its Government either to control credit and issue money for purposes of job-stimulus and the like through varying the rate of interest, or to influence its competitiveness with other economies by varying its exchange rate. Governments can set a target for either the interest rate or the exchange rate, but they cannot achieve both targets simultaneously, for each rate affects the other.

In the Eurozone interest rate and exchange rate policy are quite properly decided in the interests of the Big States, for they contain most of the population of the Eurozone. The one-size-fits-all interest rate regime of the European Central Bank (ECB) must always be unsuitable for some Eurozone countries therefore, for the 17 economies concerned differ widely.  Moreover, as the Irish State does nearly two-thirds of its trade outside the Eurozone, whereas all of the 16 other Eurozone members do half or more of their trade with one another, the exchange rate for the euro must normally be unsuitable for Ireland also. This is vividly shown these days as the euro rises vis-a-vis the dollar and pound sterling. This hits Irish exports to the dollar/sterling areas where we do most of our trade and encourages competing imports from those areas.
Having taken the disastrous step of joining the Eurozone in the first place, it would be foolish to pretend that one can get out of it without pain, especially when Irish Governments have agreed to stand over the mess in the State’s private banks and have built up such a deficit in the State’s public finances. However, re-establishing an independent Irish currency and with that its own credit and exchange rate policy has to be a central objective of all genuine Irish democrats, for without that there can be no truly independent Irish State. People should not be afraid to state this, especially as the pain of remaining in the Eurozone is mounting all the time and the historical trends point to continual strains within it and continual crisis as long as it lasts, and its eventual partial or total dissolution is inevitable.

The threat of repudiating the private bank debt now moved to the ECB  and of reestablishing the Irish pound is the principal lever/weapon the Irish State has vis-à-vis the Eurozone. At present Ireland cannot restore its economic competitiveness by devaluing its currency. It can only become more competitive by “devaluing” – that is, by  cutting –  peoples’ pay, profits and pensions instead for years to come.  The main advantage of leaving the Eurozone and rejoining the 10 EU Member States outside it is that it would enable the Ireland to resume control of its money supply and credit and thereby stimulate domestic demand and employment, while simultaneously it could boost the State’s economic competitiveness by devaluing the exchange rate. The main drawback of this step is that much of the State’s foreign debts would be in euros, if the Eurozone still existed, and would be expensive to pay off in a depreciating currency. On the other hand, the boost to competitiveness and exports arising from having a more suitable exchange rate than the Eurozone one, should enable Ireland earn more foreign currency with which to pay those debts. Temporary exchange controls would also be needed for a transitional period. It is in any case likely that some countries will leave the Eurozone in the next few years, if the Eurozone as a whole succeeds in holding together at all.

If the Eurozone breaks up, a planned dissolution and a related reapportionment of debts would clearly be better than a disorganized one.  There are many examples of monetary unions that have dissolved and been replaced by national currencies. The Irish State itself left the UK monetary union in 1921, although it maintained an overvalued púnt at par with sterling until 1979.  The USSR rouble was replaced in short order by 15 successor currencies in its 15 successor States in 1991. The Czechoslovak crown and Yugoslav dinar were replaced by successor currencies in the 1990s.  In 1919 the Austro-Hungarian thaler was replaced by the different currencies of its several successor States.

What is happening now is that Ireland, Greece, Portugal etc. and the interests of their peoples are being sacrificed in order to save the Eurozone, whose dissolution would be a blow to the entire integration project of building a European quasi-superstate under Franco-German hegemony to become a big power in the world.  The acolytes of that project in Ireland  – in the leadership of the Fianna Fail, Fine Gael and Labour parties, in Foreign Affairs at Iveagh House, the Dept.of Finance and the Taoiseach’s Department, in the Central Bank, the Irish Times, RTE and the senior echelons of the Irish Congress of Trade Unions  – are desperately afraid that their political life’s work may have been in vain, so  they are quite willing that the welfare of the Irish people be sacrificed to save it. These are perhaps the most fundamental issues that are at stake in the current crisis.

People should remember also that the only period in the 90-years’ history of the Irish State when it used its monetary independence, followed an independent exchange rate policy and effectively floated the currency, from 1993 to 1999, gave us the “Celtic Tiger” rates of economic growth of 8% a year – until that was destroyed by the low-interest-rate-induced bubble of the Eurozone from 2000 onward.

Irish Times: Dominating Role of Larger EU States

The Irish Times – Friday, March 4, 2011 (letters)

Madam, – Dr Garret FitzGerald (Opinion, February 12th) shows concern that moving away from the so-called “community method” of making EU laws towards a more “inter-governmental” approach may open the way to an EU that “for the first time becomes dominated by some larger states”.

This looks like trying to lock the proverbial stable door after the horse inside has bolted.

For decades Dr FitzGerald and those who share his views on the EU have been advancing the quite unrealistic notion that the EU is a radically new form of political life and governance in which the big European states are willing to subordinate their national interests to a larger common EU interest and that it therefore makes sense for smaller states to “pool sovereignty” with them.

In historical reality the EU since its inception has been an arena for the pursuit of the national interests of its member states, above all its bigger ones, France and Germany especially. The big states use the EU to try to dominate the smaller ones if it suits them. If not, they will go outside it or beyond it. Three developments in the past 20 years show this strikingly.

The first was the establishment of the euro currency under the 1992 Maastricht Treaty. The core objective of that was to reconcile France to Germany’s sudden reunification in 1990, using economic means that were quite inappropriate for that purpose.

The current financial crisis shows the euro currency’s structural flaws. It has fundamentally divided the EU between the 17 EU states inside the euro zone that are now suffering the euro’s torments, and the 10 EU states outside it that are not.

The second was the 2001 Nice Treaty which allows an inner group of nine or more EU states to integrate further among themselves and to use the EU institutions to do that, even though the other EU members are opposed. This was a fundamental break with the notion of the EU as a partnership of equals in which no major step would be taken without unanimity. It enables the big states to present the others with unpleasant faits-accomplis. For example it would enable the 17 euro zone members, or a sub-set of them, to adopt a common tax base for assessing corporation profits tax, or a common tax rate if they wish, as could well happen in the coming period.

The third was the Lisbon Treaty of 2009. In power-political terms this treaty’s most important provision is that it puts EU law-making on a primarily population-size basis for the first time – from 2014. This means that in three years’ time Germany’s voting weight in making EU laws on the EU Council of Ministers will be doubled from its present 8 per cent to 17 per cent, France’s, Italy’s and Britain’s vote will go from their present 8 per cent each to 12 per cent each, while Ireland’s will fall from its present 2 per cent to 0.8 per cent. Is not this by any standard a power-grab by the big states?

For decades Irish policy-makers have used rhetoric about “the European ideal”, “our EU partners” and “an EU community of equals” to justify handing over ever-greater tranches of State power and law-making to the EU. A more hard-headed and less self-deluding approach will surely be needed by future Irish governments if we are to get out of our present mess. – Yours, etc,

ANTHONY COUGHLAN,
Director,
The National Platform EU Research and Information Centre,
Crawford Avenue, Dublin 9.
 

The Power-Hungry EU

“We have got a monetary federation. We need quasi-budget federation as well …

We need quasi-federation of the budget.”

European Central Bank President Jean-Claude Trichet, The Guardian, 1-12-2010

“I deeply respect our Irish friends’ independence … but they cannot continue to say ‘come and help us’ while keeping a tax on company profits that is half [that of other countries]. We cannot speak about economic integration without the convergence of fiscal systems.”

French President Nicolas Sarkozy, The Irish Times, 14-1-2011

“We have a shared currency but no real economic or political union. This must change. If we were to achieve this, therein lies the opportunity of the crisis …

And beyond the economic, after the shared currency, we will perhaps dare to take further steps, for example for a European army.”

–  German Chancellor Angela Merkel, Open Europe international press survey, 13 May 2010

“The two pillars of the Nation State are the sword and the currency, and we have changed that.”

EU Commission President Romano Prodi, The Guardian, 1999

Next month, March 2011,  the EU Commission will propose supranational legislation for a uniform system of assessing business taxes in the EU – a Common Consolidated Tax Base.

This proposal for  what are called “destination taxes”  will undermine Ireland’s 12.5% company tax rate. It put on hold in 2008 and 2009 to help get the Lisbon Treaty referendums through in Ireland.

The idea is that firms selling goods in different EU countries would pay corporation tax to those countries’ governments based on the profits on their sales in those countries, and not to the government of the country where the goods were originally made, as happens now.

Countries would continue to decide their own tax rates as at present. This means Ireland could keep its 12.5% Corporation Profits Tax for profits made on sales in Ireland, but not on profits made on sales abroad.  The attraction to foreign investors of Ireland’s low corporation tax regime would be fundamentally subverted by this step, for most of their profits would be taxed in the countries where their goods or services were sold and not in Ireland where they are produced.

This step does not require unanimity amongst all 27 EU States. It can be done  by a sub-group of nine or more Eurozone States under the “enhanced cooperation” provisions of the Treaty of Nice, even though many or most of the other EU Members are against it.  The EU institutions can then be used to  advance further integration by this sub-group. This provision drove the proverbial coach and horses through the notion which some people believed in: namely, that the EU is some kind of “partnership of equals” in which no fundamental change can be made without all 27 Member States agreeing.

In March too the European Council will finalise arrangements for an amendment to the Lisbon/EU Treaties to set up a permanent “Financial Stabilisation Fund” from 2013, to which Ireland would be expected to contribute, without allowing the Irish people to vote on it in a referendum.

The German paper Handeslblatt reports that a “historic” change of EU policy is now under way in Berlin, with Germany no longer opposing Eurozone economic government. The new plan envisages the 17 Eurozone countries being pushed towards “harmonization” of their State Budget policies.  On taxation levels, wages of public officials and retirement ages, Eurozone countries would have to commit to binding common “bandwidths”, with penalties such as fines for any breaches.

The EU/IMF loan – better called a “stitch-up” rather than a “bail-out”! –  that was pushed on the Irish Government by the European Central Bank last November puts Ireland in a weak position to resist these further transfers of power to Brussels and Frankfurt. They underline once more the folly of our joining the Eurozone in 1999, when we could have stayed outside it like 11 of the 27 EU Member States.

It is now clear to all thinking people that joining the Eurozone  was the worst and most irresponsible decision of any Irish Government – ever.

The politicians of the three main parties who pushed that ruinous course upon us are the real perpetrators of “economic treason” in Ireland, of which our emigrating young people, our 400,000 unemployed and our debt-ridden households are the manifest current victims.

N.B. Note that from 2014, just three years time, the Lisbon Treaty/EU Constitution which was also pushed on us by Fianna Fail, Fine Gael and Labour will put EU-law making on a straight population basis, with Germany’s vote on the Council of Ministers doubling from its present 8% to 17%, France’s, Britain’s and Italy’s vote going from their present 8% each to 12% each, and Ireland’s falling from its present 2% to 0.8%.

The proposals mentioned above are but a foretaste of many more EU diktats to come, once Germany, France and the other big EU States obtain this big increase in their EU law-making power.

(11 February 2011)

Lisbon’s Constitutional Revolution by Stealth

EUROFACTS … 30 November 2009

LISBON TREATY COMES INTO FORCE TODAY, TUESDAY

The Lisbon Treaty, which has 99% the same legal effect as the EU Constitution that was rejected by French and Dutch voters in 2005, comes into force on tomorrow, 1 December.

The European Union Act 2009 was published at the end of October. This Act implements the second Lisbon Treaty referendum result by amending the European Communities Act 1972 which has made European law applicable in the State up to now. The new Act makes the laws, acts and measures of the European Union “established by virtue of the Lisbon Treaty” part of the domestic law of the State.

This is a constitutionally different European Union from what we call the European Union at present, which was established by the 1992 Maastricht Treaty, although its name is the same. This post-Lisbon EU replaces the European Community which Ireland joined in 1973 and which made supranational  European laws up to now, and takes over all its powers and institutions. From Tuesday therefore we will all be endowed with an additional citizenship to our Irish citizenship – a real EU citizenship with associated rights and duties, something quite different in its implications to the purely notional or symbolical EU citizenship that we are assumed  to have possessed up to now.

The article below explains the constitutional revolution in the EU and its Member States which has been brought about by the Lisbon Treaty and which will formally culminate on Tuesday.  This is something that scarcely figured in what passed for “debate” on the Lisbon Treaty in our Lisbon Two referendum. The  statutory Referendum Commission completely failed to explain the constitutional significance of Lisbon to Irish citizen-voters, even though that was its prime duty under the  Referendum Act establishing it – something the Government and Yes-side interests must be very grateful for.


PEOPLE’S MOVEMENT PICKET ON DAIL … TUESDAY 1-1.30 P.M.

The People’s Movement, whose chairman is former MEP Patricia McKenna, will protest against the coming into force of the Lisbon Treaty and the undemocratic manner in which it was pushed through, in Ireland and across the EU,  for half an hour outside Dail Eireann in Kildare Street from 1 to 1.30 p.m. today,  Tuesday.    Interested people are invited to come along with appropriate posters, slogans etc.


LADY CATHERINE ASHTON, BARONESS ASHTON OF UPHOLLAND

Baroness Catherine Ashton is the new EU “Foreign Minister” under the Lisbon Treaty – properly titled “The High Representative of the Union for Foreign Affairs and Security Policy”.  The Irish media have so far been remarkably reluctant to give this lady her proper title. The Irish Times refers to her as “Ms Ashton”.  Is it not curious, this reluctance to give a member of the House of Lords, which the Baroness remains, her proper designation?

Baroness Ashton will receive an annual salary of  €350,000 and have a chauffeured car, a housing allowance and a staff of 20. She will have control of the new EU External Action Service, starting with 5000 staff already engaged  on “external relations”, based on EU delegations in 130 countries – and the service is expected to grow rapidly.  Current EU foreign policy boss Javier Solana  has said the service would become “the biggest diplomatic service in the world”. It is estimated to cost some ¤50 billion between now and 2013.

This EU foreign service is not open to democratic scrutiny, is likely to develop a life of its own and come to undermine the foreign policies of EU Member States.

The Sunday Times has noted that staff in overseas EU offices typically work a 4-day week, are entitled to first-class travel to and from their posting, as well as private health insurance and an allowance of up to £1,700 a month to spend on school fees.


EU COMMISSION  TO “LOOK AT” DIRECT EU TAXES

Agence France Presse reports that in a question-time session in the European Parliamen a week ago, European Commission President Jose Barroso said he would look at the idea of raising direct EU taxation.  Asked if he agreed with Herman Van Rompuy, the new EU President, that there should be EU taxes, he said: “I intend to look at all issues of taxation in the EU. We have to look at this, we have to look at all resources of the EU.  We have promised it to the Parliament, the programme with which I was elected was to look at possible ‘own resources’ and this is in the programme that was adopted by this European Parliament.”


EUROPEAN COUNCIL PRESIDENT VAN ROMPUY AN ARCH FEDERALIST

Herman Van Rompuy, 62,  has said that he favoured the Lisbon Treaty as long as it promoted the aim of “more Europe”. He helped to draw up a strongly Euro-federalist manifesto for his Flemish Christian Democrat Party, calling for more EU power. It said: “Apart from the euro, other national symbols need to be replaced by European symbols – licence plates, identity cards, presence of more EU flags, one-time EU sports events.”

Speaking  a fortnight ago at a private dinner organised by EU-federalist members of the Bilderberg Group  at the Chateau de Val-Duchesse, where the EU’s founding Treaty of Rome was negotiated in 1957, Mr Van Rompuy backed plans for “green taxes” to fund the EU. He said: “The possibilities of financial levies at European level must be seriously examined, and for the first time large countries in the Union are open to that.”

Article 311 of the Treaty on the Functioning of the European Union, which governs the means of raising money to finance the EU,  provides under an amendment made by the Lisbon Treaty that the EU Council of Ministers “may establish new categories of own resources or abolish an existing category”,  and the new EU President was referring to that.

Pieter Van Cleppe, of the think-tank Open Europe, commented: “Van Rompuy is your typical EU federalist. He isn’t going to step on anyone’s toes or try to dominate the world like Tony Blair or President Sarkozy might have. But he can be relied upon to quietly make sure that the EU gets more and more powers, with less and less say for voters.”

The new EU President will earn €350,000 a year, taxed at 25 percent, and will have a staff of 22 press officers, assistants and administrators, in addition to 10 security agents.  This is double the salary he had as Belgian Prime Minister and  is significantly more than US President Barack Obama’s salary, which is around $400,000 a year or €269,000. The total cost of the President and his team will be ¤6 million a year.


LISBON’S CONSTITUTIONAL REVOLUTION BY STEALTH

by Anthony Coughlan

With the coming into force of the Lisbon Treaty on Tuesday 1 December, members of the European Parliament, who up to now have been “representatives of the peoples of the States brought together in the Community” (Art.189 TEC),  become “representatives of the Union’s citizens” (Art.14 TEU).

This change in the status of MEPs is but one illustration of the constitutional revolution being brought about by the Lisbon Treaty.

For Lisbon, like the EU Constitution before it, establishes for the first time a European Union which is constitutionally separate from and superior to its Member States, just as the USA is separate from and superior to its 50 constituent states or as Federal Germany is in relation to its Länder.

The 27 EU members thereby lose their character as true sovereign States. Constitutionally, they become more like regional states in a multinational Federation, although they still retain some of the trappings of their former sovereignty. Simultaneously, 500 million Europeans becomes real citizens of the constitutionally new post-Lisbon European Union, with real citizens’ rights and duties with regard to this EU, as compared with the merely notional or symbolical EU citizenship they are assumed to have possessed up to now.

Most Europeans are unaware of these astonishing changes, for two reasons.  One is that, with the exception of the Irish, they have been denied any chance of learning about and debating them in national referendums. The other is that the terms “European Union”, “EU citizen” and “EU citizenship” remain the same before and after Lisbon, although Lisbon changes their constitutional content fundamentally.

The Lisbon Treaty therefore is a constitutional revolution by stealth.

The EU Constitution, which the peoples of France and Holland rejected in 2005, sought to establish a new European Union in the constitutional form of a Federation directly. Its first article stated: “This Constitution establishes the European Union”. That would clearly have been a European Union with a different constitutional basis from the EU that had been set up by the Maastricht Treaty 13 years before.

Lisbon brings a constitutionally new Union into being indirectly rather than directly, by amending the two existing European Treaties instead of replacing them entirely, as the earlier Constitutional Treaty had sought to do. Thus Lisbon states: “The Union shall be founded on the present Treaty” – viz. the Treaty on European Union (TEU) -”and on the Treaty on the Functioning of the Union.” These two Treaties together then become the Constitution of the post-Lisbon European Union. A new Union is in effect being “constituted”, although the word “Constitution” is not used.

What we called the “European Union” pre-Lisbon is the descriptive term for the totality of legal relations between its 27 Member States and their peoples. This encompassed the European Community, which had legal personality, made supranational European laws and had various State-like features, as well as the Member States cooperating together on the basis of retained sovereignty in foreign policy and defence and in crime and justice matters.

Lisbon changes this situation fundamentally by giving the post-Lisbon Union the constitutional form of a true supranational Federation, in other words a State. The EU would still lack some powers of a fully developed Federation, the most obvious one being the power to force its Member States to go to war against their will. It would possess most of the powers of a State however, although it has nothing like the tax and spending levels of its constituent Member States.

Three steps to a federal-style Constitution

Lisbon’s constitutional revolution takes place in three interconnected steps:

Firstly, the Treaty establishes a European Union with legal personality and a fully independent corporate existence in all Union areas for the first time (Arts.1 and 47 TEU). This enables the post-Lisbon Union to function as a State vis-a-vis other States externally, and in relation to its own citizens internally

Secondly, Lisbon abolishes the European Community which goes back to the Treaty of Rome and which makes European laws at present, and transfers the Community’s powers and institutions to the new Union, so that it is the post-Lisbon Union, not the Community, which will make supranational European laws henceforth (Art.1 TEU).  Lisbon also transfers to the EU the “intergovernmental” powers over crime, justice and home affairs, as well as foreign policy and security, which at present are not covered by European law-making, leaving only aspects of the Common Foreign, Security and Defence Policy outside the scope of its supranational powers. The Treaty thereby give a unified constitutional structure to the post-Lisbon Union.

Thirdly, Lisbon then makes 500 million Europeans into real citizens of the new Federal-style Union which the Treaty establishes (Arts.9 TEU and 20 TFEU). Instead  of EU citizenship “complementing” national citizenship,  as under the present Maastricht Treaty-based EU (Art.17 TEC), which makes such citizenship essentially symbolical, Lisbon provides that EU citizenship shall be “additional to” national citizenship.

This is a real dual citizenship – not of two different States, but of two different levels of one State. One can only be a citizen of a State and all States must have citizens. Dual citizenship like that provided for in Lisbon is normal in classical Federations which have been established from the bottom up by constituent states surrendering their sovereignty to a superior federal entity, in contrast to federations that have come into being “top-down”, as it were, as a result of unitary states adopting federal form.  Examples of the former are the USA, 19th Century Germany, Switzerland, Canada, Australia. Lisbon would confer a threefold citizenship on citizens of Federal Germany’s Länder.

Being a citizen means that one must obey the law and give loyalty to the authority of the State one is a citizen of – in the case of classical Federations, of the two state levels, the federal and the regional or provincial. In the post-Lisbon EU the rights and duties attaching to citizenship of the Union will be superior to those attaching to one’s national citizenship in any case of conflict between the two, because of the superiority of Union law over national law and Constitutions (Declaration No 17 concerning Primacy).

The EU will be constitutionally superior even though the powers of the new Union come from its Member States in accordance with the “principle of conferral” (Art.5 TEU). Where else after all could it get its powers from?  This is so even though the Member States retain their national Constitutions and their citizens keep their national citizenships. The local states of the USA retain their different state Constitutions and citizenships, even though both are subordinate to the US Federal Constitution in any case of conflict between the two. The tenth amendment to the US Constitution alludes to the principle of conferral when it lays down that powers not delegated to the US Federation “are reserved to the states respectively, or to the people“.

Likewise,  it is not unusual for the Constitutions of classical Federations to provide for a right of withdrawal for their constituent states, just as the Lisbon Treaty does (Art.50 TEU). The existence of these features in the Constitution of the post-Lisbon Union does not take away from its federal character.

An alternative source of democratic legitimacy to the Nation State

Under Lisbon population size will in turn become the primary basis for EU law-making, as in any State with a common citizenry. This will happen after 2014, when the Treaty provision comes into force that EU laws will be made  by 55% of Member States as long as they represent 65% of the total population of the Union.

Lisbon provides an alternative source of democratic legitimacy which challenges the right of national governments to be the representatives of their electorates in the EU. The amended Treaty provides: “The functioning of the Union shall be founded on representative democracy. Citizens are directly represented at Union level in the European Parliament. Member States are represented in the European Council by their Heads of State or Government and in the Council by their governments…” (Art.10 TEU).  Contrast this with what is stated to be the foundation of the present Mastricht Treaty-based EU (Art.6 TEU): “The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States.

The constitutional structure of the post-Lisbon EU is completed by the provision  which turns the European Council of Prime Ministers and Presidents into an “institution” of the new Union (Art.13 TEU), so that its acts or its failing to act would, like those of the other Union institutions, be subject to legal review by the EU Court of Justice.

Constitutionally speaking, the summit meetings  of the European Council will henceforth no longer be “intergovernmental” gatherings outside supranational European structures, as they have been up to now.  The European Council will in effect be the Cabinet Government of the post-Lisbon Union. Its individual members will be constitutionally obliged to represent the Union to their Member States as well as their Member States to the Union, with the former function imposing primacy of obligation in any case of conflict or tension between the two.

One doubts if all the Heads of State or Government who make up the European Council themselves appreciate this!

As regards the State authority of the post-Lisbon Union, this will be embodied in the Union’s own executive, legislative and judicial institutions: the European Council, Council of Ministers, Commission, Parliament and Court of Justice.  It will be embodied also in the Member States and their authorities as they implement and apply EU law and interpret and apply national law in conformity with Union law. Member States will be constitutionally required to do this under the Lisbon Treaty. Thus EU “State authorities” as represented for example by EU soldiers and policemen patrolling our streets in EU uniforms, will not be needed as such.

Although the Lisbon Treaty has given the EU a Federal-style Constitution without most people noticing, they are bound to find out in time and react against what is being done. There is no European people or demos which could give democratic legitimacy to the institutions the Lisbon Treaty establishes and make people identify with these as they do with the institutions of their home countries. This is the core problem of the  EU integration project. Lisbon in effect has made the EU’s democratic deficit much worse.
It is hard to imagine that this will not make struggles to reestablish national independence and democracy and to repatriate supranational powers back to the Member States the central issue of EU politics in the years and decades ahead.

N.B. Although the above are major constitutional changes by any standard, both for the EU and its Member States,  Ireland’s Referendum Commission, under its chairman Mr Justice Frank Clarke, made absolutely no attempt to explain them or convey their significance to citizens in the Lisbon Two referendum in October. This was despite the fact that the Referendum Commission’s prime statutory duty under the Referendum Act was to explain to citizens how the proposed Lisbon constitutional amendment would affect the Irish Constitution.  The Referendum Commissioners were thereby guilty of a profound constitutional delinquency, for which the Government must surely be very grateful.

Anthony Coughlan is Director of the National Platform EU Research and Information Centre, Dublin, and President of the Foundation for EU Democracy, Brussels.

OPEN EUROPE’S 50 NEW EXAMPLES OF HOW THE EU BUDGET IS WASTED

The EU’s accountants – the European Court of Auditors (ECA) –  published their annual report on the EU’s budget in early November. The ECA refused to give the EU’s accounts a clean bill of health for the 15th year in a row, owing to fraud and mismanagement in the budget. Like last year however, the auditors did sign off the Commission’s own accounts, saying that they accurately represented how much money was raised and spent.

Although the ECA’s report is about the management of the accounts, the occasion represents an opportunity to take a closer look at the EU budget as a whole. Because while mismanagement of the accounts continues to be problematic, even when EU payments are deemed “clean” they are often still hugely wasteful. This is because the process underpinning how money is spent encourages poor project selection.

National governments are handed a pot of money that has to be spent, regardless of whether there’s a real need or demand for a certain type of project. As a result, EU-funded projects easily become expensive solutions to invented problems. The complexity and needless centralisation of these budget programmes means that taxpayers are not getting value for their money.
To illustrate this, Open Europe has produced a light-hearted list of 50 new examples of EU waste. The list is by no means comprehensive, but designed to show the types of peculiar projects on which EU money has been wasted in the past. They include:

  • An art education project called “Donkeypedia”, in which a donkey travelled through the Netherlands to meet and greet primary school children, which was part of the EU’s €7 million ‘Year of Intercultural Dialogue’ initiative.
  • An EU grant worth 800,000 Swedish kronor (€80,000), given to Sweden’s third largest city, Malmo, in 2008 to create a virtual version of itself in “Second Life” – a virtual fantasy world inhabited by computer-generated residents.
  • €400,000 to get children drawing portraits of each other in the name of European citizenship.
  • €198,500 for an EU puppet theatre network in the Baltics.

To read Open Europe’s 50 new examples of EU waste in full, see here:

www.openeurope.org.uk/research/top50waste.pdf

EU Misinformation: Barroso, Bonde and Ireland’s company Taxes

Monday 28 April 2008

Barroso, Bonde and Ireland’s company Taxes . . . Excerpt from “Bonde’s Briefing” by Jens-Peter Bonde MEP, Chairman, Independence and Democracy Group in the European Parliament, forwarded for your information

Misinformation in Ireland
I was in Ireland this weekend (18 April). Accidentally I met the Commission President José Manuel Barroso at the University of Cork. I had two other meetings. He made a splendid speech, particularly when he went outside his manuscript.

It became clear to me that his civil servants had agreed a part of his speech with the Irish Government representatives to mislead Irish citizens about a hot issue in the Irish debate: their low corporate tax at only 12.5 %.

Mislead is a strong – but very precise – expression. Barroso said there was nothing new in the Lisabon Treaty about taxes.

This is positively wrong. The new Art.113 TFEU(Treaty on the Functioning of the EU) about taxes adds a new phrase of “and to avoid distortion of competition”as an amendment to the Article. This is a clear invitation to the European Court of Justice to outlaw the very distorting low Irish rate.Today the EU is only competent to harmonise tax laws under Article 113 if it is “necessary to ensure the establishment of the internal market”. With this Lisbon Treaty amendment the EU can also harmonise tax laws if competition is distorted – this is a much wider concept. When is competition not distorted by differences?

In a new special Protocol to the Lisbon Treaty, “Protocol on the Internal Market and Competition” (No. 4), it is also added that the Internal Market “includes a system ensuring that competition is not distorted”. National hindrances can be outlawed, even by legislation based on the so-called “Flexibility clause” referred to in this Protocol.

In Art.116 TFEU distortions of competition can be hindered by laws decided by qualified majority voting in the Council. First, the Commission consults the distorting Member State. Article 116 then provides: “If such consultation does not result in an agreement eliminating the distortion in question, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall issue the necessary directives. Any other appropriate measures provided for in the Treaties may be adopted.”

In the Reader-Friendly Edition of the Consolidated Treaties which I have edited (see euabc.com ) the text in bold is the new addition to Article 113 on corporation taxes made by the Lisbon Treaty: “and to avoid distortion of competition”. Hindrances may be eliminated by majority voting.
So, if I was Irish and interested in the low corporate tax – which I am not – I would propose a strong Protocol to protect the low rate. It is not difficult to foresee an attack from another country – or company. The French Presidency has already signalled its plans for taxation before they enter into office 1 July.The Irish Government has criticized the French intentions. Well, the tax issue is also included in the annual work program for Barroso’s European Commission for 2008!

“Work will also be continued in order to allow companies to choose an EU-wide tax base as set out in the 2008 Annual Policy Strategy. An impact assessment has been launched to examine the options and their implications”,it is said at page 7 of the Work Programme.The Commission will only publish their proposal – after the Irish referendum. All controversial proposals are delayed before referendums. This is normal practice for the Commission. It is only un-normal that the method has been leaked to the press with the publication of a private e-mail from a British diplomat referring to information received from the Irish Government in confidence.

The Commission is working on a proposal to harmonise – maybe not the rate, but the base for calculating corporate taxes. The economic effect for Ireland may be the same.

Ireland has earned a lot on multinational companies settling in Ireland but selling products to the whole of the EU. Now, the Commission proposal – according to rumours – will distribute profit for taxation according to the spread of the turnover.

It does not sound surprising – or unjust – to me. This is the way the Commission is thinking – in spite of the Barroso speech to calm the Irish voters before their referendum scheduled for 12 June.

A joint rate will require unanimity, yes. But to outlaw the low rate in a Court verdict only requires a simple majority in the EU Court of Justice in Luxembourg. It is mis-leading not to tell the Irish the full truth about the Lisbon Treaty and taxation.

Even new direct taxes for the Union could be introduced by the Lisbon Treaty. See Art. 311 TFEU on the establishment of new Union “own resources” by unanimity among Member States.

“…it may establish new categories of own resources”, it is said in the new Art. 311 inserted by Lisbon.

It is also said stated: “The Union shall provide itself with the means necessary to attain its objectives and carry through its policies”.
< http://www.bonde.com/index.php/bonde_UK/article/bondes_briefing_23042008 >

A Note on Jens-Peter Bonde MEP

The author of the above statement, Jens-Peter Bonde, Danish MEP, has just edited a “Reader-Friendly Edition of the Consolidated Treaties as Amended by the Treaty of Lisbon“. This shows the additions to the two main EU Treaties that would be made by Lisbon in bold type, and the deletions in strikethrough.
This volume contains an invaluable index which will enable anyone interested in a particular topic to find easily the Consolidated Treaty Articles relating to it and to see how these would be affected by any deletions or additions made by the Lisbon Treaty.

This Reader-Friendly Edition of the Lisbon Treaty is now downloadable free from bonde.com.
Bonde has also written a short 100-page book describing the background to the Treaty and giving a general analysis of it: “From EU Constitution to Lisbon Treaty”. This will be downloadable later this week from the web-sites: bonde.com and euinfo.ie
Jens-Peter Bonde was a member of the Convention on the Future of Europe which drew up the original EU Constitution that would now be brought into being indirectly rather than directly by means of the Lisbon Treaty. He has been an MEP since the first direct elections to the European Parliament in 1979 and he is retiring from the Parliament on 9 May, Europe Day, having recently reached his 60th birthday. He first came to Ireland in 1986 to express support for the late Raymond Crotty in his constitutional action on the Single European Act, which led to the current referendum on the Lisbon Treaty. He is chairman of the Independence and Democracy Group in the European Parliament to which Munster MEP Kathy Sinnott belongs. He has written some 40 books on EU-related topics over the years and is widely known and respected for his tireless work over decades for a more transparent, less centralised and more democratic European Union. Together with Ireland’s John Gormley and others he produced a minority report on an Alternative to the EU Constitution at the close of Giscard d’Estaing’s Convention on the Future of Europe in 2004.
For enquiries contact Anthony Coughlan at 01-8305792.

Jens-Peter Bonde himself may be contacted at the European Parliament at 00-32-2-2845167 and at Jens-Peter.bonde@europarl.europa.eu
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