EU: New radical suggestions of ‘austerity contracts’

A new interim report, entitled ‘Towards a Genuine Economic and Monetary Union’ was circulated by the President of the European Council, Herman Van Rompuy. This will be discussed at this week’s European Council meeting. Here, the true vision of a fiscal and political union of the European establishments is made clear. It is a vision long on austerity and extremely short on democracy.

Not content with the Austerity Treaty and the so-called six-pack on economic governance, President Van Rompuy wants to go further. The report ‘points to the need to to complement the current framework for the surveillance and coordination of budgetary policies with a more ex ante coordination framework, as proposed in the ‘Two-Pack’, and to move gradually towards a fully-fledged integrated budgetary framework.’ What is this ‘fully-fledged integrated budgetary framework’? It is a means of ensuring uniform application of austerity across Europe, without regard to the opinions of the peoples of Europe.

A new idea raised here is the idea of ‘arrangements of a contractual nature [of member states] with the EU institutions on the reforms promoting growth and jobs these countries commit to undertake and their implementation.’ What is being suggested here is nothing less than austerity contracts. The purpose is clear. If agreed, presumably these contracts would bind future as well as present governments, thus bypassing people’s democratic right to kick out austerity policies.

Even the IMF has had to admit the devastating impact of austerity policies. I am returning today from a political trip to Greece, where the results are the most extreme – severe social destruction. It is pushing all of Europe back into recession, with Germany even facing recession in the second half of this year according to the OECD. At the same time, it has worked for the 1%. The bondholders have been protected. In Ireland, between state owned banks and national debt, we will have transferred nearly €30 billion to the bondholders this year, at the same time as cutting back on home help hours and other vital social services.

The vision of an undemocratic Austerity Union offered up by this report must be rejected. It will worsen the crisis and undermine democratic rights. Of course the Irish government’s response will undoubtedly be predictably sycophantic – in the continuation of its failed strategy that has seen an abject failure on the bank debt. Working people in Ireland must join together with their brothers and sisters in Greece, Portugal, Spain and across Europe to rise up against this Austerity Union and fight for democratic socialist change.