Bruce Arnold

Critic of Public Affairs, writing about art, theatre, music and politics

Kenny and Merkel muddy the waters rather than clear them

[This article is an extended version of the column from the Irish Independent, 22nd October 2012: for print edition, click here]

Last night’s Communique, jointly issued by the Taoiseach, Enda Kenny, and the German Chancellor, Angela Merkel, provides little to help Mr Kenny and even less to justify Angela Merkel’s remarks at the end of last week’s summit. The unique character of Ireland's banking and sovereign debt crisis lies in the over-reaction of our politicians and public servants to the crisis as it developed between 2008 and 2010. Over-statement of our prospects and gross overstatement of the economic achievements of the new government continued what is becoming a national characteristic.

The two leaders discussed Ireland's plans for a full return to the markets. That is a finely-balanced set of objectives needing much more than what the communiqué says about reaffirming the June 29 commitment. And the task talked about is no more than an examination of the situation. It sounds like Fagin’s song from Fiddler on the Roof.

Further improvement in the “sustainability of the well performing adjustment programme” needs the removal of the debt burden. We are keeping pace with the Troika, not with reality. And Ireland’s “special case” is that we fail all the time to face reality. The thought of the so-called “Eurogroup” taking that into account is truly frightening. That is what they have done up to now. And all our politicians suffer from the same infection.

The new communiqué is like Angela Merkel’s intervention at the end of Thursday’s summit. That threw Europe into confusion, no country more so than Ireland. And yesterday’s communiqué does the same.

Two things are happening that are worrying and they are both implicit and explicit in what European leaders are saying. The first is the inescapable movement towards a federation of 17 Eurozone states into one, depriving individual countries of the last vestiges of sovereignty and bringing once-independent countries under escalating EU controls.

What we see coming are common economic and financial controls, tax harmonization, a common treasury, an EU foreign policy, the supremacy of EU law, and beyond that the unification of police and military forces and full legal identity as a United States of Europe under Franco-German hegemony. The objective is greater central control over the lives of five hundred million people in varying states of recession with little growth or improvement. Growth is not part of the plan. Improvement – reduced unemployment and improving conditions – is not part of the plan either.

The second inevitability is a two-tier Europe with Ireland more likely to belong to the lower order. This is by no means certain. We could choose either staying with the austere northern countries or going with the happy-go-lucky Latins. Austerity might be more profitable but would require a permanent unemployment level of around fifteen per cent plus another ten per cent disguised in emigration.

This course would mean non-consultative pay cuts in the public and private sectors designed to ensure that our competitiveness is kept in line with Germany's. Recent tinkering with the Croke Park Agreement indicates how difficult such an approach would be.

Future circumstances would be hugely complicated by Britain opting out. Britain does not like EU intervention. The country is difficult enough to govern, its people not used to having two masters. We are.

EU directives and regulations adversely affect British business and their economy's competitiveness – as it also hinders ours – so it is no longer an emotional matter. Dealing with two huge bodies of legal and administrative controls often at cross-purposes is onerous and increasingly complex.

European law and British law, dutifully followed and observed, are often in conflict. We would have the same problem if we observed our own laws better and reconciled them with the mass of EU law which we are obliged to follow. We follow neither course very well, and in this are more in line with the happy-go-lucky Latins. We would have to change this in a full EU federation. It would not be easy.

This brings me to a third and rather different event, taking us from the empty and arid political offices from which patchwork statements are issuing, to a packed courtroom in Luxembourg. I refer to the hearing tomorrow in the European Court of Justice of the Thomas Pringle case, referred to Luxembourg by our Supreme Court, will be like voices whispering in a European storm of discord and confusion.

We may be surrounded by uncertainty coming from Mr Kenny and Chancellor Merkel, but we need also to take note of how these huge political issues that have so radically altered our relationship with the EU are now being challenged in the European Court of Justice tomorrow when the Thomas Pringle case will be heard there. It would be naïve to imagine that Pringle will win his case, the outcome of his constitutional challenge to the constitutionality of the ESM Treaty in Ireland where he sought a referendum.

The Supreme Court rejected Pringle’s case but referred it to the European Court of Justice. However, in last week’s final written judgment Mr Justice Adrian Hardiman differed from his fellow judges supporting Mr Pringle’s argument that a referendum was needed.

Tomorrow’s hearing could not have come at a more timely moment in our affairs and those of the EU and will do no less than emphasise the emptiness of the communiqué last night.

Thomas Pringle brought his case because of his concern at Ireland’s enforced request for financial help in 2010, leading to bail-out and the troika. He believes Ireland will not benefit from the EU bailout, and benefit even less from the ESM. This is a growing possibility.

He does not think the terms of the ESM are in the interests of Ireland. “The ESM is designed in a way that will divide the EU and result in its destruction. The EU is based on good grounds, and the EU must make decisions which respect the rights of all the countries and their laws, as is enshrined in the EU Treaties.”

His case, expressed in the High Court in April, is that the ESM contravenes the EU treaties. He believes the Irish government broke the law when it agreed to the ESM. He argues that the Finance Minister, Michael Noonan is the national representative on the ESM Board of Governors and that that is not constitutional.

Mr Pringle believes the ESM breaches EU treaties not just because the ‘no bail out' clause has been violated and because there is no legal protection against the ESM, but also because the ESM (to which we must contribute huge sums of money) is a new instrument that exists beyond the reach of EU treaties. The mechanism, its rules, the private circumstances (including legal and tax immunities of its governors and staff), all place it beyond European or Member State challenge of any kind.

The hearing has attracted unprecedented interest. The European Court of Justice is theoretically presided over by 27 judges, one from each state, and again, in an unprecedented way, all of them are expected to attend tomorrow. Over a dozen EU Governments, and the EU Commission, have made comments, some quite lengthy, on the submissions by both sides in this case (dealing with the legality or otherwise of the ESM treaty under EU law). The Court of Justice will hear the Irish State and Mr Pringle seeking a determination on three questions sent by our Supreme Court.

The judgment is expected to favour the Eurozone in its constantly revamped form, but this is not certain. The EU ‘State’, with its institutions and leaders, is again in free-fall, its elements breaking up or being challenged, its most powerful figure, Angela Merkel, mired in ambivalence between Europe’s interests and her own electoral objectives making her words last night difficult to understand. The rest of us are an audience for the major conflict that lies ahead.