Sunday 26 February 2017

Labour calls for closer economic tie to Brussels

The lack of fiscal oversight has led to contradictory decision-making

Jody Corcoran

Jody Corcoran

Labour finance spokeswoman, Joan Burton, yesterday called for greater "political convergence" in Europe and a degree of "monetary and fiscal" oversight from Brussels to ensure the stability of the euro.

Speaking on the topic, 'Can the EU Survive the Euro Crisis', at the Humbert Summer School in Mayo, Ms Bruton also said economic policy could not be implemented on the basis of fiscal or monetary policy decisions which were in blatant contradiction with one another. The effective management of the euro called for a "considerably greater degree of economic convergence than currently exists", she said.

Ms Burton said the Lisbon treaty was supposed to guarantee joined-up decision making. "Alas, when Greece tottered on the brink of default, it took the European Union almost six whole weeks to get its act together and mobilise a rescue package." This was not the kind of serious response that the referendum debate had promised.

The EU just about pulled through back in May, she said, but the flaws in the Union's management structure were brutally exposed, the lack of coherence in crisis management procedures were starkly revealed and the lack of preparedness painfully displayed. One such weakness, she said, was the belief that everyone was singing from the same hymn sheet, that everyone knew the rules and interpreted them similarly.

She said: "Now it beggars belief that anyone could possibly imagine that, in a community as culturally diverse and economically divergent as the European Union, major differences of interpretation as to what is and is not acceptable would not arise.

"We need a heavy dose of realism. Difference must be recognised and factored into our procedures. It is time to drop the one-size-fits-all formula and to get serious about defending the euro, to forget about the grandstanding and the emergency summits and to set up proper crisis management procedures.

"Patience is not a characteristic of the money markets. Weakness is punished with exemplary swiftness. Competence, backed by resolution in execution, is accorded a grudging respect.

"The secret of success in responding to an attack on the euro depends crucially on the preparations which are already in place for that very purpose."

Crisis management, she said, was a "technical matter" with "clear political overtones", but one which could be entrusted to the board of the European Central Bank.

"They must be empowered to take the decisions necessary to defend the common currency in rapidly evolving crisis situations. Inter-institutional and inter-governmental hotlines must already be in place, consultation must take place, but above all, those charged with containing the worst must be free to act".

But long before the need to address crises arises there were other more fundamental matters that must be addressed. "A bird never flew on one wing and economic policy likewise cannot be implemented on the basis of fiscal policy decisions which are in blatant contradiction with one another, as was the case here in Ireland.

"The effective management of the euro calls for a considerably greater degree of economic convergence than currently exists and enhanced fiscal cooperation and coordination so that potential problems are identified before they spiral out of control.

"Solidarity dictates that that the EU's institutions be appropriately empowered to employ resources as the situation demands.

"Only in this way can convergence evolve and stability be assured. Likewise, there is going to have to be a serious attempt to lay down and to enforce more rigorous standards in the financial sector."

Sunday Independent

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