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Bruce Arnold: Europe steering a course that will drive us to ruin

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What I will describe as 'conventional wisdom', using the term in its most pejorative way, is still being applied -- and widely applied -- to an economic and political crisis that is in the process of devouring us. Its ingredients are as follows:

The wisdom is: we must stick together. That means the states that are in the eurozone. They have stuck together, tightly, through an increasingly long chronology of failed measures and have been failed by these.

But we must go on sticking together with the new development. This is the collective compact supported by the proposed new international treaty on fiscal union. Lying in wait for this is the virtual inevitability of a referendum on which it is possible that the courts will be invoked to over-rule the Attorney General.

Sticking together will not be enough. The new treaty will rebuild confidence. This will not be enough. Europe's collective resources will come together and tackle excessive debt and the danger of banks collapsing. This will not be enough. Nor will the failure of the world to invest sufficiently in the eurozone. This has all been tackled before, with consistent failure. The new ingredient of the international treaty is expected to bring confidence. It won't.

Nor will this confidence bring vision; an ability to imagine once again the spirit of democracy and international co-operation out of which the EU was born. Over decades, that democracy has been systematically stripped away. The EU is now ruled by a junta of self-appointed key figures who depend on insufficient funding coming from the European Central Bank -- most of it going into the failing European banking system -- or the IMF, which is not giving enough for Europe's needs, quite rightly seeing the needs of others outside the eurozone as more important.

The feebleness of EU democracy can be gauged from the fact that the views of the vast majority of MEPs, represented by the challenge to the international treaty by leaders of the three main groupings in the EU Parliament (thus representing direct democratic intervention over that treaty), have no power at all. They cannot veto what Herman van Rompuy has cooked up. They cannot amend it.

The European Parliament will let down the countries that elected its members and will be forced to stand idly by while some other democratic governance is found to do the job.

That governance is clearly the political leadership of the EU countries, with the exception of Britain. Unfortunately, all those countries have already committed themselves to a treaty that draws us all together into a compact that will doom Ireland to the eventual collapse of its economic structure, followed by the most dire of political consequences in the ensuing chaos.

I choose these words carefully. They are meant to frighten people. They are meant to open the eyes of those who lead us.

In a powerful article last Wednesday in this newspaper, David McWilliams explained why this rubbish about sticking together, renewing confidence, accepting the stranglehold of the proposed new eurozone, rediscovering the old vision that created the EU so long ago -- copperfastening peace after World War Two and then stabilising our world after the end of the Cold War -- cannot work again, however we apply it.

He showed this to be the case because we will lack the vital requirement: our own exchange rate and with it the ability to influence our interest rate and our trade competitiveness.

Without it, we are gutted. We will be further depressed, constricted and withered along with the rest of Europe, only worse.

McWilliams wrote of 'internal devaluation'. That is devaluation without the mechanisms of independence that make it possible to devalue the currency. The only other way to devalue is to sack people, saving their wages but destroying companies by forcing them to make and sell their goods at uncompetitive prices. To this has to be added the third force destroying incentive: the need for the Government to cut its spending radically.

We are already imprisoned by the Troika, forcing us to do just that, relentlessly cutting expenditure. They will go on pursuing this negative set of objectives.

These objectives -- deeply painful to poorer families, the elderly, the ill, those in education, those unemployed and the squeezed middle classes -- will reduce all personal spending as the above scenario bites deeper. So where is the self-confidence, prophesied by the 'Irish Times', a paper dedicated to austerity measures while at the same time seeing optimism in the future?

The truth is harsher. The rigid policies being engineered for us within the terms of the proposed international treaty will make our escape from poverty more difficult. Government spending will be reduced dramatically. If the Government is not spending, and the people who can are saving against an unforeseeable but increasingly ominous set of economic threats, who is going to lift our spirits?

The external economic forces affecting Ireland's recovery are designed to strip us of the ability to recover through competitiveness.

And remaining in the euro -- apart from the vague and emotional miracles of self-confidence, fortitude, the recovery that inspired Europe well before the majority of the present population were born -- will continue that process of stripping us. For example, all of the savings derived from the stringent Budget last month were then squandered in paying Europe's January charge on our economy for bank bonds! That madness will continue.

Saving the euro, to which we are inextricably linked under present policies, is a serious and growing handicap on selling our goods abroad.

And, as David McWilliams has pointed out, we are not reducing wages so that prices can be reduced -- which is what competition is all about -- instead, we are reducing jobs and this looks like real wages are coming down. What is coming down is the crucial output on which economic growth depends. Manufactured exports are not coming down but economic growth, due to the domestic economy suffering, is.

There is some evidence, very slight, that remaining in the euro is being questioned within Government. There is recognition, by bright politicians, that our present course is a Titanic journey towards an iceberg that will put us at the bottom of the economic sea, in a huge, even spectacular loss. But there is no serious debate, either with ourselves, or with the companion PIIGS (Portugal, Italy, Ireland, Greece and Spain) countries that share our dilemma, or with Europe in any intensive way. We are waiting to see what will be done to us.

It is crucially urgent that we start such a debate with the other Piigs countries. We are not thinking for ourselves. We are actually thinking for others in the richer euro countries who are preparing to take us for another ride -- one that seems to be towards catastrophe.

Irish Independent