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James Fitzsimons: Just when we needed it the most, the EU let us down

Aconfederation of sovereign states exists in the EU, but not for long. The Germans demand that the rest relinquish their fiscal autonomy to avoid bankruptcy. A central administration will make sure the financial crisis never happens again.



It wouldn't take much for the financial markets to let Ireland back in. We have learned from our mistakes and are taking the medicine. Our paymasters should cut us some slack, but they are afraid of the signal it would send to other countries whose recovery is still in doubt. The EU is providing a financial system on which we depend. But it is still not stable.

We are dealing with financial events of such magnitude that no one could expect to be insulated from the fallout. The bondholders and the banks have been paid back. There will be no default, but we need a reduction in our debts. Repayments should be deferred. It's up to the EU now. The IMF supports common sense in these matters. Whether the EU has adopted a British stiff upper lip posture, or the code of the Samurai, we will be ruined if we maintain these lofty ideals when Ireland is broke.

If the Germans want to call the shots, they should pay the price. In the EU, some nations are more equal than others. When we give up our sovereignty, we deserve something worthwhile in return, and it's up to our Government to get it. We have paid the penalty through the severest austerity measures any of us could have imagined. Developers' and bankers' greed turned a boom into a bubble, which inevitably burst. We were a guiding light until they snuffed it out. But they couldn't have done it without foreign investments that kept it going.

Bondholders around Europe and further afield cashed in on our wealth when the Celtic Tiger roared. International banks, including those in the EU, funded our largesse, happy to reap the rewards that came with our success. Now that the mistakes have been revealed, we alone are expected to pay. Who are the bigger fools?

Our leaders are not qualified to make the decisions and their advisers are of no obvious help. They don't seem to know enough about finance to get the deal we deserve. Even if their minds were in the right place, they still don't know what they are doing. If they wait long enough, they know the problems might go away.

When the lack of liquidity revealed itself in the Irish banks, it was covered up. The public forced a blinkered government and financial regulator to face reality. Then an inexperienced government thought it could sort out the mess. But this was far beyond its comprehension, let alone any resolution.

Nothing has changed except the government. If we give up our autonomy, what government will be in change? Even a referendum will make no difference. Puppets are leading us. Brussels and Frankfurt pull the strings.

It's a pity that when we needed it most, the EU let us down. We need a holiday from our debt burden. If there was a crisis somewhere in Ireland we would all rally around and provide whatever support it takes. We might argue about it, but in the end we would do what is right and spread the cost. If local government couldn't solve the problem itself, the national government would provide the resources.

The barriers that prevent the formation of a United States of Europe were never more evident than they are now. When disaster struck, the most vulnerable were cast adrift to fend for themselves. If only the strong survive, why take the pain? We have been

too complacent. We are victims of the global economy in which we live. We embraced its objectives in the hope of reaping some of its rewards. We made a positive contribution but when its weaknesses dragged us down, those in charge sacrificed us for their own selfish ends. If they are allowed, they will take whatever we have left in order to keep what they have.

We owe them more than we can afford to pay. If they write off some of the Irish debt, large as it is, the markets will deal with us again. The EU can focus on those who are still locked out. After Greece, Spain and Italy present the real problems as their debts are so large. There isn't enough money in the ECB to save them. But if we focus, we can help them too. They have already started to turn things around.

Ireland has lost its sovereignty because our banks and developers made a bubble that burst. The Government made it possible and the global financial community gambled on our success. The success was real. It was achieved. But it wasn't sustainable. Even Anglo Irish Bank sourced its funds from legitimate financial markets. It knew the risks and it was willing to take them. The gamblers could have borne their own losses.

Those who bent the rules should pay the highest price -- even if it strips them of all their personal wealth. People are serving life sentences for a lot less. Some have been given life sentences as a result of the crisis and they did nothing wrong. The system won't save us. It is the problem until it changes.

We can be part of a united, more stable Europe. We can open our books to the technocrats in Europe. Until the Government gets a better grasp of the situation, it shouldn't concede any more power. And what we give up should be paid for by a well-deserved debt reduction. Only a fool would suggest that we should give up our fiscal autonomy while burdened by debts that we cannot bear. But can we rely on our Government to make things any better?

Our national debt stands at just over €120bn. To relinquish our fiscal autonomy, the EU should cut what we must pay back. International financial issues created the problem and its resolution is beyond our capabilities. This is not a bailout. But in any takeover of power, you get the bad with the good. Even if the EU eliminated our debt, we have a deficit created by unfunded public sector pensions that is nearly as large as the national debt itself. The country has too many financial problems close to home to be pandering to the whims of Eurocrats. The carrots they are dangling are rotten.

Unlike others, Ireland has learned from its mistakes. The EU should write off our debts or at least what we can justify. If we could break the ties that are holding us back, we would lead the way forward and become net contributors. When we are accepted as part of the solution, they can focus on those who are likely to cause its destruction. Bond markets have already unlocked the door. If we have reached the end of the beginning, things should get better soon.

James Fitzsimons is an independent financial adviser specialising in tax and financial planning

Sunday Independent