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7 January 1999 Edition

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Why the euro is bad for Ireland

By Citizens for Keeping the Irish Punt

The replacement of the púnt by the euro is a form of national treason by the bulk of our politicians, even if many of them may not realise what they are doing. An army and a currency are the two classical essential features of being an independent state - the monopoly of legal force and the monopoly of legal tender in a territory. All states have their own currencies and all curriences belong to states. By ceding to Brussels and Frankfurt the power to control credit in the economy, decide interest rates and the currency exchange rate, the politicians of our main parties are abandoning fundamental instruments for advancing the Irish people's welfare.

They are ensuring thereby that our economy is henceforth run primarily in the EU's interests, not in Ireland's. The republic thus effectively becomes an economic province of the EU, while the EU takes a giant step towards becoming a centralised superstate.

The 1992 Maastricht Treaty referendum, from which the euro-currency stems, was won by methods - the expenditure of public funds to finance one-sided and misleading propaganda - which the Supreme Court subsequently judged to be unconstitutional. This national surrender therefore lacks true popular legitimacy.

The only successful, because long lasting, monetary unions in history have been part of state-building processes. European examples are Italy, Germany and Switzerland. Our politicians have not been honest with the public that EU state-building is what is at issue in this project, which is overwhelmingly driven by political considerations, not sound economics. This republic cannot become an economic province in an EU-wide monetary union without losing the essentials of its political democracy; for the Irish people will no longer decide key policy through their representatives. Yet there is in principle no possibility of democratizing the emerging EU superstate either, for a European demos or people, which could provide a basis for that, does not exist - only European peoples, plural, with their many different national interests and solidarities.

The five years since our 1993 currency devaluation have been the only period in the history of the Irish state in which it has followed an independent exchange rate policy, permitting the púnt to float rather than tying it to sterling or the Deutschmark. The resulting highly competitive exchange rate is the most important single reason for the `Celtic Tiger' economic boom, which coincides exactly with that period. Yet having unwittingly demonstrated how successful can be an independent currency and exchange rate, our political leaders are now abandoning control of them to others, in principle for all future time.

The manifest unsuitability of a one-interest-rate-fits-all economic policy inside the eurozone is shown by our recent interest rate reductions to get in line for EMU. These further boost soaring house and asset prices here. They are precisely the opposite of what the Irish public welfare needs, although low interest rates do suit recession-locked Germany and France. Yet in two or three years time inside the eurozone, unlike now, the Irish economy may really need the stimulus of lower interest rates, just at the time when the European Central Bank decides that higher interest rates are needed to cap a German-French economic revival. And that could happen just when the euro gives us an uncompetitive exchange rate vis-a-vis the bulk of our trading partners, who will be outside the eurozone. What happens to the `Celtic Tiger' then?

By tying our currency to the eurozone, with which we do only one-third of our trade, while leaving the UK outside it, with which we do another third, our politicians are drawing a new economic partition between north and south. This north-south division will be aggravated if, as looks likely, the EU moves before long to harmonise taxes for the eurozone members.

Finally, the transition to the euro for retail transactions in 2002 is likely to be a rip-off for Irish consumers, putting in the shade the price-rises that accompanied the introduction of decimal currency in the1970s.

•Citizens for Keeping the Irish Punt can be contacted c/o ATGWU, 55 Middle Abbey Street, Dublin1

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