Should Ireland Leave the Eurozone?

While the EU Referendum campaign in the UK raged on for six months, or arguably for the last number of years, the question of EU membership has remained as something of a fringe issue in Ireland. The Irish government took its own position on Britain’s membership, urging for a remain vote, and others have taken various different positions, but in the context of Irish politics we have remained relatively silent on the question of EU membership.

In 2011 Labour ran on what was without a doubt a Eurosceptic campaign in an attempt give the ECB and the rest of the Troika the finger. It didn’t last long though. Once they were in power they rolled over and returned to the pro-EU fold of Irish politics. Sinn Fein have consistently opposed all proposed expansions of the EU and its power, but they too have found themselves campaigning to remain in the EU. It’s an awkward turn of events, but an understandable one. The life-long Eurosceptics among the Irish Socialists in AAA-PBP make calls at their public meetings for Ireland to leave the EU, but even in their case it faded into the distant background when it came to the 2016 General Election. What should have been a central issue, and clearly has been for many Irish people, has been pushed aside by more specific anti-austerity platforms. The problem with this is that the EU has been central to this austerity and to Ireland’s economic ruin. The banking system and political establishment that plunged Ireland into recession are very much embodied by the EU.

I won’t be making the case here for Ireland to leave the EU as I feel it needs to get itself together before it can ever consider doing so – unlike the UK, Ireland is a net benefactor, so has far more to lose from leaving the EU than many other countries – but I will be arguing for an exit of the Eurozone. Quite frankly, the Euro has been an absolute failure. It has accelerated the decline of many industries, it has allowed the spread of the sort of globalization of finance that has proved disastrous for economies and the general public, it has handed over increasing power to the ECB when the last two points have helped destabilize Euro countries. Speaking at an event of the Cambridge Brexit Campaign, Kelvin Hopkins MP made the point that the Euro is essentially the Deutschmark with a few other currencies attached to it, and in many ways that is true. The Euro exists to the benefit of Germany far more than anyone else, and to the detriment of Ireland, Greece, Italy, Portugal and Spain. It means Ireland’s economy is very much at the whim of interest rate and exchange rate decisions made in Frankfurt by the European Central Bank. Whereas the economic crisis of the early 2000s sent a series of countries into recession throughout 2000-2003, with both France and Germany entering recession in the later half of 2001, the UK, on the other hand, managed to stave off recession despite the economic situation of its major trading partners. Why? Monetary policy. When profits in many sectors of British industry were down 15% by mid-2001, the UK was able to use interest rates and benefit from the exchange rate situation to keep the economy afloat. For all the failures of economic policies of deregulation and privatization of the New Labour era, this ability to use monetary policy tools to stave off recession was a highpoint for Gordon Brown’s reign as Chancellor of the Exchequer. It is a tool Ireland would have hugely benefitted from in 2008, but membership of the Euro means that power is handed over largely to the ECB.

 This is an issue of sovereignty and economics. It is about jobs and living standards. Sovereignty and control over economic policy would be less of a problem if the policies of the Eurozone actually worked to the benefit of the people living in member states, but they don’t. It is a detriment to living standards, to many industries, and often to international trade and the balance of payments. The Eurozone may have one of the highest levels of GDP in the world, but what is the point in having good GDP figures if at the same time there is up to 50% youth unemployment, if tens of thousands are forced to emigrate, if thousands are at risk of losing their homes while many are already homeless, if people are forced to rely on food banks and can’t access education and healthcare due to underfunding? GDP is more a mark of national prestige than a measure of wellbeing.

Instead of suffering from crippling levels of debt, chaotic inflation and rising taxes coupled with wasteful spending, Ireland could have used monetary policies such as quantitative easing to nationalize banks, maintain funding of vital infrastructure projects and help prop up struggling industries, which employ thousands of people. We could have used interest rates to stimulate demand and alleviate debt in an attempt to halt the destructive downwards spiral of the mortgage crisis. Of course, this all assumes that we would have had a government competent enough to use available policies effectively enough to not make the recession even worse than it already was (and we saw from the austerity programmes that attempts to fix the economy often result in a much worse situation for many people than there would otherwise have been).

Ireland needs greater control of its own economy so it can be made to work in the interest of the general public rather than in the interest of the ideological goals of those at the head of the EU. This needs to be done to boost employment, rural economies and SMEs, and will also allow Ireland to have much better oversight over its banking sector and financial services, something that has been severely lacking for many years and has resulted in a fragile banking system that is once again on the brink of collapse and threatens to take the rest of us down with it.

The left in Ireland must finally bring this to the centre of the debate around Ireland’s future. What kind of Ireland do we want to live in? What kind of democracy do we want to have? Do we want to ‘pool’ our sovereignty and hand over control of policy tools to increasingly centralized control, or do we want to keep it in our own hands with our own democratic oversight?

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