jump to navigation

The Lost Revolution: The Story of the Official IRA and The Workers’ Party – 1 September 17, 2009

Posted by WorldbyStorm in Irish History, Irish Politics, The Left.
trackback

I guess it’s worth discussing some of the issues that I’ve found most striking as I’ve read the Lost Revolution: The Story of the Official IRA and The Workers’ Party over the past two weeks. It’s hardly controversial to say that I’ve found it a fascinating read so far. As noted by Garibaldy this is an history rather than an analytical book, although throughout there is considerable information both newly discovered or reframed in a broader context to provide food for thought. As it is I’m having to get post-its and mark the passages that are of particular relevance.

It’s certainly well written, and easily read which is in no sense a criticism. There is a real vitality to the first third of the book and in particular the description of Sinn Féin in the 1950s and 1960s and through to the very early 1970s. And along the way there are some remarkable political observations.

For example, given the centrality of Sinn Féin, and more particularly the IRA – for the book makes it very clear that it was the IRA which led the way in the radicalisation process of Republicanism – in the Dublin Housing Action Committee, there is a profound irony that the Minister in charge of Housing was Kevin Boland who would be instrumental in assisting the political and military split in Republicanism. It’s those small, seemingly insignificant, details which build up into a compelling overview of the period. Or what of the fact that there were joint OIRA/PIRA events well into the early 1970s?

It also implicitly engages with the mythos of the period. Most striking to me is the manner in which it demonstrates that far from the political diminishing the military, as noted above, it was the military that was leading the way as regards ideology. That that led to a broad range of militant and in some instances paramilitary actions across the island well before the North caught fire has been largely ignored in other histories, but the sheer scale of those actions is impressive. One issue that comes across loud and clear is that far from the retrospective view of a quiescent movement after 1969 and after it until the mid 1970s this was a strongly active movement both on the social front and the military front. That this history has been lost was a function, I’d suspect, of both the WP reworking its history particularly in the 1980s (as it sought to jettison much of its past) and of an essentially complicit reading on the part of its rivals who were keen to play down the very real activism that existed. So we wind up in a position where a very significant element of what was a prolonged armed struggle on a number of fronts was white-washed from effective history.

That issue of arms is a fascinating one. It is now well known that in August 1969 the IRA in Belfast had very limited resources to call upon, and this became a central aspect of the retrospective legitimation of PIRA. Yet the book makes clear just how difficult it was in practical terms to access weaponry prior to those events. Indeed quite some efforts were made.

However, what I find remarkable is that even in the wake of August 1969 and the enormous spasm of Republican sentiment across the island…

…eventually nearly everything the IRA could get their hands on was sent north – about 96 weapons and 12,000 rounds of ammunition in the immediate aftermath of August. IRA members in the North believed that Southern politicians had supplied some of the weapons. Neil Blaney would later claim that up to 25 TDs and Senators had made privately held arms available during 1969. Republicans in Tyrone also received guns from Fine Gael or ‘Blueshirt’ sources. All manner of weaponry was assembled: there were .303s, .22s, shotguns, Webley’s, ‘Peter the Painters’ (Mauser automatics) and a pair of gold-plated automatics, like ‘something out of Patton’….

Yet consider just how minimal such numbers of weapons were, given that spasm of sentiment, and given that the IRA was no longer confronting Stormont but also the military forces of the British state proper. If that was the best that could be done post-August it seems unreasonable to argue that that could be matched or bettered pre-August 1969. And it brings home a point Brian Hanley made at the Desmond Greaves School this weekend that much of the early period of the conflict has been considered through the framework of the struggle as it later developed. This anachronistic view while serving the purposes of all those who indulged in it – and a broader and more politically eclectic group would be hard to find – does the overall history a grave disservice and profoundly distorts the scale and scope of those initial events.

The split itself and the intertwined dynamics that led to it is of considerable interest too (and Hanley addressed this too over the weekend).

In Belfast recruits flooded into the IRA… while the nationalist community now had ‘high expectations’ of the IRA, they had ‘not supported the organization in real terms for 40 years’, and some republicans resented the fact that people who ‘would have spit on you and refused to put [money] in your collection box’ before August 1969 were no expected to be provided with guns. There was also some contempt for the re-emergence of those – such as Drumm, Twomey, McKee and Cahill – who had dropped out of the movement during the 1960s or even earlier; ‘They thought the Republic was going to be got without them… and they were afraid to be left out of it’. Soon these veterans were suggesting that the IRA leadership had failed to defend nationalists. Gerry Adams later recounted that he was ‘perturbed and perplexed to find that extreme criticism of the Belfast leadership was being expressed most of all by republicans whom I didn’t know or had only recently met’.

Reading that one can – of course – see retrospective justifications on all sides, but… contempt and – no doubt – a degree of apprehension at losing control on one side and an arguably self-justificatory reading of actions and events on the other clearly combined in such a way as to hasten the split. The role of those who had been with Sinn Féin throughout the period but then chose to go with the Provisionals is of equal interest. One senses from the book that there was considerable closeness, despite differences, between those within the movement which undoubtedly made the subsequent events all the more bitter. While it is clear that Mac Stiofain had been champing at the bit for years the position of others is less clear (and the necessity to keep the coalition that was Sinn Féin as broad as possible saw the survival of the Rosary in what was becoming a vastly more secular organisation into July 1969 and after).

Beyond that the sheer size of the formations, both Official and Provisional, during the 1970 to 1971 period is something that has also been largely ignored. Later analyses have tended to see the rise of the latter as near inevitable, but one wonders whether had more measured decisions been taken at various points would it have been possible to manage what was clearly a transitional stage in Republicanism in a less bloody and ultimately futile way? That the Officials were vastly more open to other ideological currents during these early years (and in truth in the lead up to 1969) is also something that has been neglected. If later jibes were of ‘Stalinism’ one could make a reasonable case that what we might term a Trotskyist influence was initially much greater than hitherto acknowledged in those early years and to the benefit of the party in some respects.

And it is here that the title begins to make sense, because whatever one thinks of the mid and latter period of the party history, which I’ll return to at a later point, there is a sense that for all the inherent and all too visible flaws there was something during this early history of Official Sinn Féin which, unlike its main rival at that point and for quite some time after, did have a huge societal potential. And this, in part, was due to that openness (and in something of a contradiction a sense that for all the machinations around the OIRA it operated more openly than it would subsequently). The point has been made to me that the book may not engage sufficiently with the political activity in the early 1970s… it’s hard to say for sure…but for that I hope that issues of the United Irishman in the Archive over the next year or two will shed further light on that issue. This was an all-island potential and one that – as we see subsequently – was, to my mind, largely dissipated in the North.

So, perhaps not quite a Lost Revolution then… but something worth reflecting upon even at this remove.

Enormous errors were made. There’s no doubt about that. Reading this it seems possible that the 1969/1970 split while it might not have been averted it could have been minimised. The push towards dropping abstentionism, while understandable, appears to have been far too enthusiastically pursued at points where the purpose of it seemed – at best – aspirational. The souring of OSF in the mid-1970s to the very broad nature of itself comes across as a significant mistake, as does the rather cosmetic (given the number of actions that continued subsequently) ceasefire of 1972. And throughout it all one can see how personality conflicts were masked in supposed ideological trappings in a way which was profoundly destructive to all involved.

Perhaps those errors were near inevitable given the context within which people operated within. But perhaps there were paths away from those contradictions and pressures that might have resulted in more positive outcomes.

There’s so much in this book to think about, not merely in relation to OSF/WP but also as regards other formations operating during the same period. I’m genuinely not surprised that it is eliciting such a large response.

Comments»

1. EamonnCork - September 17, 2009

There is an irony in the fact that while the split may have been provoked by the differering attitudes towards armed struggle, it also had a lot to do with the disaste of MacStiofain and others for what they saw as a lapse into Godless communism by Goulding and others under the influence of Roy Johnston. The irony lies in the fact that MacStiofain, O’Bradaigh and O’Conaill were eventually ousted by Adams and co at a time when the leading IRA figures in the North had also come around to embracing Marxism. If the militaristic rhetoric and military action of the seventies was the skeleton in the closet SFWP wanted to forget in the eighties, the Marxist rhetoric and belief in a socialist republic is something SF, or at least leading figures within SF, seem to want to shake off these days. It seems to be their belief that FF’s tarring of them with the left-wing brush was what banjaxed them at the last election. Personally I think the McCartney murder and the Northern Bank robbery probably did them far more damage as they conjured up the link between the SF and an active IRA.
As regards an enormous spasm of republican sentiment, I think the cliche of smug southerners totally turning their backs on what was happening in the North masks the high levels of republican sentiment which persisted at least until the mid to late seventies, and were reawakened briefly during the hunger strikes.
An episode too often forgotten is the Portlaoise hunger strike of 1975 when 14 prisoners went without food for 47 days after demanding a public inquiry into the conditions at the jail. Among those who supported this call were members of the African Society of Missions at Maynooth, the Cork County Board of the GAA, former members of the National Farmers Association, residents of the Bayside area of Sutton and workers at the Ardnacrusha Power Station, Fiat in Ballyfermot and Tara Mines. Interestingly, given the subsequent attitude of ‘what are those mad Northern bastards doing up there’ there were hunger strikers from Monaghan, Clare, Offaly, Kerry, Tipperary, Dublin, Wexford, Donegal, Laois, Cavan and Limerick. I often wonder what would have happened had there been large numbers of deaths on this occasion, given the huge trouble surrounding the single funeral of Frank Stagg two years previously.
In the end FF took power later that year and took the heat out of the situation by improving conditions in the prison, something the coalition could quite easily have done in the first place. But I think it’s a reminder that the republican movement was not the small unrepresentative rump it’s sometimes portrayed as South of the border. Among the hunger strikers were Martin Ferris, helicopter escapee Kevin Mallon and Sean McGettigan who’d been convicted of the murder of Senator Billy Fox, an incident I believe has been much underestimated for its effect in bringing the repressive instinct out in FG.

Like

2. splinteredsunrise - September 17, 2009

Not really surprising that political innovation came from the Army. I think historically that was always the way, and it was SF where you had the higher concentration of traditionalists.

I’ve just about got into the 1980s by now, and will have to seriously start taking notes along the way. There’s this weird deja vu element, where you’re reading a work of history and most of the people in it are familiar to you, if only by reputation. I think it’s hard to underestimate the role of the individual, or indeed the family, though I’m also thinking in terms of something Wohlforth used to say about how organisations have personalities of their own.

What I think it’s good on as well is the differences between north and south, and what a cultural gap there was. I remember laughing out loud when the DL founders talked about how they had had no idea that Group B existed. Maybe that sounded plausible in Dublin, but in Belfast it just seemed hilarious. So yes, I’m getting a lot out of the southern stuff where my knowledge is a lot sketchier.

The politics will bear thinking about though, and I’ll probably have another skim over the Swan book when I finish this.

Like

3. Mick Hall - September 17, 2009

I have only just started reading the book, but so far two points have struck me and given me pause for thought. First the quote from Peadar O’Donnell that with hindsight he believes the biggest mistake the left made in the 1930s was to resign from the army. The second was the ease with which Seamus Costello insisted a certain volunteer should be shot dead, not shipped out to the USA.

I especially believe these mens thoughts are relevant to what later occurred, and indeed within SF, what is happening right up to this day.

Like

4. Garibaldy - September 17, 2009

Mick,

Goulding always hammered home that O’Donnell et al had made a major mistake in walking out of the movement. It was central to his thinking.

Like

5. Jim Monaghan - September 18, 2009

“Not really surprising that political innovation came from the Army. I think historically that was always the way, and it was SF where you had the higher concentration of traditionalists@
I think it is more than this. The activists were in the army and SF was considered a supplementary org. Connolly had a marxist version where there would be an inner core, the SPI and the LP would be the outer, vaguer periphery.
In the Sticks this transmuted partially into thesecret cumanns.
On Costello I would not take everything you hear as gospel. Yes, he was determined and some could say ruthless but not mindless. All of those who were in the army cannot claim to be squeamish. It was not a home for pacifists.
On criminality. My main objection is to the hyprocrisy about it. The apologists for state repression and their own stuff should stay quiet rather than claim to be innocent/ignorant about what he dogs in the street knew.
The Republicans and marxists share a belief that an insurresction is needed..
The probelm with Republicanism is the disconnect between winning mass support and their actions.

Like

6. Starkadder - September 19, 2009

Has anyone read Patterson’s “The Politics of Illusion” or
Sean Swan’s “Official Irish Republicanism”? If so, how do they
compare with TLR ?

Like

7. conormccabe1 - September 19, 2009

Sean Swan’s book is essentially a printed thesis, and so is nowhere near as polished as TLR. There is no index, it still retains its literature review, and there are typos galore. It could have done with a fresh pair of eyes. As far as content goes, though, I found it quite interesting. It’s well worth reading, and makes full use of the Workers party’s archives. It’s particularly good on the pre-split tensions, and clashes over direction, etc. It’s a fine piece of historical research, but it desperately needs an editor. and it’s a real pity because I think Swan has quite a readable style. I wouldn’t compare the two books, as they’re doing two different things. One’s aimed at a general readership, the other’s a justification for a doctorate. But because of that, they actually compliment each other quite well, and should be read in tandem. Both make clear, by the way, that although the split may have been exploited or wished for by the Southern Irish authorities, the reasons for it had deep roots within the organisation.

Like

WorldbyStorm - September 19, 2009

Conor, do you know if it’s possible to get a copy of it anywhere. I remember reading it donkey’s years ago in Raheny Library (I often wondered about the poitical inclinations of the staff there 😉 )…

It struck me at the time as coming very strongly from the BICO side of the fence in terms of analysis… but perhaps that’s my memory playing tricks with me.

Like

8. Garibaldy - September 19, 2009

There was a second edition of the Politics of Illusion in 1997 that still turns up in secondhand bookshops. The coverage of the DL split is somewhat disingenuous to say the least. The attitude that I saw in it was that he was a proper Marxist, unlike people like Connolly and Peadar O’Donnell. It wasn’t the book that people in The WP had been expecting as far as I know.

Like

WorldbyStorm - September 19, 2009

I have the first edition. Must go back and re-read it. I’ll bet the WP wasn’t happy, and arguably rightly so.

Like

9. Conor McCabe - September 19, 2009

WBS, is that the same book? Sean Swan’s book came out in 2007. Dublin City Library, though, have a copy, which is how I got to read it.

Like

WorldbyStorm - September 19, 2009

Hmmm…. perhaps not… not sure to be honest… when did he write the original thesis?

Like

Garibaldy - September 19, 2009

My mistake. I had assumed you were talking about the Patterson book because the Swan book was so recent.

Like

Conor McCabe - September 19, 2009

It was submitted to UU library in 2006.

Like

10. Garibaldy - September 19, 2009

You can download Swan’s book as a PDF from Lulu.com for about £3 or something.

Like

11. yourcousin - September 19, 2009

Having just finished Lost Revolution last night and Swan’s book earlier this summer I would say that they compliment each other very well. As WBS has noted before, TLR is a narrative with little analysis. Whereas Swan’s limited scope of study lets him to be a little more reflective. In this Swan has the edge for the events in Belfast and the lead up to the split. As Swan notes the Civil War history around Kerry as well as the fact that many of those expelled in the lead up to the split later affiliated with the Provos. But wouldn’t it be the case that I’ve got to go to work this morning before I do a real post about TLR.

Like

12. Garibaldy - September 19, 2009

Look forward to that post YC. Glad the work situation is improving too.

Like

13. splinteredsunrise - September 19, 2009

Scott Millar was saying at the Belfast launch yesterday that it was quite deliberately a narrative without analysis. I suppose if there was some big polemical agenda, they wouldn’t have got the access that they did. I’m finding myself having to apply my own knowledge and read between the lines quite a bit, but as a factual work it’s good and it certainly evokes the atmosphere.

Nearly finished reading TLR, and will probably spin several posts out of it. After that, it’ll be the Aiseirghe book, just for a change of pace.

Like

WorldbyStorm - September 19, 2009

And yet not as much as you might think…in terms of change of pace.

Like

splinteredsunrise - September 19, 2009

May I say too, nice to see so many people at the Belfast launch. But since I hadn’t seen many of them for years, it’s always a bit of a shock when they turn up looking much greyer. And a very very diverse crowd – some I might have counted on, but catching sight of IRSP people was a bit of a surprise given the history. All in all, with folks like Seamie Lynch and Mary Mac and Brian Feeney there, it was like being back in the 80s.

Like

14. Meyer Lansky - September 19, 2009

I think the TLR gives one of the first accounts of the fighting in Belfast in August 1969 Your Cousin. Swan doesn’t mention the various IRA efforts to pull the police away from Derry or the attempts at re-arming/up-arming or whatever you want to call it. Swan’s conclusion is strong though, especially on the WP’s confusion on working class unity and what it meant.

Like

15. Nightwatchman - September 19, 2009

‘And a very very diverse crowd – some I might have counted on, but catching sight of IRSP people was a bit of a surprise given the history. All in all, with folks like Seamie Lynch and Mary Mac and Brian Feeney there, it was like being back in the 80s.’

There was a very mixed crowd, including former members of almost every republican group. Couldn’t have happened even ten years ago. Good to see.

Like

16. splinteredsunrise - September 19, 2009

Maybe it’s time calming down some of the old animosities. Actually, a friend said to me the other day that I’d fit pretty well in the Sticks. I’m not sure I like that, but I wasn’t mortally offended by it. And if you look at the breadth of people willing to support the Garland campaign… a bit of detente is no bad thing.

Like

Garibaldy - September 19, 2009

Yes SS, it hasn’t gone unnoticed that The WP remains resolutely unlinked from the expanded political links section on your website :p

Seriously though I think there is a general recognition that the left is so weak – and I’d point once again to the absence of a left candidate from the Euro election in the north, and the absence of a hard left party from the Dáil (though that is likely to change at the next election) – that we have to find ways to cooperate much more. Various other means have been tried, and so we have to, especially at this time.

Like

WorldbyStorm - September 20, 2009

“I’d fit pretty well in the Sticks”

hmmmm, surely not 🙂

Like

splinteredsunrise - September 20, 2009

Garibaldy can rest easy, I have no plans to join the WP, and I suspect yer man was joking. But I do agree with the idea that, the left being as weak as it is, you need to find means of cooperation. I’d say they should be practical to start off with – I’ve no patience for these grandiose “time for left unity” proclamations the SWP go in for – but there are areas where links can be built for the benefit of all, and never mind who did what to whom in the 1970s.

No, I don’t have the allergic reaction to the WP that I used to. Those DL bastards are a different matter though. 🙂

Like

Garibaldy - September 20, 2009

I see I may have stated a falsehood on the links on your page SS. Apologies if so. Couldn’t agree more on the DLs. Especially that WBS so-and-so. Splitter!

Like

17. Ramzi Nohra - September 19, 2009

Good stuff.

A minor question on arms – didnt the IRA sell off a load of weapons to the Free Welsh Army (or some permutation of those words…). I’ve seen that reported in a few different works.
If true, it would give a different context (and arguably attach more culpability) on their relative inability to conjure up arms in ’69.

On the Garland campaign, my understanding is that SF is supporting it. Garibaldy I guess you would know – how is that going down with WP guys? ie is it creating an atmosphere of detente.. or do a lot of old suspicions remain?
thanks

Like

18. Garibaldy - September 19, 2009

Ramzi,

There were definitely some links with the Free Wales Army, although the arms question is more complicated. There were more weapons in Belfast than people think. And the other point to remember is that there was little support for weapons being there. You need somewhere to store them, and if you don’t have a great deal of support from the population, you don’t have it. This is an often overlooked factor in the situation in Belfast in August 1969.

On the Garland campaign, we are pleased to have support not only from people like Gerry Adams and Martin Ferris, as well as many more from their party, but also from other groups and parties, ranging from Fianna Fáil to Fine Gael to unionists and ex-members of The WP who went DL, or in other splits. Credit to all those supporting the campaign. You can find a list of prominent supporters (though not sure how current it is) at the website

http://www.seangarland.org

if you are interested.

Like

19. Watcher - September 20, 2009
20. Ramzi Nohra - September 20, 2009

Thanks G. I take your point on the storing of arms.

Like

21. yourcousin - September 21, 2009

Meyer,
I think I would disargee on TLR being one of the first accounts of the August fighting in Belfast. I would hate to have to go back through my books but I think even Grizzly Adams talks about how they “went out” to pull forces off of Derry in his books. I also think Swan covers the rearming in more detail.

Garibaldy,
I would ask where you get you information on the IRA not being able to store weapons up North and there not being the support for it. Swan deals with it quite specifically in his book. Swan, page 290 specifically deals with the issue of MacStiofain acting indepently of Dublin to smuggle weapons up North in early ’69. There’s also the part about old Republicans getting back involved due to fears of a pogrom and trying to acquire arms. and O Bradaigh asking Goulding point blank about IRA plans in case of a pogrom in July 1969 to which he replied “yes”.

On the day of the pogroms the IRA leadership were posing for film crews and hadn’t any weapons aside from their show pieces for the TV camera (TLR page 129). Swan deals with the same piece in more detail on pages 296-297 which talks covers the fact that Northern officers came down after the pogrom had started to get arms, only to be told that, “the weapons available were those that had been used in the camp that day, and that they were old and there was little ammo for. The northerners couldn’t believe this and were bitterly disappointed”. Those would be the weapons that Goulding ordered organized after he discovered what was going on (also on page 129 of TLR). So it’s not quite the principled thing that Garland stated of not wanting to escalate the situation or what you suggest of not having a place to store them. The shortage of arms may be more complicated than the Free Wales Army, but not by that much.

Like

22. Joe - September 21, 2009

I remember reading a letter from Cathal Goulding to the Sunday Tribune in the 80s in which he specifically denied that arms had been sold or given to the Free Wales Army. It was in response to the claim being made in some story in that paper. This would have been mid 80s when I was a member of the WP and I was very surprised that Goulding would write such a letter in that it implicitly acknowledged his IRA role in the 60s.

Like

23. Garibaldy - September 21, 2009

YC,

That comes from a conversation I had with one of the Belfast company QMs in 1969. Swan on p.298 says Goulding said in 1972 that there were arms but that he deliberately held them back because he believed this was what the unionist state wanted, but it was a miscalculation. Hard to know whether Ryan is right 35 or 40 years later, or Goulding was right in 1972.

Like

24. Scott Millar - September 21, 2009

The claim there were guns being held back is fanciful and I think has more to do with political considerations in 1972 than anything that was going on in 1969. Weapons were held back from Belfast in the lead up to August but post 14th everything that members could get their hands on went North (as far as myself and Brian’s research with numerous veterans indicates).

Claims of the selling of much weaponry to the Free Wales Army would seem to be similar to I Ran Away – something which is brought to the fore by elements in the years post the split. There was a high degree of contact between he FWA and IRA in the late 1960s, much encouraged by figures that went both ways in the split. In the book we indicate that explosives were transfered from the Welsh to the IRA and FWA members came to Ireland to train. In a book on the FWA there is claim by one of their former members that two Thompson guns were given to them by the IRA, if any such deals took place they were in the context of arms swaps rather than sales. Much consideration was being given to locating arms in the UK by IRA members during this period and claims that weapons were leaving the organization rather than coming in are just not borne out by any personal directly involved.

I have since publication been informed by a London based Provisional member than contact was maintained between their organization and the FWA into the 70s and further arms exchanges took place.

Like

WorldbyStorm - September 21, 2009

It’s amazing the mythology that has developed over this. I think I mentioned it when I posted up the July United Irishman form 1969 which showed a Free Welsh colour party… I wonder if that helped solidify certain ideas in people’s heads.

BTW Scott, nice to meet you the other week. And congratulations on how well the book is doing…

Like

25. Garibaldy - September 21, 2009

Thanks for that Scott. I’d agree entirely that the events of mid-August changed everything, in terms of popular support for the IRA and in terms of priorities for the movement.

Like

26. Paddy - October 18, 2009

How was Liam McMillen so well respected with the whole Republican Movement stick or provo as i here these things in bars and stuff????

Like

27. eejoynt - October 18, 2009

probably because (unlike his successors)
he had a wide circle of friends and a wide range of interests outside the movement, the Irish language movement being a case in point.
He was an interesting man and a great reconteur

Like

28. Irish Left Review · The Rise and Rise of the Irish Left - October 29, 2009

[…] concerned with the jockeying for position of the larger centre right political parties. Reading The Lost Revolution I was struck by a reference to the 1987 General Election which noted that the combined strength of […]

Like

29. Seán Garland, The Workers Party, And The Fools Republic « An Sionnach Fionn - August 1, 2011

[…] There’s none so hypocritical as those on the political Left, particularly the hard Left, so it’s been more than interesting to watch some of Ireland’s most well known communists and socialists, both the die-hards and the born-agains, lining up to defend former Workers Party leader Seán Garland, as he faces extradition to the United States. Just as interesting has been those who have kept well away from the court case, aware of their own shadowy past links to the bold Seán, the Workers Party, Sinn Féin and the Irish Republican Army. The hijacking of the leaderships of the latter two organisations by communists in the late 1960s and early ‘70s led to the split in the Irish Republican movement that gave birth to Provisional Sinn Féin (PSF / SF) and the Provisional IRA (PIRA / IRA). And the rest, as they say, is history. […]

Like

30. The Labour Party And The Official IRA – They Haven’t Gone Away, You Know « An Sionnach Fionn - August 23, 2011

[…] The hijacking of the leadership of the Irish labour Party by Official Sinn Féin / Official IRA Sinn Féin the Workers Party / Official IRA the Workers Party / Official IRA / Group B Democratic Left in the 1990s is one of the great putsches of Irish party politics. The sequence of events is clear enough. In the late 1960s the higher echelons of Sinn Féin and the Irish Republican Army had come under the influence of would-be communist revolutionaries more concerned with liberating the global working classes than the Irish population of the North of Ireland. The fact that the working classes of the world weren’t all that sanguine about the glories of communist liberation and that Irish citizens living in the north-east of the country were rather more concerned about being murdered in their beds by rampaging mobs from the British ethnic minority than Marx or Lenin never really bothered these newbie Reds. The proletariat would follow where the revolutionary leadership led them (for the leadership knew better). […]

Like

31. Rita cahull - May 20, 2012

We cannot let this government reform British regime as we do not want to turn back into British reform regime, no Brits allowed in Eire, good Friday agreement cannot be broken, we have to stop these bastards before they ruin this country, we are 100 per cent Irish bred, and I would like to keep my Celtic Irish roots, not British or uk, what is Sein fein going to do, to stop them, we need to stop LB and FG from ruining Ireland, no to this treaty, no to British, have you read Jean Monet 1998 it tells you all about Cameroons plans and merkel and Israel and Britain and northern Ireland’s real plan and it seems to follow a very huge pattern of corruption, also if you get a chance read green paper, pretty interesting of the 27 elected members plans, and bailouts and war plans to attack Iran, all to steal their oil, like Iraq, this government is very dangerous and need to be kicked out of government, well I said enough for now, Rita cahull

Like

32. Rita Cahull - May 20, 2012
GREEN PAPER Feasibility of introducing Stability Bonds DRAFT GREEN PAPER Feasibility of introducing Stability Bonds 1.RATIONALE AND PRE-CONDITIONS FOR STABILITY BONDS 1 1.1.Background This Green Paper has the objective to launch a broad public consultation on the conceptof Stability Bonds , with all relevant stakeholders and interested parties, i.e. Member States, financial market operators, financial market industry associations, academics, within the EU and beyond, and the wider public as a basis for allowing the European Commission to identify the appropriate way forward on this concept. The document assesses the feasibility of common issuance of sovereign bonds (hereafter” common issuance”) among the Member States of the euro area. 2 Sovereign issuance in the euro area is currently conducted by Member States on a decentralised basis, using various issuance procedures. The introduction of commonly issued Stability Bonds would mean a pooling of sovereign issuance among the Member States and the sharing of associate drevenue flows and debt-servicing costs. This would significantly alter the structure of the euro-area sovereign bond market, which is the largest segment in the euro-area financial market as a whole (see Annex 1 for details of euro-area sovereign bond markets). The concept of common issuance was first discussed by Member States in the late 1990s,when the Giovannini Group (which has advised the Commission on capital-market developments related to the euro) published a report presenting a range of possible options for co-ordinating the issuance of euro-area sovereign debt. 3 In September 2008, interest in common issuance was revived among market participants, when the European Primary Dealers Association (EPDA) published a discussion paper “A Common European Government Bond” 4 . This paper confirmed that euro-area government bond markets remainedhighly fragmented almost 10 years after the introduction of the euro and discussed the pros 1 The public discussion and literature normally uses the term “Eurobonds”. The Commission considersthat the main feature of such an instrument would be enhanced financial stability in the euro area.Therefore, in line with President Barroso’s State of the Union address on 28 September 2011, this GreenPaper refers to “Stability Bonds”. 2 In principle, common issuance could also extend to non-euro area Member States but would imply exchange rate risk. Several non-euro area Member States have already a large part of their obligations denominated in euro, so this should not represent a significant obstacle. All EU Member States might havean interest in joining the Stability Bond, especially if that would help reducing and securing their funding costs and generates positive effects on the economy through the internal market. From the point of view of the Stability Bond, the higher the number of Member States participates, the bigger are likely to be the positive effects, notably stemming from larger liquidity. 3 Giovannini Group: Report on co-ordinated issuance of public debt in the euro area (11/2000).http://ec.europa.eu/economy_finance/publications/giovannini/giovannini081100en.pdf . 4 See A European Primary Dealers Association Report Points to the Viability of a Common EuropeanGovernment Bond,http://www.sifma.org/news/news.aspx?id=7436. common issuance in the EMU@10 report. The intensification of the euro-area sovereign debt crisis has triggered a wider debate onthe feasibility of common issuance. 5 A significant number of political figures, marketanalysts and academics have promoted the idea of common issuance as a potentially powerfulinstrument to address liquidity constraints in several euro-area Member States. Against this background, the European Parliament requested the Commission to investigate the feasibility of common issuance in the context of adopting the legislative package on euro-area economic governance, underlining that the common issuance of Stability Bonds would also require a further move towards a common economic and fiscal policy. 6 While common issuance has typically been regarded as a longer-term possibility, the more recent debate has focused on potential near-term benefits as a way to alleviate tension in the sovereign debt market. In this context, the introduction of Stability Bonds would not come at the end of a process of further economic and fiscal convergence, but would come in parallel with and foster the establishment and implementation of the necessary framework for such convergence. Such a parallel approach would require an immediate and decisive advance in the process of economic, financial and political integration within the euro area. The Stability Bond would differ from existing jointly issued instruments. Stability Bonds would be an instrument designed for the day-to-day financing of euro-area general governments through common issuance. In this respect, they should be distinguished from other jointly issued bonds in the European Union and euro area, such as issuance to financeexternal assistance to Member States and third countries. 7 Accordingly, the scale of Stability Bond issuance would be much larger and more continuous than that involved in the existing forms of national or joint issuance. 5 See Annex 2 for an overview of analytical contributions to the Stability Bonds debate. 6 European Parliament resolution of 6 July 2011 on the financial, economic and social crisis: recommendations concerning the measures and initiatives to be taken ((2010/2242(INI) states:” …13. Calls on the Commission to carry out an investigation into a future system of Eurobonds, with a view to determining the conditions under which such a system would be beneficial to all participating Member States and to the euro area as a whole; points out that Eurobonds would offer a viable alternative to the US dollar bond market, and that they could foster integration of the European sovereign debt market, lower borrowing costs, increase liquidity, budgetary discipline and compliance with the Stability and Growth Pact (SGP), promote coordinated structural reforms, and make capital markets more stable, which will foster the idea of the euro as a global ‘safe haven’; recalls that the common issuance of Eurobonds requires a further move towards a common economic and fiscal policy;14. Stresses, therefore, that when Eurobonds are to be issued, their issuance should be limited to a debt ratio of 60% of GDP under joint and several liability as senior sovereign debt, and should be linked to incentives to reduce sovereign debt to that level; suggests that the overarching aim of Eurobonds should be to reduce sovereign debt and to avoid moral hazard and prevent speculation against the euro; notes that access to such Eurobonds would require agreement on, and implementation of, measurable programmes of debt reduction ;” 7 E.g. bonds issued by the Commission under the Balance of Payments Facility/EFSM and bonds issued by the EFSF or issuance to finance large-scale infrastructure projects with a cross-country dimension(e.g. project bonds to be possibly issued by the Commission). The various types of joint issuance and other instruments similar to Stability Bonds are discussed in Annex 3 Issuance of Stability Bonds could be centralised in a single agency or remain decentralised at the national level with tight co-ordination among the Member States. The distribution of revenue flows and debt-servicing costs linked to Stability Bonds would reflect the respective issuance shares of the Member States. Depending on the chosen approach to issuing Stability Bonds, Member States could accept joint-and-several liabilityfor all or part of the associated debt-servicing costs, implying a corresponding pooling of credit risk. Many of the implications of Stability Bonds go well beyond the technical domain andinvolve issues relating to national sovereignty and the process of economic and political integration. These issues include reinforced economic policy coordination and governance and, under some options, the need for Treaty changes. The more extensively credit risk would be pooled among sovereigns, the lower would be market volatility but also market discipline on any individual sovereign. Thus fiscal stability would have to rely more strongly on discipline provided by political processes. Equally, some of the pre-conditions for the success of Stability Bonds, such as a high degree of political stability and predictability or the scope of backing by monetary authorities, go well beyond the more technical domain. Any type of Stability Bond would have to be accompanied by a substantially reinforced fiscal surveillance and policy coordination as an essential counterpart, so as to avoidmoral hazard and ensure sustainable public finances. This would necessarily have implications for fiscal sovereignty, which calls for a substantive debate in euro area member states. As such issues require in-depth consideration, this paper has been adopted by the Commission so as to launch a necessary process of political debate and public consultation on thefeasibility of and the pre-conditions for introducing Stability Bonds. 1.2.Rationale The debate on common issuance has evolved considerably since the launch of the euro .Initially, the rationale for common issuance focused mainly on the benefits of enhanced market efficiency through enhanced liquidity in euro-area sovereign bond market and the wider euro-area financial system. More recently, in the context of the ongoing sovereign crisis, the focus of debate has shifted toward crisis management and stability aspects. Againstthis background, the main benefits of common issuance can be identified as: Managing the current crisis and preventing future sovereign debt crises The prospect of Stability Bonds could potentially quickly alleviate the current sovereigndebt crisis, as the high-yield Member States could benefit from the stronger credit worthiness of the low-yield Member States . Even if the introduction of Stability Bonds could take some time (see Section 2), prior agreement on common issuance could have an immediate impact on market expectations and thereby lower average and marginal funding costs for those Member States currently facing funding pressures. However, for any such effect to be durable, a roadmap towards common bonds would have to be accompanied by parallel commitments to stronger economic governance, which would guarantee that the necessary budgetary and structural adjustment to assure sustainability of public financeswould be undertaken. Reinforcing financial stability in the euro area Stability Bonds would make the euro-area financial system more resilient to futureadverse shocks and so reinforce financial stability . Stability Bonds would provide all participating Member States with more secure access to refinancing, preventing a sudden lossof market access due to unwarranted risk aversion and/or herd behaviour among investors.Accordingly, Stability Bonds would help to smooth market volatility and reduce or eliminatethe need for costly support and rescue measures for Member States temporarily excludedfrom market financing . The positive effects of such bonds are dependent on managing the potential disincentives for fiscal discipline. This aspect will be discussed more thoroughly inSection 1.3 and Section 3. The euro-area banking system would benefit from the availability of Stability Bonds. Banks typically hold large amounts of sovereign bonds, as low-risk, low-volatility and liquidinvestments. Sovereign bonds also serve as liquidity buffers, because they can be sold atrelatively stable prices or can be used as collateral in refinancing operations. However, asignificant home bias is evident in banks’ holdings of sovereign debt, creating an importantlink between their balance sheets and the balance sheet of the domestic sovereign. If the fiscal position of the domestic sovereign deteriorates substantially, the quality of available collateralto the domestic banking system is inevitably compromised, thereby exposing banks torefinancing risk both in the interbank market and in accessing Eurosystem facilities. StabilityBonds would provide a source of more robust collateral for all banks in the euro area,reducing their vulnerability to deteriorating credit ratings of individual Member States.Similarly, other institutional investors (e.g. life insurance companies and pension funds),which tend to hold a relatively high share of domestic sovereign bonds, would benefit from amore homogenous and robust asset in the form of a Stability Bond Facilitating transmission of monetary policy Stability Bonds would facilitate the transmission of euro-area monetary policy. Thesovereign debt crisis has impaired the transmission channel of monetary policy, asgovernment bond yields have diverged sharply in highly volatile markets. In some extremecases, the functioning of markets has been impaired and the ECB has intervened via theSecurities Market Programme. Stability Bonds would create a larger pool of safe and liquidassets. This would help in ensuring that the monetary conditions set by the ECB would passsmoothly and consistently through the sovereign bond market to the borrowing costs of enterprises and households and ultimately into aggregate demand. Improving market efficiency Stability Bonds would promote efficiency in the euro-area sovereign bond market and inthe broader euro-area financial system . Stability Bond issuance would offer the possibilityof a large and highly liquid market, with a single benchmark yield in contrast to the currentsituation of many country-specific benchmarks. The liquidity and high credit quality of theStability Bond market would deliver low benchmark yields, reflecting correspondingly low credit risk and liquidity premiums (see Box 1). A single set of “risk free” Stability Bond benchmark yields across the maturity spectrum would help to develop the bond market more broadly, stimulating issuance by non-sovereign issuers, e.g. corporations, municipalities, andfinancial firms. The availability of a liquid euro-area benchmark would also facilitate thefunctioning of many euro-denominated derivatives markets. The introduction of StabilityBonds could be a further catalyst in integrating European securities settlement, in parallelwith the planned introduction of the ECB’s Target2 Securities (T2S) pan-European commonsettlement platform and possible further regulatory action at EU level. In these various ways,the introduction of Stability Bonds could lead to lower financing costs for both the publicsector and the private sector in the euro area and thereby underpin the longer-term growth potential of the economy. Box 1: The expected yield of Stability Bonds – the empirical support The introduction of Stability Bonds should enhance liquidity in euro-area government bond markets,thereby reducing the liquidity premium investors implicitly charge for holding government bonds.This box presents an attempt to quantify how large the cost savings through a lower liquidity premiumcould be. A second component of the expected yield on Stability Bonds, namely the likely credit risk premium has proven more controversial. Both the liquidity and credit premiums for a Stability Bondwould crucially depend on the options chosen for the design and guarantee structure of such bonds. Several empirical analyses compared the yield of hypothetical commonly-issued bonds with theaverage yield of existing bonds. These analyses assume that there is neither a decline in the liquidity premium nor any enhancement in the credit risk by the common issuance beyond the average of theratings of Member States. Carstensen (2011) estimated that the yield on common Bonds, if simply aweighted average of interest rates of Member States, would be 2 percentage points above the German10-year Bund. Another estimate (Assmann, Boysen-Hogrefe (2011), as cited by Frankfurter Allgemeine Zeitung (2011)) concluded that the yield difference to German bunds could be 0.5 to 0.6of a percentage point. The underlying reasoning is that fiscal variables are key determinants of sovereign bond spreads. In fiscal terms, the euro-area aggregate would be comparable to France;therefore the yield on common bonds would be broadly equal to that on French bonds. An analysis byJ.P Morgan (2011), using a comparable approach, yields a similar range of around 0.5 to 0.6 of a percentage point. A further analysis along these lines by the French bank NATIXIS (2011) suggeststhat common bonds could be priced about 20 basis points above currently AAA-rated bonds. Faveroand Missale (2010) claim that US yields, adjusted for the exchange rate premium, are a good benchmark for yields on common bonds, because such bonds would aim to make the euro-area bondmarkets similar to the US market in terms of credit risk and liquidity. They find that in the years before the financial crisis the yield disadvantage of German over US government bonds was around 40 basis points, which would then represent the liquidity gains obtained from issuing common bondsunder the same conditions as US bonds.In order to provide an estimate of the attainable gains in the liquidity premium, the Commission hasconducted a statistical analysis of each issuance of sovereign bonds in the euro area after 1999. Thesize of the issuance is used as an approximation (as it is the most broadly available indicator even if itmight underestimate the potential gain in liquidity premia) of how liquid a bond issuance is, and thecoefficient in a regression determines the attainable gains from issuing bonds in higher volumes. 8 The issuance sizes as recorded in Dealogic have been adjusted to incorporate the size of adjacentissuances with similar maturity and settlement date. To adjust for differences in time-dependent marketconditions, control variables are introduced for the impact of the level of the interest rate (the 2-year swaprate) and of the term structure (the difference between the 10-year and the 2-year swap rates) prevailing at A first model is estimated using data on AAA-rated euro-area Member States (labelled “AAA” in thetable), and a second model is estimated using data on all available euro-area Member States (labelled”AA”). The second model also controls for the rating of each issuance. It emerges that all coefficientsare significant at conventional levels, and between 70 and 80% of the variation is explained by theestimation. Table: Model estimates and expected change in yield due to lower liquidity premium DEAAAAADEAAAAAYield (%) – model based3.683.633.871.922.432.63Yield change with US market size-0.07-0.09-0.17-0.07-0.17-0.17 Historical average 1999-20112011 market conditions To obtain the gain in the liquidity premium, the coefficients from the model estimate were used tosimulate the potential fall in yields of bonds that were issued in the average US issuance size rather than the average euro-area issuance volume. Hence, the US’s issuance size serves as a proxy for howliquid a Stability Bond market might become. In a first set of calculation, the liquidity advantage wasderived from the average historical “portfolio” yield since 1999. For comparison, the samecalculations were made assuming the market conditions of summer 2011.The table’s second row indicates that the yield gain due to higher issuing volume would be in the rangeof 10 to 20 basis points for the euro area, depending on the credit rating achieved, but rather independent on whether the historical or recent market conditions were used. The corresponding gainin the yield for Germany would be around 7 basis points. The simulations demonstrate that theexpected gain in the liquidity premium is rather limited and decreases for Member States that already benefit from the highest rating.While it is obvious that the Members States currently facing high yields would benefit from both the pooling of the credit risk and the improved liquidity of the common bonds, the current low-yieldMember States could face higher yields in the absence of any improvement in the credit risk of thecurrent high-yield issuers. In principle, compensatory side payments could redistribute the gainsassociated with the liquidity premium, but in the absence of better governance the overall creditquality of the euro area debt could in fact deteriorate as a result of weaker market discipline to theextent that the current low-yield Member States would face increased funding costs. Enhancing the role of the euro in the global financial system Stability Bonds would facilitate portfolio investment in the euro and foster a morebalanced global financial system. The US Treasury market and the total euro-area sovereign bond market are comparable in size, but fragmentation in euro-denominated issuance meansthat much larger volumes of Treasury bonds are available than for any of the individualnational issuers in the euro area. On average since 1999, the issuance size of 10-year USTreasury bonds has been almost twice the issuing size of the Bund and even larger than bondsissued by any other EU Member State. According to available data, trading volumes in the USTreasury cash market are also a multiple of those on the corresponding euro-area market,where liquidity has migrated to the derivatives segment. High liquidity is one of the factorscontributing to the prominent and privileged role of US Treasuries in the global financialsystem (backed by the US dollar as the sole international reserve currency), thereby attractinginstitutional investors. Accordingly, the larger issuance volumes and more liquid secondary markets implied by Stability Bond issuance would strengthen the position of the euro as aninternational reserve currency. 1.3.Preconditions While Stability Bonds would provide substantial benefits in terms of financial stabilityand economic efficiency, it would be essential to address potential downsides. To this end,important economic, legal and technical preconditions would need to be met. These pre-conditions, which could imply Treaty changes and substantial adjustments in the institutionaldesign of EMU and the European Union, are discussed below. Limiting moral hazard Stability Bonds must not lead to a reduction in budgetary discipline among euro-areaMember States . A notable feature of the period since the launch of the euro has beeninconsistency in market discipline of budgetary policy in the participating Member States.The high degree of convergence in euro-area bond yields during the first decade of the eurowas not, in retrospect, justified by the budgetary performance of the Member States. Thecorrection since 2009 has been abrupt, with possibly some degree of overshooting. Despitethis inconsistency, the more recent experience confirms that markets can discipline national budgetary policies in the euro area. With some forms of Stability Bonds, such disciplinewould be reduced or lost altogether as euro-area Member States would pool credit risk for some or all of their public debt, implying a risk of moral hazard. Moral hazard inherent incommon issuance arises since the credit risk stemming from individual lack of fiscaldiscipline would be shared by all participants. As the issuance of Stability Bonds may weaken market discipline, substantial changes inthe framework for economic governance in the euro area would be required . Additionalsafeguards to assure sustainable public finances would be warranted. These safeguards wouldneed to focus not only on budgetary discipline but also on economic competitiveness (seeSection 3). While the adoption of the new economic governance package already provides asignificant safeguard to be further reinforced by new regulations based on Article 136 9 , theremay be a need to go still further in the context of Stability Bonds – notably if a pooling of credit risk was to be involved. If Stability Bonds were to be seen as a means to circumventmarket discipline, their acceptability among Member States and investors would be put indoubt. Ensuring high credit quality and that all Member States benefit from Stability Bonds Stability Bonds would need to have high credit quality to be accepted by investors .Stability Bonds should be designed and issued such that investors consider them a very safeinvestment. Consequently, the acceptance and success of Stability Bonds would greatly benefit from the highest rating possible. An inferior rating could have a negative impact on its 9 Proposal for a Regulation of the European Parliament and of the Council on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area; Proposal for a Regulation of the European Parliament and of the Council on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area. pricing (higher yield than otherwise) and on investors’ willingness to absorb sufficiently largeamounts of issuance. This would particularly be the case if Member States’ national AAAissuance would continue and thereby co-exist and compete with Stability Bonds. High creditquality would also be needed to establish Stability Bonds as an international benchmark andto underpin the development and efficient functioning of related futures and optionsmarkets. 10 In this context, the construction of Stability Bonds would need to be sufficientlytransparent to allow investors to price the underlying guarantees. Otherwise, there is a risk that investors would be sceptical of the new instrument and yields would be considerablyhigher than the present yields for the more credit-worthy Member States. Achieving a high credit quality will also be important to ensure the acceptance of Stability Bonds by all euro-area Member States. One key issue is how risks and gains aredistributed across Member States. In some forms, Stability Bonds would mean that Member States with a currently below-average credit standing could obtain lower financing costs,while Member States that already enjoy a high credit rating may even incur net losses, if theeffect of the pooling of risk dominated the positive liquidity effects. Accordingly, support for Stability Bonds among those Member States already enjoying AAA ratings would require anassurance of a correspondingly high credit quality for the new instrument so that the financingcosts of their debt would not increase. As explained, this again would rest on a successfulreduction of moral hazard. The acceptability of Stability Bonds might be further assured by amechanism to redistribute some of the funding advantages between the higher-and lower-rated Member States (see Box 2). The credit rating for Stability Bonds would primarily depend on the credit quality of theparticipating Member States and the underlying guarantee structure. 11 – With several (not joint) guarantees , each guaranteeing Member State would be liable for its share of liabilities under the Stability Bond according to a specific contribution key. 12 Provided that Member States would continue to obtain specific ratings, a downgrade of alarge Member State would be very likely to result in a corresponding downgrade of theStability Bond, although this would not necessarily have an impact on the rating of theother Member States. In present circumstances with only six AAA euro-area Member States, a Stability Bond with this guarantee structure would not be assigned an AAAcredit rating and could even be rated equivalently with the lowest-rated Member State. – With several (not joint) guarantees enhanced by seniority and collateral , eachguaranteeing Member State would again remain liable for its own share of Stability Bondissuance. However, to ensure that Stability Bonds would always be repaid, even in case of default, a number of credit enhancements could be considered by the Member States.First, senior status could be applied to Stability Bond issuance. Second, Stability Bonds 10 The experience of rating the EFSF bonds has showed that a rating of the bond superior to the averageguarantees made by participating Member States was accomplished by different tools such as holding cash buffers, loss-absorbing capital and over-guaranteeing the issuance size. While these elements have beencomplex to manage in the case of the EFSF, they may prove useful in reinforcing the credit rating of theStability Bond. 11 In this section, the terms several guarantee and joint and several guarantee are used in an economicsense that may not be identical to their legal definitions. 12 Such as an EU budget or ECB capital key could be partially collateralised (e.g. using cash, gold, shares of public companies etc.).Third, specific revenue streams could be earmarked to cover debt servicing costs relatedto Stability Bonds. The result would be that the Stability Bonds would achieve an AAArating, although the ratings on the national bonds of less credit-worthy Member Stateswould be likely to experience a relative deterioration. – With joint and several guarantees , each guaranteeing Member State would be liable notonly for its own share of Stability Bond issuance but also for the share of any other Member State failing to honour its obligations. 13 . Even under this guarantee structure,Stability Bonds may not obtain or maintain an AAA rating if a limited number of AAA-rated Member States would be required to guarantee very large liabilities of other lower-rated Member States. There is also a non-negligible risk that a cascade of ratingdowngrades could be set in motion, e.g. a downgrading of a larger AAA-rated Member State could result in a downgrading of the Stability Bond, which could in turn feedback negatively to the credit ratings of the other participating Member States due to their contingent liability for all Stability Bond issuance. Accordingly, appropriate safe guards would be essential to assure budgetary discipline among the participating Member Statesvia a strong economic governance framework (and possibly seniority of Stability Bonds over national bonds under an option where these would continue to exist). Box 2: Possible redistribution of funding advantages between Member States The risk of moral hazard associated with Stability Bond issuance with joint guarantees might bead dressed by a mechanism to redistribute some of the funding advantages of Stability Bond issuance between the higher- and lower-rated Member States. Such a mechanism could make the issuance of Stability Bonds into a win-win proposition for all euro-area Member States. A stylised example using two Member States can be used to demonstrate: The government debt of both Member States amounts to about EUR 2 billion, but Member State A pays a yield of 2%, while Member State B pays a yield of 5% on national issuance with 5-year maturity. Stability Bond issuance would finance both Member States fully, with maturity of 5 yearsand an interest rate of 2%). The distribution of Stability Bond issuance would be 50% for each Member State. Part of the funding advantage that Member State B would enjoy from Stability Bond issuance could be redistributed to Member State A. For example, a 100bps discount for Member State A could befinanced from the 300 bps premium for Member State B. Accordingly, the Stability Bond could fund Member State A at a yield of 1% and fund Member State B at a yield of 3%. Both Member States would have lower funding costs relative to national issuance. Needless to say, the mechanism for internal distribution of the benefits from Stability Issuance would need to be formulated but would be linked to relative budgetary performance in the context of the euro-area economic governance framework. Ensuring consistency with the EU Treaty Consistency with the EU Treaty would be essential to ensure the successful introduction of the Stability Bond. Firstly, Stability Bonds must not be in breach of the Treaty prohibition However, in such circumstances, participating Member States would have a claim on the defaulting Member State. on the “bailing out” of Member States. The compatibility of Stability Bonds with the current Treaty framework depends on the specific form chosen. Some options could require changesin the relevant provisions of the Treaty. Article 125 of the Treaty on the functioning of the European Union (TFEU) prohibits Member States from assuming liabilities of another Member State. Issuance of Stability Bonds under joint and several guarantees would a priori lead to asituation where the prohibition on bailing out would be breached. In such a situation, aMember State would indeed be held liable irrespective of its ‘regular’ contributing key, should another Member State be unable to honour its financial commitments. In this case, anamendment to the Treaty would be necessary. This could be made under the simplified procedure if a euro area common debt management office were constructed under an inter-governmental framework, but would most likely require the use of the ordinary procedure if itwere placed directly under EU law since it would extend the competences of the EU. Unless aspecific basis is established in the Treaty, an EU-law based approach would probably require the use of Article 352 TFEU, which implies a unanimous vote of the Council and the consent of the European Parliament. The issuance of Stability Bonds and the tighter economic and fiscal coordination needed for ensuring its success would also most likely require significant changes to national law in a number of Member States 14 . Issuance of Stability Bonds under several but not joint guarantees would be possible within the existing Treaty provisions. For example , increasing substantially the authorised lending volume of the ESM and changing the lending conditions with a view to allowing it toon-lend the amounts borrowed on the markets to all euro-area Member States could be constructed in a way compatible with Article 125 TFEU, provided the pro-rata nature of the contributing key attached to the ESM remains unchanged. The same reasoning would apply toissuances of a possible common debt management office, whose liabilities would remain limited to a strictly pro-rata basis. The Treaty would also need to be changed if a significantly more intrusive euro-area economic governance framework was to be envisaged . Depending on the specific characteristics of Stability Bonds, fiscal and economic governance and surveillance in participating Member States would have to be reinforced to avoid the emergence of moral hazard. Further qualitative changes in governance beyond the proposals included in the23 November package will probably require changes in the Treaty. Section 3 discusses such options of reinforced fiscal governance in more depth. 2.OPTIONS FOR ISSUANCE OF STABILITY BONDS Many possible options for issuance of Stability Bonds have been proposed, particularlysince the onset of the euro-area sovereign crisis. However, these options can be generally 14 For example, the German Constitutional Court ruling of 7 September 2011 prohibits the Germanlegislative body to establish a permanent mechanism, ” which would result in an assumption of liability for other Member States’ voluntary decisions, especially if they have consequences whose impact is difficult tocalculate. ” It also requires that also in a system of intergovernmental governance, the Parliament mustremain in control of fundamental budget policy decisions. categorised under three broad approaches, based on the degree of substitution of nationalissuance (full or partial) and the nature of the underlying guarantee (joint and several or several) implied. The three broad approaches are 15 :1.the full substitution of Stability Bond issuance for national issuance, with joint andseveral guarantees;2.the partial substitution of Stability Bond issuance for national issuance, with joint andseveral guarantees; and3.the partial substitution of Stability Bond issuance for national issuance, with several butnot joint guarantees.In this section, each of the three approaches is assessed in terms of the benefits and preconditions outlined in Section 1. 2.1.Approach No. 1: Full substitution of Stability Bondissuance for national issuance, with joint and severalguarantees Under this approach, euro-area government financing would be fully covered by theissuance of Stability Bonds with national issuance discontinued . While Member Statescould issue Stability Bonds on a decentralised basis via a coordinated procedure, a moreefficient arrangement would imply the creation of a single euro-area debt agency. 16 Thiscentralised agency would issue Stability Bonds in the market and distribute the proceeds toMember States based on their respective financing needs. On the same basis, the agencywould service Stability Bonds by gathering interest and principal payments from the Member States. The Stability Bonds would be issued under joint and several guarantees provided byall euro-area Member States, implying a pooling of their credit risk. Given the joint-and-several nature of guarantees, the credit rating of the larger euro-area Member States wouldmost likely dominate in determining the Stability Bond rating, suggesting that a StabilityBond issued today could be expected to have a high credit rating. Nevertheless, the design of the cross-guarantees embedded in Stability Bonds and the implications for credit rating andyields would need to be more thoroughly analysed. This approach would be most effective in delivering the benefits of Stability Bondissuance. The full substitution of Stability Bond issuance for national issuance would assurefull refinancing for all Member States irrespective of the condition of their national publicfinances. In this way, the severe liquidity constraints currently experienced by some Member States could be overcome and the recurrence of such constraints would be avoided in the future. This approach would also create a very large and homogenous market for Stability Bonds, with important advantages in terms of liquidity and reduced liquidity risk premia. The new Stability Bonds would provide a common euro-area benchmark bond and so offer a more efficient reference framework for the pricing of risk throughout the euro-area financial 15 A fourth approach involving full substitution of Stability Bonds and several but not joint guarantees would also be possible but is not considered, as it would not be materially different from the existing issuance arrangements. In addition, hybrid cases could be conceived, for example several guarantees on debt obligations coupled with a limited joint guarantee to cover short-term liquidity gaps. 16 See section 4 for a review of the advantages and disadvantages of centralised and decentralised issuance system. By assuring high quality government-related collateral for financial institutions in all Member States, it would maximise the benefits of common issuance in improving there silence of the euro-area financial system and in improving monetary-policy transmission. The Stability Bond under this approach would also provide the global financial system with a second safe-haven market of a size and liquidity comparable with the US Treasury market and so would be most effective in promoting the international role of the euro. At the same time, this approach would involve the greatest risk of moral hazard. Member States could effectively free ride on the discipline of other Member States, without any implications for their financing costs. Accordingly, this approach would need to be accompanied by a very robust framework for delivering budgetary discipline and economic competitiveness at the national level. Such a framework would require a significant further step in economic, financial and political integration compared with the present situation. Without this framework, however, it is unlikely that this ambitious approach to Stability Bond issuance would result in an outcome that would be acceptable to Member States and investors. Given the joint-and-several guarantees for the Stability Bond and the robustness required in the underlying framework for budgetary discipline and economic competitiveness, this approach to Stability Bond issuance would almost certainly require Treaty changes. Under this approach, the perimeter of government debt to be issued via Stability Bonds would need to be defined . In several Member States, bonds are not only issued by central governments but also by regional or municipal governments. 17 In principle, one might opt for including sub-national issuance. The obvious advantage would be that the potential benefits in terms of market stability, liquidity and integration would be broadened. It would also be consistent with the EU approach to budgetary surveillance, which covers the entire general government debt and deficits. On the other hand, pooling issuance only of central governments might deliver a more transparent and secure arrangement. Central government data are typically more easily accessed, which is not always the case for local authorities Moreover, the issuance would cover only deficits fully controlled by central governments. From a purely market point of view, such Stability Bonds would replace only widely known central government bonds, which would facilitate the assessment and valuation of the new Stability Bonds. 18 The process for phasing-in under this approach could be organised in different ways depending on the desired pace of introduction. Under an accelerated phasing-in, new issuances would be entirely in the form of Stability Bonds and outstanding government bonds could be converted into new Stability Bonds, i.e. in form of a switch of a certain amount of national government bonds in exchange for new Stability Bonds. The main advantage of this option would be the almost immediate creation of a liquid market with a complete benchmark yield curve. The buy-back of legacy bonds could also alleviate the current acute financing problems of the Member States with high debt and high interest rates. However, the operation may be complicated and would require careful calibration of the conversion rate to minimise market disruption. An alternative would be a more gradual scheme, i.e. full, or even only 17 This is the case in particular for Germany and to a lesser extent for Spain and France. 18 This narrow coverage of Stability Bonds would imply that Member States would have to commit not to issue own national, or other sovereign, bonds, including their sub-federal entities if these are included inthe system of joint issuance concentrated in the national bonds, amplifying the credit risk. 22 The intensified market pressures on national issuance would provide market discipline. A key issue in this approach would be the specific criteria for determining the relative proportions of Stability Bond and national issuance. The main options would be: – A simple rule-based system: For example, each Member State could be entitled to an amount of Stability Bonds equal to a specified percentage of its GDP, perhaps reflecting the Treaty criterion of 60%. An important dimension to consider is how much risk would be concentrated on the national (and junior) part, this being dependent on the size of the common issuance (the higher the share of Stability Bond This approach to Stability Bond issuance is less ambitious than the full-issuanceapproach above and so delivers less in terms of economic and financial benefits. Due totheir seniority over the national bonds and guarantee structure, the Stability Bonds would posea very low credit risk, the latter reflected in high credit ratings (i.e. AAA). The yield on theStability Bonds would therefore, be comparable with yields on existing AAA government bond in the euro area. In consequence, there would be corresponding benefits in terms of euro-area financial stability, monetary policy transmission and the international role of theeuro, although these would be less than under the more ambitious approach of fullsubstitution of Stability Bond issuance for national issuance. As the build-up phase inStability Bond issuance toward the agreed ceiling would most likely take several years, allMember States could, during the start-up phase, have very broad access to financial markets Delpla and von Weizsäcker argue that, due to the high default risk, red debt should largely be kept outof the banking system, by becoming no longer eligible for ECB refinancing operations and subject to painful capital requirements in the banking system. via Stability Bonds. This would overcome possible liquidity constraints faced by someMember States but for that period give rise to the same moral hazard implications asdiscussed in Section 2.1 under full issuance. Given that a return to national issuance for theselatter Member States would be required when the Stability Bond ceiling would be reached,they would need to provide reassurance that during this time they would undertake the budgetary adjustments and structural reforms necessary to reassure investors and so maintainaccess to markets after the introductory period. The yields on the newly issued national bondswould, however, rise due to their junior status. Ultimately, assuming a reasonably high proportion of Stability Bond issuance has been reached, the market would be expected to beliquid, but less liquid than if all issuances were in Stability Bonds as the residual national bonds would also hold a certain market share. On the other hand, the preconditions for Stability Bond issuance would be somewhatless binding under this approach. Establishing a ceiling for Stability Bond issuance wouldhelp to reduce moral hazard by maintaining a degree of market discipline through the residualnational issuance. However, the relationship between moral hazard, market discipline, andcontagion risk in determining the appropriate Stability Bond ceiling is not straightforward. Arelatively low Stability Bond ceiling (implying a large amount of residual national issuance)would limit moral hazard but could leave Member States with existing high debt levelsvulnerable to the risk of catastrophic default on their national issuance. Such a catastrophicdefault would carry contagion risk for the euro area as a whole. A relatively high StabilityBond ceiling (implying a small amount of residual national issuance) would imply a greater risk of moral hazard but would still allow the possibility of default in a Member State withless catastrophic effects and less contagion risk for euro area as a whole. A robust framework for maintaining fiscal discipline and economic competitiveness at national level would still berequired to underpin the Stability Bond issuance, although the market discipline provided viathe retention of national issuance might imply a less dramatic transfer of sovereignty thanunder the approach of full Stability Bond issuance. Meanwhile, the choice of ceiling wouldalso determine the likely credit quality of the Stability Bond. A relatively low ceiling wouldunderpin the credit quality of Stability Bonds by limiting the amount of debt covered by thestronger joint and several guarantees. 23 The joint-and-several guarantee for the Stability Bondwould almost certainly require Treaty changes. The process for phasing-in under this approach could again be organised in differentways depending on the desired pace of introduction. Under an accelerated phasing-in, acertain share of outstanding euro-area government bonds would be replaced by StabilityBonds at a pre-specified date using pre-specified factors. This would rapidly establish acritical mass of outstanding Stability Bonds and a sufficiently liquid market with a complete benchmark yield curve. However, it could imply that most Member States reach the ceilingsat the moment of the switch and that they would have to continue tapping capital markets withnational bonds. Under current market conditions, this might constitute a drawback for someMember States. Under a more gradual phasing-in, all (or almost all) new gross issuance for 23 The proposal by Bruegel sets the ceiling at 60% of GDP, using the Maastricht criterion as reference butother proposals with even lower ceilings have been made. Indeed, it has been argued that a sufficiently lowceiling virtually guarantees zero default risk on Eurobonds. A standard assumption in the pricing of default risks is that in the case of default 40% of the debt can be recovered. Applying this consideration to sovereign debt, a ceiling below the recovery value would imply that the debt issued under the common scheme will be served under any condition Member States would be in Stability Bonds until the Stability Bond issuance target ceiling isreached. Since for several years only (or nearly only) Stability Bonds would be issued, thisapproach would help to ease market pressure and give vulnerable Member States time for thereforms to take effect. However, specific challenges emerge for the transition period, ashighly indebted countries typically have larger and more frequent rollovers. Unless other arrangements are agreed, their debt replacement with Stability Bonds up to the ceiling will bemore rapid than the average, while for countries with debt below the ceiling, it would takelonger. In consequence, the individual risk, which a possible “joint-and-several” guarantee iscovering, would be skewed to the higher side in the transition phase, while on the other sidethe liquidity effect, which should compensate the AAA countries, would still be small. Thisspecificity may need to be reflected in the governance arrangements. For example, analternative could be to set annual predefined ceilings, rising slowly from zero to the desiredlong-term value.Due to the need for changes to the Treaty, the implementation of this approach might alsotake, as for Approach No 1, some considerable time, although the lesser degree of necessarychanges to economic and fiscal governance, due to the partial reliance of markets for signalling and disciplining, might make the implementation process less complex and time-consuming. Box 3: Debt redemption fund and safe bonds As a specific example of the partial issuance approach, the German Council of Economic Experts(GCEE) presented in their Annual Report 2011/12 24 a proposal for safe bonds that is a part of a euro-area wide debt reduction strategy aimed at bringing the level of government indebtedness back belowthe 60% ceiling as put in the Maastricht Treaty.One of the pillars of the strategy is a so-called debt redemption fund. The redemption fund would pool government debt exceeding 60% of individual countries’ GDP of euro area Member States. Itwould be based on joint liability. Each participating country would, under a defined a consolidation path, be obliged to autonomously redeem the transferred debt over a period of 20 to 25 years. The joint liability during the repayment phase means that safe bonds would thereby be created. In practice, the redemption fund would issue safe bonds and the proceeds would be used by participating countries to cover their pre-agreed current financing needs for the redemption of outstanding bonds and new borrowing. Therefore, the debt transfer would occur gradually over around five years. Member States with debt above 60% of GDP would therefore not have to seek financing on the market during the roll-in phase as long as the pre-agreed debt reduction path wasadhered to. After the roll-in phase, the outstanding debt levels in the euro area would comprise:(i) national debt up to 60% of a country’s GDP, and (ii) debt transferred to the redemption fundamounting to the remainder of the debt at the time of transfer. Open questions remain, for exampleon the fund’s risk, which would be skewed due to the over-representation of high-risk debt, and theimpact on the de facto seniority from collateralisation of the fund’s bonds.The GCEE safe bonds proposal combines (temporary) common issuance and strict rules on fiscaladjustment. They do not constitute a proposal for Stability Bonds in the meaning of this Green Paper,in the sense that common issuance would be temporary and used only for Member States with publicdebt ratios above 60% of GDP. Instead, the GCEE proposes to introduce a temporary financing tool 24 Published on 9 Nov. 2011,http://www.sachverstaendigenrat-wirtschaft.de/aktuellesjahrsgutachten.html, paragraphs 9-13 and 184-197 Approach No. 3: Partial substitution of national issuancewith Stability Bond issuance with several but not jointguarantees Under this approach, Stability Bonds would again substitute only partially for nationalissuance and would be underpinned by pro-rata guarantees of euro-area MemberStates 25 . This approach differs from Approach No. 2 insofar as Member States would retainliability for their respective share of Stability Bond issuance as well as for their nationalissuance. However, issues relating to the split between Stability Bond and national issuance,including the choice of ceiling for Stability Bond issuance, would be largely the same. This approach to the Stability Bond would deliver fewer of the benefits of commonissuance but would also require fewer preconditions to be met. Due to the several, but not joint, guarantee, moral hazard would be mitigated. Member States could not issue benefitingfrom a possibly higher credit quality of other Member States. In addition, the continuedissuance of national bonds would expose Member States to market scrutiny and market judgement that would be an additional, possibly and at times, strong deterrent to irresponsiblefiscal behaviour. While this approach would be of more limited use in fostering financialmarket efficiency and stability, it would be more easily and more rapidly deployable. Giventhe several but not joint guarantees, Member States subject to high market risk premia would benefit considerably less from the creditworthiness of low-yield Member States than inApproach No. 2 and particularly than in Approach No. 1. In that sense, the possiblecontribution of Approach No. 3 to mitigating a sovereign debt crisis in the euro area and its possible implications on the financial sector would be much more limited. However, given the possibly much faster implementation time of this approach, it could, unlike the other twoapproaches possibly help addressing the current sovereign debt crisis. The key issue with this approach would be the nature of the guarantee underpinning theStability Bond . In the absence of any credit enhancement, the credit quality of a StabilityBond underpinned by several but not joint guarantees would at best be the (weighted) average of the credit qualities of the euro-area Member States. It could even be determined by the credit quality of the lowest-rated Member State, unless they enjoy credible seniority over national issuance in the case of all Member States (see below). This could certainly reduce the acceptance of the instrument among investors and among the higher-rated Member States and undermine the benefits of Stability Bonds, notably their resilience in times of financial stress. In order to increase acceptance of the Stability Bond under this approach, the quality of the underlying guarantees could be enhanced. Member States could provide seniority tothe debt servicing of Stability Bonds. Furthermore, Member States could provide collateral,such as cash, gold reserves which are largely in excess of needs in most EU countries, as wellas earmarking specific tax receipts to servicing of Stability Bonds. More than for approachno. 2, where the common part is backed by joint and several guarantees, the feasibility of thisoption relies on the seniority status of the common issuer and on a prudent limit for thecommon issuance. This points to the need for careful analysis of the implications of thisoption for current bonds in circulation, where some negative pledge clauses may exist, and theidentification of appropriate solutions. While under normal conditions, the total cost of debt for a country should remainconstant or fall, the marginal cost of the debt would rise . This should help in containingmoral hazard and prompting budgetary discipline, even in the absence of any particular formof enhanced governance or fiscal surveillance. The Stability Bond would thereby provide alink and reinforce the effectiveness of the newly established governance package, if theamounts to be funded through common issuance are determined in close connection withfiscal targets established in the Stability programmes and create strong incentives to rapidlyreduce overall debt levels. 26 It would also eliminate the need for a Treaty change in thisregard. However, maintaining the credit quality of the Stability Bond would most likelyrequire secondary legislation to establish the seniority status of the Stability Bond. The alternatives in the treatment of legacy bonds, as well as their respective advantagesand disadvantages, would be similar to the ones described under Approach No. 2 . This option could be implemented relatively quickly . This option could be pursued withoutrequiring changes to the EU Treaty, while secondary legislation may be helpful to strengthenthe seniority principle. Furthermore, substitution of national by Stability Bonds would only be partial. Therefore, this approach could be implemented rather quickly. Combining the approaches As the scope, ambition and required implementation time vary across the threeapproaches, they could also be combined . Approach No. 1 can be considered the mostambitious approach, which would deliver the highest results in market integration andstrengthening stability but it might require considerable time for implementation. Conversely,Approach No. 3, with its different scope and guarantee structure, seems to be more easilyready for a more rapid deployment. Hence, there is a certain trade-off between ambition of thefeatures and scope of the Stability Bond and the possible speed of implementation. Toovercome this trade-off, the various options could be combined as sequential steps in a process of gradual implementation: a relatively early introduction based on a partial approachand a several guarantee structure, combined with a roadmap towards further development of 26 Similarly, but presumably needing a Treaty change, Bini-Smaghi proposed a Eurobond with pro-rate guarantees but with the right to issue debt transferred from Member States to a supra-national agency. Thedebt could be issued up to levels agreed by the Council in the context of the yearly approval of the stability programmes, which would made impossible issuing debt to cover expenditure over the debt limit set everyyear. This way a “debt brake” would be created, which would force a country to make an early decisionwhen its public debt gets too close to the agreed limit. this instrument and the related stronger governance. Such an upfront political roadmap couldhelp ensuring the market acceptance of Stability Bonds from the outset. Impact on non-euro area Member States of the EU and third countries Participation in the Stability Bond framework is usually conceived for the MemberStates of the euro area 27 . This is a due to the normal desire of Member States to issue debtand maintain markets in their own currency and of the fact that E-bonds might be part of aframework of a higher degree of economic and political integration. However, these Member States would nevertheless be affected by the introduction of Stability Bonds, accompanied bya reinforced framework of economic governance. Financial stability across the euro areafostered by Stability Bonds would also directly and substantially stabilise financial marketsand institutions in these countries. The same would apply for any third country, to the extentof its economic and financial linkages with the euro area. On the other hand, the creation, byStability Bonds, of a very large and sound market for safe assets might add to competition between financial markets for investors’ interest GREEN PAPER on the feasibility of introducing Stability Bonds Gist of the Commission document The EC Green Paper assesses the feasibility of common issuance of sovereign bonds among the Member States of the euro area. Sovereign issuance in the euro area is currently conducted by Member States on a decentralised basis, using various issuance procedures. The introduction of commonly issued Stability Bonds would mean a pooling of sovereign issuance among the Member States and the sharing of associated revenue flows and debt-servicing costs. The Green Paper does not indentify any preferred option or way forward. Instead, the document aims to stimulate a wide public debate on appropriate next and possibly more concrete steps in this matter. According to the EC Green Paper many possible options for common issuance of Stability Bonds can be categorised in three broad approaches, based on the degree of substitution of national issuance (full or partial) and the nature of the underlying guarantee (joint and several or several) implied. The three broad approaches examined in the Green Paper are: • the full substitution by Stability Bond issuance of national issuance, with joint and several guarantees; • the partial substitution by Stability Bond issuance of national issuance, with joint and several guarantees; • the partial substitution by Stability Bond issuance of national issuance, with several but not joint guarantees; These options present different trade-offs between the expected benefits and pre-conditions to be met. Stability Bonds would be an instrument designed for the day-to-day financing of euro-area general governments through common issuance. In this respect, according to the EC, they should be distinguished from other jointly issued bonds in the European Union and euro area, such as project bonds, which aim to enhance the credit standing of private entities that need to raise private funds for the large-scale infrastructure projects they promote. The Green Paper argues that the common issuance of Stability Bonds could have significant potential benefits, namely: • The prospect of Stability Bonds could potentially quickly alleviate the current sovereign debt crisis, as the high-yield Member States could benefit from the stronger creditworthiness of the low-yield Member States; • Stability Bonds would make the euro-area financial system more resilient to future adverse shocks and so reinforce financial stability; • Stability Bonds would improve the effectiveness of euro-area monetary policy; • Stability Bonds would promote efficiency in the euro-area sovereign bond market and in the broader euro-area financial system; • Stability Bonds would facilitate portfolio investment in the euro and foster a more balanced global financial system. On the other hand, the EC believes that the introduction of Stability Bonds would indeed pose significant challenges and requirements to be met. According to the EC the main issues are the following: • the need to guard against any weakening of market discipline; • Stability Bonds should be designed and issued such that investors consider them a very safe asset; • Stability Bonds must be compatible with the EU Treaty. Moreover, according to the EC several technical issues should be addressed. The implementation issues analysed in the Green Paper cover the organisation of debt issuances through debt management offices, the relationship with the ESM, the legal regime governing issuance, documentation, market convention and accounting questions. LikeLike
33. Rita Cahull - May 20, 2012

The Evolution of the European Union
May 19th, 2011
The path to the European Union has spanned sixty years and several incarnations. While the original goal of integration was to make war on the European continent unprofitable and uneconomical (especially for Germany) with the European Coal and Steel Community, integration has progressed so far beyond that it has reached a point unimaginable in 1951. Understanding the history and evolution of European institutions that have come to make up the European Union is vital for understanding how said institutions function and how they work together. From the Treaty of Paris in 1951 that started the movement towards a united Europe to the Treaty of Lisbon in 2009 that finally integrated all of the previously created organizations truly into the European Union the history of the EU contains many twists and turns, new institutions and mergers of old ones. The European Union is the largest and most integrated collection of countries working together in political and economic harmony.
After World War Two there was tension in Europe over how to prevent further wars from breaking out on the continent. France especially was worried that Germany would rise for a third time to decimate their country and economy. Robert Schumann, the French foreign minister after WWII, and Jean Monnet, a French civil servant, both sought a way to both rebuild Europe after the destruction of the war as well as a way to make any future German aggression unprofitable. They also wanted to make Germany feel as though they were equal, so stem further ill feelings. If the two countries were to integrate their coal and steel markets (the two most important commodities in wartime), it would make it near impossible for one to attack the other. Each Monnet and Schumann would come up with their own plan, but the Schumann Plan would be adopted as the method of choice to begin the economic integration of Europe, as it was more moderate. The Treaty of Paris in 1951 brought into existence the ECSC, the first real organization of European integration.
The European Coal and Steel Community was the first of the institutions that would try and unite European countries together. It was an economic union of the Coal and Steel markets of France, West Germany, Italy and the Benelux countries. The goals of the ECSC were to create a free trade area as well as a common market for several different goods used in industrialized economies. The main difference in the ECSC that was not present in many other international organizations at the time was the notion of a High Authority which had the final say on things such as prohibition of subsidies and aid, action against restrictive practices, promotion of research, decisions on whether business practices were allowable, and in some instances control prices. It also had the ability to impose fines on those who did not obey its rulings. There was also a Council of Ministers which was made up of ministers from national governments with each state having one representative regardless of size, which had some control over the actions of the High Authority. The third body of the ECSC was the Common Assembly, which was made up of members selected by national governments. The Common Assembly essentially acted as an advisory body to the High Authority and had no real power. The final institution established by the Treaty of Paris was the Court of Justice. It was created to settle disputes between member states, organs of the ECSC itself, and between each of the former. These institutions formed the earliest basis for the organs of the European Union as they exist today.
Other institutions that were created at the same time as the ECSC were the European Defence Community and the European Political Community. Each institution was meant to integrate Europe further by linking together their defence plans as well as political administration. The EPC would have created a constitutional assembly which would have worked towards creating a single constitution for all of the countries involved. The European Defence Community, which would have linked together a defence force from the six countries that were originally part of the ECSC, failed before it even came in to effect, as the French National Assembly rejected the plan. Many people still did not want to rearm Germany, concerns that such a force would be ineffective and partial, and in some ways that it was not even necessary. The dismissal of the EDC also spelled the death of the EPC. It would not be until the European Union was created in 1993 that Europe would be more than economically integrated.
While the EDC was ineffective at creating a common defence system, the Western European Union, which was established with the Treaty of Brussels in 1948 between France, the United Kingdom and the Benelux countries, and was added to by Italy and West Germany in 1955, created a “consultative, primarily defence-oriented, organization”. The WEU permitted West German rearmament with various restrictions imposed, and was specifically responsible for West Germany becoming part of NATO. In total there are currently 28 members of the WEU, with various standings within the organization itself. It is largely defunct as most of its objectives (collective defence) have been taken over by NATO and institutions have become parts of the European Union. It is doubtful that the WEU will continue to exist for much longer.
The European Economic Community was established in the Treaties of Rome in 1957. The same treaties also established the European Atomic Energy Community or Euratom. Each the EEC and Euratom have four major organs, the Commission, the Parliament, the Council and the Court of Justice. The Commission is an appointed body of 14 members, 1 from each smaller state and 2 from the larger ones. The Commission’s role was to be the executive body, drafting legislation and ensuring that the day to day running of the organization was working. The Parliament has control over the budget of the organization but very little control over anything else. The Council of Ministers was composed of one national minister from each of the member countries and was the main decision making body of the EEC. Which minister that was present depended on what was being discussed, such that agricultural ministers were present for decisions regarding agriculture and if the subject of the meeting was energy the ministers in charge of energy would be present. The Court of Justice was not part of the Treaties of Rome, but rather was the same court that had been established by the ECSC, with the ECSC, EEC and Euratom all using it after the Merger Treaty which came in to effect in 1967. The Merger Treaty also created a single Council and a single Commission for all three communities, although different people would attend meetings on different topics. This did not mean that the treaties or the organizations were merged, only that the bureaucracy was.
Even though the ideals of the Treaties of Rome called for common markets and a free trade area between members, much progress had not been made by the 1980s. In 1987 the Single European Act came into effect, which carried the first real changes to the Treaties of Rome. It set out a timeline for the completion of the internal market between member stands for 1992. It also increased the role of the European Parliament by creating an assent procedure which made it necessary for the Parliament to agree to admission of new members as well as association agreements between the EEC and other countries not within the union. This would be the last amendment to the original system of treaties, as everything would be consolidated in 1993 with the Treaty of Maastricht, otherwise known as the Treaty of European Union.
As the Cold War drew to an end at the beginning of the 1990s, Europe found itself no longer divided by the Iron Curtain. As more countries could now be included in the common market, there was a renewed push for complete integration of Europe‘s economic, political and legal institutions. In this new atmosphere the proponents of the EEC strove to take their organization several steps forward. With the Treaty of Maastricht they were able to do this. The first thing that the treaty did was officially change the name of the organization to the European Union. Because the Single European Act had set 1992 as an end date for the complete economic integration of Europe and such had been accomplished, the organization required a new forward objective if it was to stay relevant. The treaty set the stage for this by constructing a pillar system for the basis of the continuation of the organization. The first pillar is the organizations that have preceded the EU, such as the ECSC, EEC, Euratom, etc. The second and third pillars are not institutionalized, but rather the implicit cooperation of national governments on issues of the Common foreign and security policy and Police and judicial cooperation in criminal matters. The Treaty of Maastricht also introduced new and important features of the Union. The first is a solid timeline for a European Monetary Union, as well as the European Central Bank, which would culminate in the introduction of the Euro. It also brought the idea of Citizenship of the Union to fruition with the integration of passports for all member countries. This treaty was the first time that the organization now known as the EU had made a serious attempt to establish a legitimate bid as a truly political entity for all of Europe.
There were two subsequent modifications of the Treaty of Maastricht, the Treaty of Amsterdam in 1997 and the Treaty of Nice in 2001. The Treaty of Amsterdam continued to add to the jurisdiction of the EU, including the ability to legislate on immigration, as well as civil law as it pertained to movement within the EU. Both the Treaty of Amsterdam and the Treaty of Nice tried to deal with the issue of the biggest enlargement in the organization‘s history taking place as 10 countries were slated to join the EU in 2004. To give these countries delegates in each of the organs of the EU would make such completely unmanageable in size as well as shift the balance between the number of large and small states, as almost all of the states joining were relatively small in size. Eventually they came to the compromise of redistribution of seats in the Parliament, the eventual downsizing of the Commission also with which the larger countries would have to give up their second commissioner, and a reweighing of votes in the Council. While this was not the outcome that anyone really wanted, it ended up being the only thing that everyone could come to agreement over; even though each nation understood that without compromise the whole system would be strained to continue to be effective.
The membership of the organizations that have made up the European Union was slowly increasing during the 1970s and 1980s, and picked up rapidly after the collapse of the Berlin Wall and the USSR. At first it was very hard to have anyone join the EEC, as the French President Charles De Gaulle was opposed to letting the United Kingdom and everyone else who wanted to joined were compelled to do so by the thought of UK membership. After a change in French leadership, 1973 saw the United Kingdom, Ireland and Denmark be the first countries to enlarge the EEC. Greece finally joined in 1981, followed by Spain and Portugal in 1986. East Germany joined the community de facto when it merged with West Germany in 1990. Further enlargement would not occur until after the ratification of the Maastricht Treaty, as Austria, Sweden and Finland joined became full members in 1995. In the biggest expansion that the EU has seen, many of the former Soviet states joined in 2004. This included Poland, Hungary, the Czech Republic, Slovenia, Slovakia, Malta, Cyprus, Latvia, Lithuania and Estonia. The latest enlargement included the countries of Bulgaria and Romania in 2007. This brought the number of countries in the European Union to a grand total of 27. Countries that are not currently included in the European Union include Croatia, Turkey, and Macedonia who have current membership bids as well as Switzerland, Iceland, Albania, Kosovo, Norway, Bosnia-Herzegovina, and Serbia and Montenegro.
The latest change to the European Union has come through the Treaty of Lisbon, which was completely ratified by all members in November 2009. In this treaty for the first time there is a specific clause that addresses the possibility of a member country withdrawing from the Union. It also changed the voting method in the Council, which will now have to include 55% of the Member States representing 65% of the population of the Union for a double majority. One of the biggest changes that occurred to the structure of the EU was the creation of a President of the European Council, which is effectively the head of the European Union. The new treaty also gives the EU jurisdiction over a multitude of new things such as “freedom, security and justice, such as combating terrorism or tackling crime… energy policy, public health, civil protection, climate change, services of general interest, research, space, territorial cohesion, commercial policy, humanitarian aid, sport, tourism and administrative cooperation.” It also consolidated all of the negotiating power available to the Union into one position so as to make it easier to interact with countries outside of the Union and to make it more visible on the world stage. While these are not the only things that the Treaty of Lisbon encompasses and while one does not know the implications of such changes, it will be interesting to see what these changes actually bring about.
The current organization of the European Union after the Treaty of Lisbon is far from what it started out as in the ECSC in 1951. It now consists of 9 different institutions, as well as dozens of agencies, advisory bodies, financial bodies and interinstitutional bodies. The European Council sets out the general political direction and goals of the Union. The European Parliament (which is directly elected by citizens of the EU) passes legislation in conjunction with the Council of the European Union, which is made up of national ministers from each of the member states. The European Commission both proposes legislation to the Council of the European Union and the European Parliament and ensures that statutes are applied throughout the EU properly. The Court of Justice of the European Communities is meant to settle disputes between organs of the EU, member states, and a combination of both. The European Court of Auditors reviews the financing of the Union’s activities. The European Central Bank is in charge of European monetary policy as well as the administration of the Euro currency, while the European Data Protection Supervisor advises throughout the organization of the EU on data protection legislation. There is also a European Ombudsman to mediate complaints about poor administration by the EU and its organs. This quick overview shows how much more complicated the European Union is than its predecessors, most of which only having 3 institutions.
The European Union has been in the making for 6 decades, and while Europe is not completely politically integrated, Europe is very close to being a federation of states. From its humble beings as a single common market between six countries, the European integration project has grown to encompass the legal, economic and political institutions of 27 nations. It is important to understand that something as massive as the European Union does not just come into existence with one act or one single idea, but is a collection of hundreds of people‘s ideals and years upon years of hard work and determination. The time that the creation of these institutions has spanned is also helpful in understanding what the objectives of such were, and how that plays into how they are used today. While the goals of Robert Schumann were the ones that Europe chose to pursue in 1951, Jean Monnet‘s goal of European integration was realized nonetheless.
The path to the European Union has spanned sixty years and several incarnations. While the original goal of integration was to make war on the European continent unprofitable and uneconomical (especially for Germany) with the European Coal and Steel Community, integration has progressed so far beyond that it has reached a point unimaginable in 1951. Understanding the history and evolution of European institutions that have come to make up the European Union is vital for understanding how said institutions function and how they work together. From the Treaty of Paris in 1951 that started the movement towards a united Europe to the Treaty of Lisbon in 2009 that finally integrated all of the previously created organizations truly into the European Union the history of the EU contains many twists and turns, new institutions and mergers of old ones. The European Union is the largest and most integrated collection of countries working together in political and economic harmony.
After World War Two there was tension in Europe over how to prevent further wars from breaking out on the continent. France especially was worried that Germany would rise for a third time to decimate their country and economy. Robert Schumann, the French foreign minister after WWII, and Jean Monnet, a French civil servant, both sought a way to both rebuild Europe after the destruction of the war as well as a way to make any future German aggression unprofitable. They also wanted to make Germany feel as though they were equal, so stem further ill feelings. If the two countries were to integrate their coal and steel markets (the two most important commodities in wartime), it would make it near impossible for one to attack the other. Each Monnet and Schumann would come up with their own plan, but the Schumann Plan would be adopted as the method of choice to begin the economic integration of Europe, as it was more moderate. The Treaty of Paris in 1951 brought into existence the ECSC, the first real organization of European integration.
The European Coal and Steel Community was the first of the institutions that would try and unite European countries together. It was an economic union of the Coal and Steel markets of France, West Germany, Italy and the Benelux countries. The goals of the ECSC were to create a free trade area as well as a common market for several different goods used in industrialized economies. The main difference in the ECSC that was not present in many other international organizations at the time was the notion of a High Authority which had the final say on things such as prohibition of subsidies and aid, action against restrictive practices, promotion of research, decisions on whether business practices were allowable, and in some instances control prices. It also had the ability to impose fines on those who did not obey its rulings. There was also a Council of Ministers which was made up of ministers from national governments with each state having one representative regardless of size, which had some control over the actions of the High Authority. The third body of the ECSC was the Common Assembly, which was made up of members selected by national governments. The Common Assembly essentially acted as an advisory body to the High Authority and had no real power. The final institution established by the Treaty of Paris was the Court of Justice. It was created to settle disputes between member states, organs of the ECSC itself, and between each of the former. These institutions formed the earliest basis for the organs of the European Union as they exist today.
Other institutions that were created at the same time as the ECSC were the European Defence Community and the European Political Community. Each institution was meant to integrate Europe further by linking together their defence plans as well as political administration. The EPC would have created a constitutional assembly which would have worked towards creating a single constitution for all of the countries involved. The European Defence Community, which would have linked together a defence force from the six countries that were originally part of the ECSC, failed before it even came in to effect, as the French National Assembly rejected the plan. Many people still did not want to rearm Germany, concerns that such a force would be ineffective and partial, and in some ways that it was not even necessary. The dismissal of the EDC also spelled the death of the EPC. It would not be until the European Union was created in 1993 that Europe would be more than economically integrated.
While the EDC was ineffective at creating a common defence system, the Western European Union, which was established with the Treaty of Brussels in 1948 between France, the United Kingdom and the Benelux countries, and was added to by Italy and West Germany in 1955, created a “consultative, primarily defence-oriented, organization”. The WEU permitted West German rearmament with various restrictions imposed, and was specifically responsible for West Germany becoming part of NATO. In total there are currently 28 members of the WEU, with various standings within the organization itself. It is largely defunct as most of its objectives (collective defence) have been taken over by NATO and institutions have become parts of the European Union. It is doubtful that the WEU will continue to exist for much longer.
The European Economic Community was established in the Treaties of Rome in 1957. The same treaties also established the European Atomic Energy Community or Euratom. Each the EEC and Euratom have four major organs, the Commission, the Parliament, the Council and the Court of Justice. The Commission is an appointed body of 14 members, 1 from each smaller state and 2 from the larger ones. The Commission’s role was to be the executive body, drafting legislation and ensuring that the day to day running of the organization was working. The Parliament has control over the budget of the organization but very little control over anything else. The Council of Ministers was composed of one national minister from each of the member countries and was the main decision making body of the EEC. Which minister that was present depended on what was being discussed, such that agricultural ministers were present for decisions regarding agriculture and if the subject of the meeting was energy the ministers in charge of energy would be present. The Court of Justice was not part of the Treaties of Rome, but rather was the same court that had been established by the ECSC, with the ECSC, EEC and Euratom all using it after the Merger Treaty which came in to effect in 1967. The Merger Treaty also created a single Council and a single Commission for all three communities, although different people would attend meetings on different topics. This did not mean that the treaties or the organizations were merged, only that the bureaucracy was.
Even though the ideals of the Treaties of Rome called for common markets and a free trade area between members, much progress had not been made by the 1980s. In 1987 the Single European Act came into effect, which carried the first real changes to the Treaties of Rome. It set out a timeline for the completion of the internal market between member stands for 1992. It also increased the role of the European Parliament by creating an assent procedure which made it necessary for the Parliament to agree to admission of new members as well as association agreements between the EEC and other countries not within the union. This would be the last amendment to the original system of treaties, as everything would be consolidated in 1993 with the Treaty of Maastricht, otherwise known as the Treaty of European Union.
As the Cold War drew to an end at the beginning of the 1990s, Europe found itself no longer divided by the Iron Curtain. As more countries could now be included in the common market, there was a renewed push for complete integration of Europe‘s economic, political and legal institutions. In this new atmosphere the proponents of the EEC strove to take their organization several steps forward. With the Treaty of Maastricht they were able to do this. The first thing that the treaty did was officially change the name of the organization to the European Union. Because the Single European Act had set 1992 as an end date for the complete economic integration of Europe and such had been accomplished, the organization required a new forward objective if it was to stay relevant. The treaty set the stage for this by constructing a pillar system for the basis of the continuation of the organization. The first pillar is the organizations that have preceded the EU, such as the ECSC, EEC, Euratom, etc. The second and third pillars are not institutionalized, but rather the implicit cooperation of national governments on issues of the Common foreign and security policy and Police and judicial cooperation in criminal matters. The Treaty of Maastricht also introduced new and important features of the Union. The first is a solid timeline for a European Monetary Union, as well as the European Central Bank, which would culminate in the introduction of the Euro. It also brought the idea of Citizenship of the Union to fruition with the integration of passports for all member countries. This treaty was the first time that the organization now known as the EU had made a serious attempt to establish a legitimate bid as a truly political entity for all of Europe.
There were two subsequent modifications of the Treaty of Maastricht, the Treaty of Amsterdam in 1997 and the Treaty of Nice in 2001. The Treaty of Amsterdam continued to add to the jurisdiction of the EU, including the ability to legislate on immigration, as well as civil law as it pertained to movement within the EU. Both the Treaty of Amsterdam and the Treaty of Nice tried to deal with the issue of the biggest enlargement in the organization‘s history taking place as 10 countries were slated to join the EU in 2004. To give these countries delegates in each of the organs of the EU would make such completely unmanageable in size as well as shift the balance between the number of large and small states, as almost all of the states joining were relatively small in size. Eventually they came to the compromise of redistribution of seats in the Parliament, the eventual downsizing of the Commission also with which the larger countries would have to give up their second commissioner, and a reweighing of votes in the Council. While this was not the outcome that anyone really wanted, it ended up being the only thing that everyone could come to agreement over; even though each nation understood that without compromise the whole system would be strained to continue to be effective.
The membership of the organizations that have made up the European Union was slowly increasing during the 1970s and 1980s, and picked up rapidly after the collapse of the Berlin Wall and the USSR. At first it was very hard to have anyone join the EEC, as the French President Charles De Gaulle was opposed to letting the United Kingdom and everyone else who wanted to joined were compelled to do so by the thought of UK membership. After a change in French leadership, 1973 saw the United Kingdom, Ireland and Denmark be the first countries to enlarge the EEC. Greece finally joined in 1981, followed by Spain and Portugal in 1986. East Germany joined the community de facto when it merged with West Germany in 1990. Further enlargement would not occur until after the ratification of the Maastricht Treaty, as Austria, Sweden and Finland joined became full members in 1995. In the biggest expansion that the EU has seen, many of the former Soviet states joined in 2004. This included Poland, Hungary, the Czech Republic, Slovenia, Slovakia, Malta, Cyprus, Latvia, Lithuania and Estonia. The latest enlargement included the countries of Bulgaria and Romania in 2007. This brought the number of countries in the European Union to a grand total of 27. Countries that are not currently included in the European Union include Croatia, Turkey, and Macedonia who have current membership bids as well as Switzerland, Iceland, Albania, Kosovo, Norway, Bosnia-Herzegovina, and Serbia and Montenegro.
The latest change to the European Union has come through the Treaty of Lisbon, which was completely ratified by all members in November 2009. In this treaty for the first time there is a specific clause that addresses the possibility of a member country withdrawing from the Union. It also changed the voting method in the Council, which will now have to include 55% of the Member States representing 65% of the population of the Union for a double majority. One of the biggest changes that occurred to the structure of the EU was the creation of a President of the European Council, which is effectively the head of the European Union. The new treaty also gives the EU jurisdiction over a multitude of new things such as “freedom, security and justice, such as combating terrorism or tackling crime… energy policy, public health, civil protection, climate change, services of general interest, research, space, territorial cohesion, commercial policy, humanitarian aid, sport, tourism and administrative cooperation.” It also consolidated all of the negotiating power available to the Union into one position so as to make it easier to interact with countries outside of the Union and to make it more visible on the world stage. While these are not the only things that the Treaty of Lisbon encompasses and while one does not know the implications of such changes, it will be interesting to see what these changes actually bring about.
The current organization of the European Union after the Treaty of Lisbon is far from what it started out as in the ECSC in 1951. It now consists of 9 different institutions, as well as dozens of agencies, advisory bodies, financial bodies and interinstitutional bodies. The European Council sets out the general political direction and goals of the Union. The European Parliament (which is directly elected by citizens of the EU) passes legislation in conjunction with the Council of the European Union, which is made up of national ministers from each of the member states. The European Commission both proposes legislation to the Council of the European Union and the European Parliament and ensures that statutes are applied throughout the EU properly. The Court of Justice of the European Communities is meant to settle disputes between organs of the EU, member states, and a combination of both. The European Court of Auditors reviews the financing of the Union’s activities. The European Central Bank is in charge of European monetary policy as well as the administration of the Euro currency, while the European Data Protection Supervisor advises throughout the organization of the EU on data protection legislation. There is also a European Ombudsman to mediate complaints about poor administration by the EU and its organs. This quick overview shows how much more complicated the European Union is than its predecessors, most of which only having 3 institutions.
The European Union has been in the making for 6 decades, and while Europe is not completely politically integrated, Europe is very close to being a federation of states. From its humble beings as a single common market between six countries, the European integration project has grown to encompass the legal, economic and political institutions of 27 nations. It is important to understand that something as massive as the European Union does not just come into existence with one act or one single idea, but is a collection of hundreds of people‘s ideals and years upon years of hard work and determination. The time that the creation of these institutions has spanned is also helpful in understanding what the objectives of such were, and how that plays into how they are used today. While the goals of Robert Schumann were the ones that Europe chose to pursue in 1951, Jean Monnet‘s goal of European integration was realized nonetheless.
What is happening in Europe should not surprise anyone. Here is the unknown truth about European integration. 70 years before the European Union was born, an Irish scholar wrote about European integration – how it would develop, its character and future prospects. He warned Ireland and England would become provinces of Europe, and they would not be saved if Britain joined a confederation of European nations which would develop through a great European crisis. He has been proved right. Ireland has no control over its economic destiny. In Britain, European laws reign supreme. Majority of Britons want Britain to leave the EU because the EU has become a burden on them.
The ‘Seer of Dublin’, whose father was a Scot, specifically recorded that the European confederacy would become the next major political feature in history after the restoration of the Jews to Palestine. He has been proved right. The state of Israel was created in Palestine in May 1948. Two years later, in May 1950, the EU was born with the Schuman Plan after the Second World War. Everything the Seer wrote about EU has come to pass. The Lisbon Treaty and the Fiscal Charter will pave the way for his word on Europe’s future to be fulfilled. I urge the Irish to examine what the native of Dublin, who was educated at Trinity College, wrote about Europe’s future before they vote on 31 May to adopt or reject the Fiscal Compact Treaty. I also encourage the Scots to examine what the Seer wrote about Europe’s future.
The French and the Germans will sacrifice France and Germany to save the euro. But they will labour in vain to save the EU. The EU has no soul. It is a ‘corpse’ on its way to a crematorium. Why? Because European leaders have ignored the crucial advice Schuman and Adenauer offered to Europeans concerning the survival of the European project. Jean Monnet’s European Titanic is doomed. No one can save it from hitting an iceberg. The Irish and the British must heed the warning of the Seer of Dublin and leave the EU. Had the passengers who perished on the Titaninc had known the unsinkable ship would sink on its maiden voyage, would they have joined the doomed luxurious vessel? I leave you with the “Seer’s” word on democracy: “Democracy, not despotism, is the goal towards which civilization is tending. But democracy in its full development is one of the surest ways to despotism. First, the revolution; then, the plebiscite; then the despot.” The Eu is corrupt. It is a dictatorship. It rejects the democratic decisions of its members.
What is happening in Europe should not surprise anyone. Here is the unknown truth about European integration. 70 years before the European Union was born, an Irish scholar wrote about European integration – how it would develop, its character and future prospects. He warned Ireland and England would become provinces of Europe, and they would not be saved if Britain joined a confederation of European nations which would develop through a great European crisis. He has been proved right. Ireland has no control over its economic destiny. In Britain, European laws reign supreme. Majority of Britons want Britain to leave the EU because the EU has become a burden on them.
The ‘Seer of Dublin’, whose father was a Scot, specifically recorded that the European confederacy would become the next major political feature in history after the restoration of the Jews to Palestine. He has been proved right. The state of Israel was created in Palestine in May 1948. Two years later, in May 1950, the EU was born with the Schuman Plan after the Second World War. Everything the Seer wrote about EU has come to pass. The Lisbon Treaty and the Fiscal Charter will pave the way for his word on Europe’s future to be fulfilled. I urge the Irish to examine what the native of Dublin, who was educated at Trinity College, wrote about Europe’s future before they vote on 31 May to adopt or reject the Fiscal Compact Treaty. I also encourage the Scots to examine what the Seer wrote about Europe’s future.
The French and the Germans will sacrifice France and Germany to save the euro. But they will labour in vain to save the EU. The EU has no soul. It is a ‘corpse’ on its way to a crematorium. Why? Because European leaders have ignored the crucial advice Schuman and Adenauer offered to Europeans concerning the survival of the European project. Jean Monnet’s European Titanic is doomed. No one can save it from hitting an iceberg. The Irish and the British must heed the warning of the Seer of Dublin and leave the EU. Had the passengers who perished on the Titaninc had known the unsinkable ship would sink on its maiden voyage, would they have joined the doomed luxurious vessel? I leave you with the “Seer’s” word on democracy: “Democracy, not despotism, is the goal towards which civilization is tending. But democracy in its full development is one of the surest ways to despotism. First, the revolution; then, the plebiscite; then the despot.” The Eu is corrupt. It is a dictatorship. It rejects the democratic decisions of its members.

Like


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: