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Ireland should abandon the Euro which was established for political not economic reasons and so has not worked Anthony Coughlan The political purpose of establishing the Eurozone was to reconcile France to German reunification following the USSR’s collapse. This political agenda used economic means that most economists who were not EU-ideologues regarded as quite unsuitable for that purpose. The irrationality of this ill-conceived and doomed project is now playing out before our eyes. The value of having one’s own currency, and with it the ability to follow an independent exchange rate policy, was shown decisively in Ireland from 1993 to 1999. This was the only period in the history of the Irish State when we followed an independent exchange rate policy and, in effect, floated the Irish pound, giving us a highly competitive exchange rate. This boosted Irish exports, inhibited competing imports and gave us the “Celtic Tiger” years of high economic growth. From the 1920s to 1979, the Irish pound was pegged at par with sterling, reflecting the conservative economic outlook of those then running the State. This gave Ireland an implicitly over-valued currency, which inhibited economic growth and employment in those years. In 1979, we broke the link with sterling, but tied ourselves instead to the Deutschmark in the European Monetary System (EMS) in preparation for the Economic and Monetary Union (EMU). Britain did the same, but the markets forced Britain to devalue in September 1992. When this happened, Ireland stuck with the Deutschmark, so that by January 1993 the Irish pound was worth 110 pence sterling. All hell then broke loose, for our over-strong currency was ruining the State’s foreign trade, which was mostly with the UK and USA. This forced a devaluation of one-tenth from 110 to 100 pence sterling in February 1993. We had a similar devaluation vis-à-vis the dollar and, in effect, floated the Irish pound. This floated downward for the rest of the 1990s. It was a nominal 90 pence sterling when we adopted the Euro. At the time the Republic did roughly one-third of its trade with the other Eurozone countries, one-third with the UK and one-third with the USA and the rest of the world. The 1993 devaluation gave us a highly competitive exchange rate. This in turn encouraged foreign and domestic investment. Our annual economic growth rate, which had averaged 3-4% a year from the 1960s to the early 1990s, doubled to 7% in 1993-4. It averaged 8% a year between then and 2001. In the first years of Euro membership the value of the Euro fell vis-à-vis the dollar and sterling, fortuitously adding to Ireland’s economic competitiveness. With supreme folly Ireland’s ultra-Europhile politicians decided to join the Eurozone in 2002 on the assumption that the British would join it in a year or two, but they did not and will not. “The Eurozone will give us permanently lower interest rates”, said the ESRI’s John FitzGerald at the time. Eurozone interest rates were low at the time to suit Germany and France, which were then in recession. Ireland was in boom and needed higher interest rates to prevent price bubbles. Instead we halved our interest rates on joining the EMU, giving huge impetus to the borrowing binge that followed in 2002-2007. Now we are caught inside the Eurozone with an over-valued Euro exchange rate as the sterling and dollar areas with which we do the greater part of our trade float their currencies downward and we cannot do likewise. The prime culprits in this are the Euro-federalists in Iveagh House and Merrion Square who advise Foreign Minister Mícheál Martin, Finance Minister Brian Lenihan and their predecessors, backed by their ideological cheerleaders in the editorial office of the Irish Times. They include the Grand Panjandrums of Irish Euro-fanaticism: Garret FitzGerald, Peter Sutherland, Alan Dukes, Pat Cox, Brigid Laffan, Brendan Halligan, Ruairi Quinn and David Begg, and their acolytes in the leadership of our political parties and in the media. The lesson of the Euro crisis is that the struggle for national independence and national democracy should have priority over everything else until these have been attained – and that to attain them Irish democrats, whether on the Left, Right or Centre of politics, need to unite, or at least campaign in parallel. In the present context, this means raising the demand for the State to leave the Eurozone so as to restore an independent Irish currency.  We should join the other EU States that are in the EU but are not trapped in the Eurozone and restore our economic sovereignty. “There is no example in history of a lasting monetary union that was not linked to one State” , said Otmar Issing, chief economist of the Bundesbank and later director of the ECB. And of course, there are many examples of States that were both monetary and fiscal unions but which have disappeared into history because the solidarity that bound their component nationalities and regions together, sometimes for long periods, broke down. Where now are the USSR rouble, the Czechoslovak crown, the Yugoslav dinar or the Austro-Hungarian thaler? Unless we leave the Euro, all the media rhetoric about delinquent bankers and developers, or business interests bemoaning the credit crunch, or trade unions calling for priority to be given to jobs and investment, are so much blowing against the wind. Anthony Coughlan is Director of the National Platform EU Research and Information Centre, Dublin.

End division of  Dáil representatives on the real left, from grass-roots campaigners Richard Boyd Barrett Fianna Fáil and the Greens face electoral disaster at the next general election. Fianna Fáil promoted the greed of bankers, developers and the super-wealthy, which has brought the economy to its knees. They championed the neo-liberal economic madness of ‘light touch-regulation’, tax cuts for the rich and privatisation, which facilitated that greed. Now, they and the Greens want working people and the vulnerable in our society to pay for the crisis, with unemployment and savage cuts in incomes and public services, pouring tens of billions into bailing out the bankers who created the crisis in the first place. The public are just waiting in the long grass to take their revenge when an election is finally called. But what is the alternative? Looking to the mainstream opposition parties for alternatives and a way out of the economic crisis offers little inspiration. Fine Gael and the Labour Party, will undoubtedly make very significant electoral gains, and almost certainly form the next government. However, Fine Gael embrace the same policies of low taxes on wealth and privatisation as the government, and, if anything, are even more gung-ho about slashing public spending – which means more cut backs and attacks on working people and the less well-off. The Labour Party mouth some opposition to the neo-liberal economic doctrines that have led us into the current mess, but their criticism is for the most part cleverly crafted rhetoric that fudges the key issue of whether to tax the wealthy or cut public spending and workers pay, to deal with the crisis. They do this, of course, because to commit to any real challenge to wealth inequality or the dictatorship of the international financial markets would render impossible their central project of entering a coalition government with Fine Gael in a year or two. The  bitter experience of Fine Gael/Labour-controlled councils across the country, who vote through budgets that include bin charges, privatisation of services and cut backs in community amenities, confirms that an Fine Gael/Labour government will be little different to the present one. Sinn Féin, who have in the past presented themselves as a radical left alternative, recently voted down a motion from some of its own members at its annual Ard Fheis, which called for the party to rule out future deals with FF or FG. Like Labour and the Greens before them, Sinn Féin are keeping their options open on doing deals with the devil. If we are to have a genuine political alternative that will challenge the status quo, and will not compromise that challenge for a shoddy coalition deal, we need to look beyond the traditional political establishment. Some suggest this will require a new party. But why re-invent the wheel? The People Before Profit Alliance (PBPA) and other Socialists, have argued for years that a de-regulated, privatised, profit-driven economy was not simply unjust but would inevitably crash. They have been proven totally correct. They propose a genuinely alternative set of policies based on social equality and democratic, rational planning of the economy, which in the wake of the current disaster is surely the only credible approach for organising an economy and a society. Importantly, they opposed the neo-liberal economic model when was it was neither profitable nor politically fashionable to do so, and this suggests, not only good ideas, but principles that don’t bend with every passing wind. These Left forces also have a long record of practical campaigning and mobilisation, involving themselves in grass-roots campaigns on local, national and international issues. In other words, they don’t just spend their time making point-scoring speeches – they actually do things! Of course, the Left has its failings – the biggest of which is being too divided and failing to communicate its message in a language that ordinary people can understand. PBPA is a serious attempt to overcome these problems. It has united different socialist and environmental strands and as its name suggests seeks to present principled left politics in new and easily understandable manner. They are actively engaging with other socialist and progressive forces on the Irish political scene with a view to establishing a credible independent left electoral alliance at a national level. Between PBPA, the Socialist Party and a number of left independents, such an alliance is in with a real chance of winning a number of seats in the next Dail. A left block with half a dozen Dáil seats, that is also building practical grass-roots’ movements of opposition to unjust cut-backs and the policies of bailing out the banks, could quickly become a major focus for the huge numbers of ordinary people desperately seeking a real alternative. If we want to see a genuine political alternative, that is the one to build. Richard Boyd Barrett is a Councillor for the People Before Profit Alliance and a member of the Socialist Workers Party.