The radical Front de Gauche (Left Front) is to launch a campaign for a referendum in France against the Fiscal Compact, known by critics as the Permanent Austerity Treaty.
Agreed on 2 March 2012 by 25 EU countries, minus Britain and the Czech Republic, the EU Fiscal Compact – a German invention officially known as Treaty on Stability, Coordination and Governance (SCG) – caps a country’s public deficit at a tiny 0.5 percent of gross domestic product (GDP). It’s the economics of the corner shop – or as Angela Merkel would see it, translating into national accounts the prudence of a Swabian housewife.
Last week, EU leaders agreed a 120 billion euro ‘growth pact’ to accompany the draconian Fiscal Compact. But the only concrete step that leaders agreed was to increase the capital of the European Investment Bank (EIB) by 10 billion euros that boosts its lending capacity by 60 billion. They are relying on 55 billion euros in unused aid for EU regions to take the plan’s envisaged funds up to 115 billion euros, but there’s a dispute about whether the money is really available.
The EIB’s stringent lending criteria also adds to uncertainty about what impact it will have with Ireland, model austerity-bailout student, saying it probably won’t be able to access funding because the poor credit rating of the country and its banks.
The growth pact came about as a result of pressure from France’s new president Francois Hollande who called for it in his inaugural address in Paris in May as part of a commitment to change the direction of Europe away from the austerity championed by the German Chancellor and his predecessor Nicolas Sarkozy. But the Left Front dismissed it as a ‘smoke screen’.
Olivier Dartigolles, spokesman for the French Communist Party, which together with the Left Party and other radicals forms the Left Front, said:
Our analysis is that contrary to the commitment of Francois Hollande the Treaty remains intact, not renegotiated. We are at risk of swallowing the Sarkozy-Merkel Treaty, even though Sarkozy was defeated.”
The Left Front’s referendum campaign will run through the summer – and bar a move to push to quick vote in parliament where a majority of MPs will very likely back it – into the autumn.
The Left Front’s Jean Luc Melenchon campaigned against the Fiscal Compact during his impressive Presidential bid, which saw him in third place with as much as 18% in opinion polls after eventual victor Hollande and incumbent Nicolas Sarkozy, before finishing with 11% of the vote. As part of his campaign, former socialist minister Melenchon said he wanted a referendum on the matter.
André Chassaigne, President of a Left Front-led parliamentary group argued that the French people must ‘have their say’:
This Treaty constitutes an attack on sovereignty of every European country and will plunge their economies into recession. This is an issue of democracy.’
Ireland backed the Fiscal Compact treaty in a referendum after massive international pressure, and the parliament in Portugal, another failing austerity student, has also given it the green light. The parliament in Denmark has also approved the Fiscal Compact, as have parliamentarians in Berlin, but in Germany it is subject to a legal challenge by Die Linke (Left Party) which argues it is unconstitutional.