Alin Zlatescu's EU Debate Speech 2010

Here is Alin Zlatescu's speech which won the best speech award at the 2010 EU debate:


Good evening fellow students, distinguished guests, members of the proposition.

The Euro has always been a major currency, based on a monetary union between countries who do not share political union.

Its creation was remarkable, the triumph of political will, over economic barriers.

But make no mistakes Ladies and Gentlemen; there are significant costs to such a union, which are becoming especially evident now.

The most obvious, is the loss of two major macroeconomic policy instruments: First, the exchange rate and second, the monetary policy, which could be used to prevent an economy from collapsing.

Of course this is not foolproof, as many countries know, but trying to adjust without such instruments, is that much harder, and will require severe cutbacks on public spending and private consumption, which are not only difficult to implement, but unlikely to be accepted by the public.

So let me explain: Ireland, and the other countries sharing the Euro, gave up their rights to put into practice, an independent monetary policy and exchange rate instrument. Instead, they choose to accept the economic strategies as implemented by the European Central Bank, which do not reflect economic conditions in Ireland, or for that matter, in any other, small, open economy countries, in Europe. Decisions taken in Frankfurt are more likely to be influenced by the Large European economies, to benefit their growth.

This “one size fits all” monetary policy, does not suit all the countries equally, is less effective than the policy an independent country, could pursue, and is the source of great instability for the member states.

This means, that the Eurozone members, lost their ability to devalue their currencies, to compensate for a loss of competitiveness. The governments are over reliant now on fiscal policy, which is itself controlled by the Stability and Growth Pact.

Adopted in 1997 and later revised in 2005, the Stability and Growth Pact, fails to enforce fiscal discipline, and ensure sound and sustainable public finances within the EMU.

Financial supervision, remained mainly national in scope, as the rules of the single currency, allow for sanctions to be applied, to countries running unsustainable fiscal practices, but to date, these sanctions have never been used, in the single currency’s 11 year history.

So what does that tell you?

It’s clear, the euro has been a disaster for Ireland, and will ensure, our fall lasts considerably longer than it has to.

Let us look now, at what other countries have done? Well, we see that, of the three entrants into the EEC in 1973, we’re the only ones using the euro. However, we trade far less with other Eurozone countries, than either Denmark or Britain.

Countries like Sweden, Denmark and the UK, have negotiated, an opt out clause, allowing them to remain outside the Euro Area. Their decision was based on the deep reluctance to surrender sovereign power, something that Ireland did not reflect on.

The prospect for the Irish exporters facing a flexible exchange rate with the sterling is rather daunting. A strong sterling causes inflationary worries for Ireland, while a weak one, hits the Irish exporters.

Who would’ve guessed, that we’d get locked into an arrangement, which means we have to try to be more competitive than Germany, the world’s, most successful exporter.

So the question for those who, rightly suggest, we need to cut our wages and prices down by30%, to claw back the competitive losses we suffered since joining the euro, is: How are we going to do it? In particular, how are we going to do this, without leaving the euro? And, what is the alternative to leaving the euro? Most importantly: How high does unemployment have to go for us, to be competitive again?

Until these questions are answered, there are significant question marks, over the wisdom of Ireland using the euro.

We simply can’t keep cutting expenditure, when there is no offsetting stimulus, coming from a cheaper exchange rate, which would allow the trading sector to grow. This is basic-economics, the sort of stuff you learn in first year.

We know that, had we applied the most basic criteria for suitability, there is no way Ireland would’ve joined the euro.

Besides, one doesn’t even have to understand economics, to see that what happens in Greece is a clear example, highlighting the inefficiency of the Monetary Union.

The problem posed by the debt issues in Greece is deeper, and probably more significant, since it calls into question, the stability and practicality of the Eurozone itself.

With Greece overdrawn, and no one eager to foot the bill, Europe’s debt crisis, has exposed a fundamental weakness among the 16 countries that share the euro: Different, and often widely opposite approaches to spending, don’t make for a happy union.

It’s impossible to have a common currency, for such a big and diverse area.

There’s no real solution for Greece. They’re helpless now, and only for a magic wand, its deficit would disappear.

For the opponents of the euro, Greece, and the lack of cohesion among the EU, is a case of: “I told you so.”

As a result, it should force Europe, to reconsider how much of a union it really wishes to be.

Because, look at it this way: what’s in this monetary union for you and for me, for the ordinary people of this country? Well, I’m sure you have the answer to that: not much, but to the contrary: wage cuts, rising unemployment, it simply fails us when we need it the most.

So what should we do?

What can we do?

Well, the response to this crisis, means that we’re moving into a new era, which might be good for us, but until there’s full political union in Europe, Ireland should adopt the Danish and Swedish approach, of having its own currency, something that could be done without too much disruption.

However, if this crisis were to accelerate political union, and would, ultimately, change the view in Brussels, about the joint responsibility, that is necessary to make the euro work, it will have been a crisis worth having, for Ireland in particular.

Thank You!