ROY GREEN,
A chara, - Bernard Connolly (Opinion, December 31st) claims the euro is "part of the design to extinguish freedom in a European empire". The breathless catalogue of misinformation that is marshalled to support this irresponsible scare-mongering would scarcely merit a response but for the parallel drawn between Argentina's economic collapse and the fate said to await the Republic of Ireland "over the next two or three years".
If there were any basis in economic theory or evidence for this parallel, we would rightly be concerned about Ireland's future in the eurozone. However, the parallel is misguided for two reasons. First, Argentina tied its weak, inflation-prone currency to the much stronger currency of another state - the US - with no provision for the coordination of monetary or fiscal policy, let alone economic transfers to Argentina as part of a "dollar zone" regional development policy. By contrast, Ireland has pooled its currency on an equal basis with 11 others in the context of a common monetary policy, increasing fiscal coordination and an active European regional development policy, which underpinned Ireland's economic success in the 1990s.
Second, Argentina's economy, once the most prosperous in the world, has undergone steady decline since the end of the 19th century, largely as a result of its failure to adjust to changes in global markets. This failure was merely compounded by the attempt to maintain peso-dollar parity when much of Argentinian industry was either uncompetitive or experiencing diminishing terms of trade. Again, Ireland's experience could not be more different. Its productivity growth has more than matched its European partners - reflected in unit labour costs 10 per cent lower than the eurozone average - and investment, training and research continues to be directed to the leading knowledge-based growth sectors.
What is Bernard Connolly's alternative to "euro-slavery"? It cannot be membership of the dollar zone, which is ruled out by the Argentinian scenario, despite the high level of US investment here. Nor can it be monetary autonomy, because, as Prof Rory O'Donnell demonstrates in his article on the same page, this is now a mirage for small, open economies in Europe - unless it is a Cuban scenario that Bernard Connolly has in mind.
In the end, the only realistic alternative for Bernard Connolly, possibly even his hidden agenda, is a return to the "sterling zone".
Where would that leave "hard-won Irish freedom"? - Yours, etc.,
ROY GREEN,
Professor of Management,
NUI,
Galway.
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Sir, - the paucity of economic arguments to support Ireland joining an economic and monetary union with countries with which we conduct little of our trade and even less investment is illustrated in Rory O'Donnell's overawed welcome for the euro (The Irish Times, December 31st).
The euro experience in Ireland has already vindicated those who pointed out its deficiencies in economic theory. The euro has brought to Ireland, with 3.7 per cent unemployment, policies designed for the core euro-zone countries with 9 per cent unemployment. Bringing Irish unemployment up to the core euro-state level means increasing the number out of work by over 130,000. The combination of a deteriorating exchange rate and declining and negative real rates of interest has harmed the Irish economy in recent times, as economic theory predicted.
The EU, having promoted a monetary policy package the opposite of what Ireland required, then embarked on a campaign of recrimination against Irish fiscal policy, which was the most successful in the OECD.
Ireland has outperformed the EU in economic growth, added some 60 per cent to those at work, reduced unemployment from 17 per cent to 3.7 per cent, reduced its debt ratio to the second lowest in the EU, and provided for pensions on a funded rather than pay-as-you-go basis. Perhaps Ireland should be giving the lecture and the EU listening?
Two of Rory O'Donnell's "academic economists in the Anglo-Saxon world" who have criticised the impact of the euro on Ireland are Nobel Laureates. In an interview with Jane Suiter (The Irish Times January 27th, 2001) Prof Bob Mundell said that "Mr McCreevy's implementation of tax cuts when the State was running large surpluses was exactly correct" and that "the new Brussels economics were completely wrong". Milton Friedman told Conor O'Clery (The Irish Times September 5th, 2001) that "the euro has brought inflation to Ireland. . .Stable prices in the Republic would have required a 15-20 per cent appreciation of the punt versus the euro."
Nothing has discredited the European ideal in Ireland more than the interferences in Irish economic policy by the EU since the launch of the euro as a virtual, and depreciating, currency three years ago. This meddling is a far more important factor in explaining the No majority in the Nice referendum than any hostility towards the applicant countries. The £6 billion bribe used to secure the Maastricht referendum on the euro looks very bad value now. When the Europhiles lost the Nice referendum they got a rematch. Why not re-run both the Nice and Maastricht referendums on the same day?
Bernard Connolly, writing also on December 31st, is overly pessimistic: Ireland cannot be locked into the EMU against its national interest. It can repeat the 1979 exit from sterling. As Rory O'Donnell concludes, EMU is an exercise in "pragmatic and experimental development." It is a foolhardy experiment for Ireland. - Yours, etc.,
SEAN D. BARRETT, FTCD,
Department of Economics,
Trinity College,
Dublin 2.
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Sir, - Under the title of her article, "Euro seen as a threat to identity", Lorna Siggins (The Irish Times, December 31st) implies that I offer reasons to fear the introduction of the euro. My intention is quite the opposite. The euro may well, as she reports, signal an enormous reduction in the dependence of the citizen on the nation-state. I welcome that. - Yours, etc.,
Prof KEVIN BARRY,
Department of English,
NUI,
Galway.
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Sir, - We are all intelligent people to whom money is important. Hence it is no surprise that the euro changeover has been quick and painless. Your paper obviously does not see its readers as such, to judge by the many patronising articles on how well everyone has coped. - Yours, etc.,
IAN BECKETT.
Corr Castle,
Sutton,
Dublin 13.