Pat Rabbitte (Dublin South West, Labour)

I know that this would fit in with the text that has been sent to all Fianna Fáil Deputies entitled "We have turned the corner". Let us hope that it is true.

I do not dispute what the Deputy has said. This debate is about stability in the eurozone. There is no arguing with his point that it is in our interest that the euro remains strong and is protected and that there is a requirement for solidarity and responsibility in our position vis-À-vis a member state partner in trouble. I also agree with his warning that we should not take anything for granted and that the system is creaking. The eurozone itself could be at risk. It seems a monstrous proposition, but we have seen in recent days that this is not unthinkable.

The purpose of this Bill is to give a dig-out to Greece. I support the Bill. The logic of our position is to support a fellow member state, which can no longer source money on the international bond markets. I have received half a dozen e-mails from constituents querying why we are lending money to Greece when we ourselves are broke. Usually people are satisfied with the answer, not least when it is explained to them that we might be next in the queue ourselves.

In fairness to sceptical questioners, the question does arise about what will happen if Greece does not manage to surmount its financial and economic problems and is unable to repay the loans from other eurozone partners. I do not know what the answer is and I do not know if the Minister knows. If he does, he might enlighten us in his reply. One way or another, it seems this gesture of solidarity is inevitable. The crisis provoked by Greece and exploited by speculator elements in the money markets has threatened the stability of the euro area. In such circumstances member states have little choice but to provide Greece with an alternative and sustainable source of borrowing.

However, it is still a shock to citizens of the European Union to realise that the very sustainability of the currency itself could be threatened and we are not yet out of the woods. We can blame all the speculators we like and we can reasonably deplore the credence irrationally commanded by the ratings agencies, but this crisis has exposed weaknesses that were probably inherent in the monetary union project from the beginning.

It is true that Greece did not play by the rules, but then neither did we. However, it is not just the small countries or the so-called peripheral states that broke the rules. Some of the big countries also broke the rules along the way and were seen to do so with impunity. However, Greece has earned the title as the most egregious offender. Fiddling the books has not just confronted its new government with enormous challenges, but it has plunged the entire euro area into some turmoil.

Economic and monetary union was a political project. Not all economies were at similar stages of development and some were in significant divergence. However, notwithstanding this divergence there were benefits to be gained from joining the euro. Unfortunately, the benefits appear to have concealed the necessity to address the structural divergences. In Ireland's case, our banks were unable to contain themselves. They behaved like the boy in the chocolate factory. They were suddenly able to access barrels of cheap money and shovel it out at a profit to all comers. We know where such reckless lending has brought us. Now it appears we were not alone and, Greece apart, we were only worse. It was inevitable, therefore, that when the crisis came the impact would be so much more severe in some member states than others.

Provided there is reasonable and prudent budgeting policy, the creation of a stabilisation fund was inevitable. However, in the errant states we are stuck with fiscal correction measures that are inflicting severe hardship. We know how bad it is in Ireland and can only imagine how bad it is in Greece where the cuts are reported to be twice as severe as what is happening in Ireland. However, we knew that gross spending was sustainable in the short term only because of temporary revenues from tax-driven property development. This served only to exaggerate the divergence between our economy and the benchmark German economy. The Stability and Growth Pact alone was an insufficient mechanism to make monetary union work and more especially so when it was operated more in the breach than the observance.

Necessity, however, is the mother of invention. Confronted by the threat to attack the euro, the European authorities and political leadership have now come up with solutions that will, I hope, not only tame the turmoil but provide mechanisms to anticipate problems in the future. In particular, I acknowledge the necessity for the stabilisation fund jointly created with the IMF. The shift of emphasis by the ECB is also welcome. I am not sure I yet understand the full import of measures to co-ordinate fiscal strategy. If member states are to be required in the future to send their budgetary homework to Brussels for correction, there will inevitably be resistance.

Imposing German-style discipline on the more profligate member states is not guaranteed to work. Unless it is accompanied by measures to stimulate growth and expand employment, it will not work anyway. For example, our Government's preoccupation has been entirely focused on fiscal correction and the inevitable cuts that must follow while the gap between revenues and spending remains so large. However, there is a separate recession issue that has attracted little or no attention. In so far as there was a significant policy difference in the British general election, it was between those who thought it possible for that country to grow its way out of a recession and those who thought the country could cut way out of a recession. We can only cut so much but if we do not get growth going again, we will remain playing catch up. In the early 1990s we endured a period of jobless growth. The same is likely to happen again. At European level and at domestic level as well as tackling the structural deficit, we need to see a jobs and growth strategy. So far that is missing here in Ireland and at the top of the European Union.

The debate in the neighbouring jurisdiction is interesting where that philosophical argument during the general election seems to have been resolved in favour of more cuts. That economy is obviously critical to our success here in Ireland. It now appears the economy could be plunged deeper into recession, which will be a problem for us also. Nobody on these benches demurs from the necessity to take this step of solidarity with a partner member state currently in trouble. Why the Greek situation is as serious is primarily a matter for the Greek people and political system. One cannot but have sympathy for the Greek Prime Minister, Mr. George Papandreou, and his Government over what they inherited. In addition to being profligate and reckless, to be dishonest in the presentation of the figures has created a very challenging situation for his Government.

In the process we have seen how, although not a major economy, what has happened in Greece has threatened to destabilise the entire euro project. Coming at the time it did, while the German Government was anticipating significant elections, there was a delay which was exploited. It could have been exploited with dreadful consequences for all of us. For all of these reasons I support the Bill, but plead with the Government to shift its focus now from mere fiscal correction to the entire question of a jobs and growth strategy. It should do what it can to cause that strategy to move to the top of the European agenda.

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