Brian Cowen (Laois-Offaly, Fianna Fail)

I will deal with one of the Deputy's questions, the one relevant to the questions tabled, which concern what was decided upon at the last European Council meeting and the agenda for the next one. I fundamentally disagree with Deputy Ó Caoláin's analysis that the proposals for the better co-ordination of economic policies represent in some way a diminution of our sovereignty. We live in an era of interdependence. We have taken on obligations as well as rights in joining the single currency and great benefits have derived to the country from the establishment of the euro and our membership of it. The biggest impetus for economic advancement in this country over the past 25 years was the establishment of the Single Market and, the follow on from that, which was the establishment of a single currency in which to trade in that market. For a country like ours, which exports 95% of what it produces, anything that improves our access to those markets and avoids the transaction costs of converting from one currency to another and the improved and increased transparency that provides for pricing greatly outweighs any disadvantages.

The other premise of the Deputy's question was that peer review is new and is to our disadvantage. In a single currency area of 16 independent sovereign states, the need for co-ordination of economic policy is fundamental. The establishment of the European Central Bank has been fundamental. I ask the Deputy to contemplate in the context of the crisis we have been seeking to manage over the past two years where the resources would reside in this State to meet the resources we have been able to obtain from the ECB in dealing with the funding mechanism and the funding requirements of this economy over the past 24 months. If we had our own currency, does he suggest that in the aftermath of the international financial crisis we would have the resources to withstand the impact of that? I am afraid he is totally mistaken if that is what he believes. The unfortunate example that we have of Iceland should remind him of the importance of avoiding isolation in the matter. If one was to take the Deputy's analysis, it is probably a greater guarantee of the loss of sovereignty than the retention of it.

There is a need clearly within the auspices of the Stability and Growth Pact, which was revised in recent years, to have situations were pre-emptive or preventative measures can be taken rather than subsequent corrective ones. Where excess deficit procedures at the moment offer verbal and written warnings and ultimate sanctions, they may well prove too late, particularly when one has had the impact of the financial crisis on public debt that every country has had to contend with as a result of what we have seen in the past number of years.

If, as I agree, it is also about the need to maintain public services on a sustainable basis, one cannot put forward a sustainable case for the retention of public services if one is running deficits of 10% or 12%. One has to bring one's public finances back into order to protect public services to the greatest extent possible and to provide a means by which in better times in the economic cycle we can once again, as we did in the past, greatly increase resources in the context of personnel, material and money for these services.

That is my strong view about seeking to portray this as a loss of sovereignty. It is a fundamental fact that we share sovereignty in many areas as a member of the EU, much to the advantage of the country. Any objective analysis of how the country has developed, regardless of the problems we face now, is that our best prospects are as part of an integrated European economy rather than seeking to suggest that a free trade area between independent sovereign states will provide us with the prospects or opportunities we have obtained in the past and we hope to create in the future.

I do not agree with the premise that lies behind the questions. The objective evidence does not support the contentions made.

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