Arthur Morgan (Louth, Sinn Fein)

I thank Deputy Burton and the Labour Party for sharing time with me.

The EU has now set up a special purpose vehicle, SPV, under the European stabilisation mechanism that will provide funding of up to €440 billion to any eurozone state or states in debt trouble. This SPV is, of course, underwritten by the same eurozone countries that it has been set up to protect.

The €440 billion fund will act as a guarantee for sovereign debt issuances by eurozone countries. Countries will each secure 120% of their share of the loans to secure the highest rating for the debt. The EU finance Ministers' aim is for ratings companies to assign a triple AAA rating to the facility and whose bonds would be eligible for European Central Bank, ECB, re-financing operations. The agency will sell bonds, backed by guarantees, and use the moneys it raises to make loans to eurozone states in need.

Bizarrely, the debt crisis is being fought with more debt. I do not subscribe to this legislation because one cannot treat a debt-fuelled over-consumption problem by adding much more debt. This is an illogical position in which eurozone governments are guaranteeing their own debt before it is even issued. We are in a position where the ECB is keeping our banks afloat and the eurozone countries are keeping each other afloat through mutual guarantees. The underlying problem of too much bad debt, however, is still there.

It is the significant size of the banking sector in the core European countries and the amount of debt in the peripheral countries that they are holding that is determining who in Europe must be saved and who must make sacrifices. Since these banks are the recipients of the bailout, their losses have even determined the size of the bailout too. The Greek bailout did not aim to revive the Greek economy. Instead, it was to provide a guarantee against a debt default by Greece and other European crisis-hit economies. It was, therefore, entirely a bailout for holders of Greek Government debt.

The European Commissioner for Economic and Monetary Affairs, Ollie Rehn, said any loans from the European Financial Stability Facility, EFSF, would impose the kind of austerity budget conditions on recipients that Greece faces as part of a programme for receiving quarterly aid disbursements under the 2 May accord. The process for providing assistance will be similar to that under the loans-to-Greece package. The loans are strictly conditional on a programme being agreed to by the country concerned, as well as the EU and the IMF. The final decision, however, will be taken by the board of directors of the EFSF. The IMF has become the policeman of the eurozone. With that decision the only thing that can happen is the strengthening of the Stability and Growth Pact to the detriment of smaller countries and the weakest economies. This is not a mechanism of solidarity; it is one of pressure. Already other countries, such as Spain and Portugal, are taking measures against working people, driving up unemployment and poverty without providing any way out of this crisis. Social dumping has become the only instrument of competition in the EU, far from the Europe of solidarity and social cohesion.

We must not forget the role of the IMF in Ireland's banking crisis, as highlighted by the two reports published this month. Professor Patrick Honohan stated in his report that the IMF was not strongly or consistently critical of the underlying dynamics of fiscal policy. Its oversight failed abysmally and now it is charged with overseeing European financial stability. In whose interests is this? It certainly is not in the interest of ordinary people for whom the IMF is recommending cutting wages, welfare and public services.

European governments are currently repeating their age-old mistake of cutting spending and raising taxes for low-income earners well before the economy has recovered. In the US, there is a debate about another stimulus package to ensure the recovery does not prematurely run out of steam, a wise approach. The Europeans, on the other hand, are choking off the recovery before it has even started. The premature austerity programmes will ultimately impede debt reduction as nominal growth remains weak.

The crisis in the EU is badly affecting European economies and societies. Policies adopted to cover its costs have lead to harsh austerity measures that have only deepened the recession, encouraged the growth of unemployment and attacked labour and pension rights.

Sinn Féin is not anti-EU. However, it recognises the push for strengthened fiscal union is undermining the peoples of Europe. This drive for fiscal consolidation has shown a lack of will among European leaders to deliver a social union. The EU must be more than about the Single Market with a common currency. We need sustainable policies for growth and stimulus that will benefit the peoples of Europe rather than depress them. I hope the Minister of State will not try to misrepresent my party's position on this Bill as being anti-EU.

Countries that enter into debt to save jobs and stimulate recovery by investment should not be punished. Taxes that governments rely on to service their debts have plunged and actually led to wider deficits. If any economy does not grow but tries to pay its large debts, it will turn into a debt-servicing agency which hollows out the productive marrow of society.

European finance Ministers have resolved to submit draft budgets for the approval of their counterparts and the European Commission before unveiling them in national parliaments. Ministers have agreed to impose new financial penalties on governments that flout EU budget rules. Responding to pressure on the euro following the Greek debt debacle, they also agreed to widen the scope of existing surveillance measures to compel countries with high national debts to reduce them.

With the combination of these budgetary oversight mechanisms and the stringent terms and conditions that will be attached to countries that need to draw down from the EFSF, it is clear economic recovery and growth will be stunted by harsh contraction measures that will not stimulate the economy, create employment or deliver people from poverty.

Rather than the creation of financial measures that will actually help ailing European economies, the package that has been put together by the Commission and eurozone Ministers is crippling both economically and socially. We should not be mistaken. The European Commission will police national budgets and dictate where cuts and savings should be made. Unless its diktat is followed, countries will not be eligible to draw down certain funding from the EU. If countries do not follow the diktat, they will be punished at EU level.

How can I support this legislation that will undoubtedly and unduly punish and penalise the peoples of Europe? I agree with the objective of trying to create a collective response to the attack on the euro. However, this facility is not the best way of achieving this. A different economic approach is essential. A stimulus package, like that in the United States, must be at the heart of building our way out of this economic crisis rather than punishing and crippling the poorest in our society.

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