Michael Noonan (Limerick East, Fine Gael)

I understand the memorandum of understanding which will accompany the bailout agreement from Europe will be quite specific. Recently I was briefed that it would deal in generalities but now it appears it will be specific about 2011 and, although it will be less specific about the following years, it will still be specific. Items will be included that effectively will be mandatory.

I want to tell the Commission we are not a colony but a sovereign Government. I want to tell those clever anonymous spokespersons from the European institutions that the way we behave here is governed by the European treaties and they should not advocate solutions for Ireland that are beyond the scope of the treaties. There will be a new Government, whatever its composition may be. I do not believe a new Government should be tied to the specifics of a plan negotiated by an outgoing Government that has lost all credibility at home and abroad. I want to tell the Commission straight out that will not work. We are committed to the targets but not to the specifics. If the budget goes through obviously that will change the status of the specifics for 2011 but for the subsequent years we will sit down with the Commission and renegotiate specifics. We will not accept any other arrangement from the Commission.

My final remark concerns the euro. The euro brought wealth to Ireland. It was a great idea and it helped trade and the economy. It also brought a wash of cheap credit to Ireland which did not suit our position in the economic cycle, caused us a great deal of grief and was a big contributory factor to the bubble. I do not believe the eurozone has been developed as a proper fiscal zone. One may look at the system in the United States which has automatic stabilisers for when things go wrong in a particular state and where there can be fiscal flows from one part of the country to another to maintain an economy.

The eurozone is a very undeveloped common currency area that must be developed further. I do not believe that addressing fiscal imbalances in the peripheral states and deflating them is going to stabilize it. The big countries such as Germany and France have a responsibility to get demand going in the economy. Why do they not cut their taxes, get consumer spending going and give us a chance to export to them? Was not the entire basis of the new Europe that there would be an interchange, with countries buying and selling to each other to get the economy going? The view advocated by the policy makers in Europe is incredibly narrow and I do not believe it will work. There is no point in blaming Ireland because the euro is under pressure. The euro is under pressure because it has fundamental flaws in its composition.

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