Brian Cowen (Laois-Offaly, Fianna Fail)

In respect of Deputy Rabbitte's first question, the interest rates are manageable. Ireland was the first entrant into the new mechanism. The EU element of the mechanism is new but, as Members are aware, the IMF has been involved in activity of this sort for many years. The point the Tánaiste was making is that any change in the arrangements relating to Ireland - I will return in a moment to whether there is a prospect for such change - cannot be unilaterally negotiated between this country and the institutions. There must be agreement among the 27 member states in order for this to happen. Apart from the mechanics of what is involved, the question really relates to the prospect of that which I have outlined happening.

We must take cognisance of the German Government's policy in this area. Germany would be the main contributor to any such fund as a result of the fact that such a high component of Europe's GDP resides in that country. Governments tend to take account of sentiment among German taxpayers regarding the idea that Germany should be the post of last resort in extreme circumstances. The reaction of the public in Germany in respect of the bilateral loan made available to Greece last year became an issue. There were particular reasons a negative attitude was adopted by certain people in Germany in this regard. As the Government of Greece has discovered, its equivalent of the CSO was not functioning properly and, therefore, that country ended up in a situation that was based on information which was not accurate. There is no such contention in respect of Ireland, which is well-regarded in all of the areas to which I refer.

A risk premium was determined by the eurogroup and the ECOFIN Council in respect of Ireland, as the first entrant into the new mechanism. The reason for this relates to the need to strike a balance in respect of the composition of the interest rate that must be paid. In the first instance, such a rate must be one which, presumably, the country involved can pay. The second point is that a premium must be attached which will discourage countries, that may be heading towards difficulties, from believing that moneys will be available to them at a certain rate. Countries must not be in a position to continue on the course they have chosen, safe in the knowledge that there remains a last resort open to them which would be far more attractive than what would occur if they continued to obtain sovereign debt in debt markets. I hope the Deputy understands my point. The decision in this regard was made at European level and Ireland was the first entrant into the new mechanism.

The Deputy referred to eurobonds. Obviously we would be interested in that concept. However, it has attracted varying levels of support in the European Council. Those who would be interested in such bonds are those who could benefit greatly from being in receipt of them. There are large contributor countries which have a very different view of eurobonds. To my knowledge, these countries have taken a strong stand against their introduction.

President Juncker is a long-standing chairman of the eurogroup. When he and another European Head of Government put the proposal relating to eurobonds back on the table in recent months, there was a very strong reaction in respect of it in individual European capitals. The eurogroup has, however, embarked upon this process. As line Minister, the Minister for Finance would be the best person to go into further detail on this matter. It seems the sooner the European monetary system convinces markets that we are on the road to recovery and that sovereign debt levels can be brought under control by means of the policies, both domestic and European, that are being implemented - the role of the ECB in this regard will be crucial - the sooner we will return to normalcy in respect of sovereign debt markets. The sooner Ireland can return to the market at rates which were traditionally of the order of 4% to 4.5% prior to the emergence of the crisis the better it will be.

The currency crisis has not gone away in that respect. There are, as the Deputy says, fundamental issues that need to be addressed. However, the policy mix and the initiatives to be taken collectively, given the varying perspectives countries have on the impact such initiatives have on their own national Exchequers or their own exposures, is something that will require further detailed discussion. It is not clear to me that, if one likes, the cheap money option is just down the road.

On the developments in the EU involvement in this whole area as it evolves its policy - just as it has evolved its policy in regard to the financial institutions arising out of this crisis since 2008, policies will evolve - this does not necessarily mean that something will happen just because there is the prospect or the possibility of it happening. The underlying issue for the EU, to come back to an earlier comment by Deputy Gilmore, is to use this permanent mechanism, when it does arise, as a very last resort - the term being used is "if indispensable".

All the co-ordination and harmonisation of policies that is now taking place at the economic level within Europe - which has the semester and all of the increased surveillance that is taking place - which was not sufficient to signal the crisis when it did occur, will be pushing national member states to take greater steps at consolidation, in my opinion, to avoid the permanent mechanism coming into place. Even if it does come into place, one should not think that because it is a bigger pool of money, if that arises, based on the number of countries which could be looking at this as an option in due course, without my predicting that this is the case or doing an injustice to those countries, the use of this fund will only occur on a very strict criteria basis and after national governments having done everything - I mean everything - possible to avoid its use.

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