Micheál Martin (Cork South Central, Fianna Fail)

While the specific agenda for tomorrow's summit is still uncertain there is no doubt about how serious the issues are. The leaders have what may well be their final chance to show they are capable of addressing the crisis engulfing the eurozone. There is no longer any doubt that only dramatic, fast and comprehensive action can stop the situation becoming much worse. The key principles for action were agreed in February but the repeated delays and unforgivable inaction since then has spread the uncertainty which was supposed to be tackled.

This summit is happening because the chairman of the euro group, the Prime Minister of Luxembourg, Jean-Claude Juncker, looked with clearly escalating panic at what is happening to Greece, Spain and Italy and understood there is no more time. If Europe's leaders departed for their August breaks without taking action they might return to find a greater emergency and the end of the common currency. The Prime Minister, Mr. Juncker, is an experienced and knowledgeable leader. He does not exaggerate and he was right to request that the summit be convened. It may well be that full and final agreement is not possible but the constant uncertainty which comes with acknowledging problems and failing to deal with them has to end and be seen to end.

When Greece was given funding last year every country acknowledged that a more formal and comprehensive system for providing financial aid was now required. This was done only in part. Markets did not believe that the measures agreed were strong enough to deal with all possible eventualities. Instead of properly appreciating how widespread the contagion could be, there was a belief held by many that the only issue was that of a few errant countries on the periphery. This formed part of what lay behind the regular and deeply damaging briefings in October and November as a prelude to Ireland's financial programme. At that stage it was again agreed that the programme was too inflexible and needed to be made less onerous. No negotiation was possible on the interest rate because the policies agreed earlier in the year did not allow for it. The parties in the new Government have consistently refused to acknowledge this until today in the Taoiseach's speech and they know that their posturing on the issue before the general election was part of just another short-term political game on their part.

In the first two months of the year there was a strong sense that the European Union needed new policies to provide enough funding to be able to support even a large country; change the duration and cost of debt repayments to make them more sustainable; and introduce fiscal rules which would provide confidence in the medium and long term. Each of these was agreed to in principle in February and included in the 11 March communiqué. Unfortunately, only the fiscal rules element was implemented quickly. The delay, uncertainty and anonymous briefings turned a confidence-building initiative into one which has had the opposite effect.

The threat to the euro is not some abstract theory or the fantasy of doomsayers. The common currency can only survive if member states continue to see that the alternative would be much worse and if investors have faith in it. Ireland, with others, has always accepted very serious constraints on its ability to act because of its commitment to collective action by states, but the status quo is no longer credible and something must give. For the sake of the European Union, I hope there is unbending resistance to debt restructuring rather than the currency.

The Greek Government has taken many brave steps in addressing a fiscal crisis which has been developing for 20 years. It has shown that it is different from its predecessors and deserves extra time and greater flexibility. Greece does not have Ireland's export base or a number of our other long-term strengths and it started this crisis with a dramatically higher debt than ours. There is no evidence that it can sustain its debt and repayment burdens and a failure to acknowledge this with each new plan continues to be a root cause of the escalating crisis. Whether it is through buy-backs in the steeply discounted market or any other range of moves, Greece's sovereign debt needs to be restructured now rather than waiting for a more uncontrollable default in the future. The availability of the European Stability Mechanism, ESM, for a second round of financing needs to be fully nailed down by leaders. A combination of a restructured debt, secure medium-term funding and the economic plans of the Greek Government can see the country through. We should support it in this.

The role of the European Central Bank in this matter has been, at best, controversial and, at worst, extremely negative. At a time of such crisis the bank should not be falling back on technical rules to stand in the way of an essential policy. Its threat to withdraw all funding for Greece if there is even a technical credit event confirms once again that its rigid orthodoxies serve the European Union badly.

It has been this country's policy since last year to seek to impose significant losses on bank bondholders. Our proposals were vetoed by the ECB because of its fear of a contagion, which has happened. Unilateral action was not and is not an option because of other funding realities for the banking system and public spending. However, the reality of the deep discounts which the markets have imposed on bond values shows that the risks arising from imposing significant losses on bondholders are lower than ever. The late Brian Lenihan provided for this in legislation and imposed the first haircuts. The Fine Gael and Labour Party Government likes to ignore this when using the legislation. Where once the valid argument was that imposing bondholder losses would provide a fatal blow to Ireland's ability to return to the market, the evidence today is that the failure to impose losses is undermining our ability to return to market. Both the Taoiseach and the Minister for Finance, Deputy Noonan, have repeatedly said they do not intend to raise the issue of bank bondholders until the autumn. They have done this, even though they have worked to hype minor announcements as being deeply significant. If the Greek debt issue is being addressed, so too should the Irish bank bondholder issue. We took on large parts of the debt because of a Europe-wide policy of avoiding imposing investor losses. If this policy is to be relaxed on the much more serious issue of sovereign debt, we must inform our colleagues that there will be significant losses imposed on bank bondholders.

One of the most ridiculous developments in recent months has been the lengths to which the Government has gone to claim credit for developments in which it played no serious role. The ESM announcement of a few weeks ago was a classic example of the genre. On the Monday morning the Minister for Finance said it did not relate to Ireland but was welcome nonetheless. By the Tuesday the Taoiseach was hailing a great strategic victory. He appears to be the only person left in Europe who believes it was a wise decision to leave the debt and interest issue in the hands of the finance Ministers. The hands-off approach failed miserably and the momentum towards action evident in January and February disappeared.

Having spent months spinning the idea that Ireland had undertaken a diplomatic offensive, the facts show that there has been no initiative whatsoever. During the general election the Taoiseach went to Berlin to show how he would lead from the front, directly engaging with European leaders. In the four months since he has failed incredibly to hold a single bilateral meeting with a eurozone leader and yesterday he stated he had had no personal contact with a eurozone leader in the run-up to the emergency summit. Just like his personal commitment to Roscommon County Hospital has now been denied, so too has his pledge in Berlin of personal diplomatic leadership been dismissed. Given the amount of time the Taoiseach and his Ministers have invested in attacking predecessors for supposedly failing to meet people, the complete absence of personal action is incredible. Perhaps if they had been less concerned with partisan attacks, they would have been able to arrange a diplomatic initiative. There will be a reduction in Ireland's interest rate and there should be a move on the issue of bank debt. The Taoiseach will no doubt be unstinting in his praise of himself, but any progress will happen because of an overall decision which he and his Ministers have played no serious role in influencing. His approach has been to sit on the substitutes bench and claim credit for the goals scored.

Only three hours have been provided for the summit, including lunch. Some are already trying to talk down the likely outcome, but the issues involved go beyond anything which can be spun for the sake of media headlines. This is one of the most important summits in the history of the European Union. It falls on the leaders to show that they can rise above the crisis and that they will take measures to help member states and restore confidence. The can must not be kicked down the road again.

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