Pádraig Mac Lochlainn (Donegal North East, Sinn Fein)

My colleague, Deputy Adams, outlined how our national interest should be reflected in the discussions at the EU summit. I share his concerns. There is a need to assert our national interest and the sovereignty of our State. However, what is shaping up as a bad deal for us will also be a bad deal for all of Europe. It looks like the summit will continue to follow the mistakes of the past. European leaders are doing too little, too late. They are placing the demands of wealthy bankers ahead of the needs of the citizens and pursuing austerity when we should be promoting growth. We need to put an end to this. What we know of the tentative agreement at the weekend is that it will continue the failed practice of cutbacks, taking money from taxpayers to bail out banks and placing the burden onto the economies of peripheral states. We are told that they are considering a Europe-wide banking bailout without knowing the cost of the bank recapitalisation. Perhaps the Taoiseach can bring the Anglo Irish Bank case study to the summit to demonstrate what happens when one gives a blank cheque to bankers.

Austerity and bank bailouts will not lead to growth across Europe, the stability of the euro or reduced debt levels. It has failed here, failed in Greece and Portugal and it will fail in the European economy. I accept that we are not Greece and Portugal but the approach of austerity has failed in all economies. What makes European leaders believe it will work across the EU? A number of steps are required at European level if we are to deliver growth and stability across Europe. We need honesty and we need to know the true level of the banking losses. The current EU stress tests failed to deal with the exposure of banks to sovereign debt and continue to overvalue property assets. Once we know the full extent of the problem, we can begin to act.

Reports today suggest the banks are opposed to a substantial write-down, which is no surprise. This is a crisis in banking and finance. Without a substantial write-down, the alternative is an unstructured default, which will have a greater impact on banks. The banks are involved in a game of bluff and that bluff needs to be called. The banks need to step up to the mark and take responsibility for the mess they have created. They must be forced to write down the cost of their bad debts as a condition of any future recapitalisation. The cost of recapitalisation should not be borne by ordinary taxpayers across the EU. An enlarged EFSF is not the vehicle for recapitalisation. The ECB should become the lender of last resort for the European banking system. The ECB performs this function in a number of countries, including Ireland. Rather than printing euro to buy the bonds of European economies, the ECB would be better placed redirecting these facilities to stabilise the European banking system.

Alongside recapitalisation, we need to promote economic growth and employment. In the absence of private sector investment, we need a European stimulus to compliment stimulus programmes in individual member states. The European Investment Bank has twice the lending capacity of the World Bank and it must use this capacity, with national governments, to increase the level of investment and create employment and build infrastructure.

I fear the grand bargain, as it was called at the weekend, will be the failed approach of the previous Irish Government implemented at a European level. I hope that the Taoiseach brings our experiences with him and that he will carry with him the story of many thousands who are on the dole or were forced to emigrate. I hope he will demonstrate clearly that the approach advocated has further depressed our economy. That approach has failed the State and it will fail the European economy. It is remarkable to see an absence of political leadership for so long in Europe and the lack of any real solidarity or a solution. Now, we see the spectacle of David Cameron and Nicolas Sarkozy exchanging insults and President Sarkozy and Chancellor Merkel laughing when asked whether Prime Minister Berlusconi's Government in Italy is capable of repaying. This is a damning and symbolic message to send to the people of Europe. To repeat the mistakes made in Ireland and the crazy policy of writing a blank cheque for bankers without carrying out due diligence on the European banking system will lead to profound disaster, even worse than what we have now.

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