Seán Conlan (Cavan-Monaghan, Fine Gael)

The key outcome of the meeting tomorrow must be a resolution which limits further damage to Ireland and other eurozone countries caused by an unwillingness, thus far, to agree a common approach to fiscal policy, and more importantly, there must be a decision on which countries wish to abide by those rules and which are insolvent and must restructure. Primarily, this crisis has resulted from design flaws in the euro that have existed since its inception. Many economists warned against the introduction of the currency on the basis that countries would lose their ability to devalue or set their own interest rates. Others argued that the euro's creation was a triumph of bad politics over economics and that a monetary union without a central fiscal authority was very risky. They pointed out that in the US the federal tax and transfer system was important in lessening the effects of regional shocks.

The politicians of Europe knew this at the time but they also knew that the people of Europe would not be willing to agree to a fiscal union. Eurozone interest rates were set to suit countries with low growth and low inflation like Germany. This resulted in almost a decade of negative real interest rates in Ireland, facilitating cheap credit which led to the property boom. I would be guilty of lazy analysis if I did not point out that a responsible Irish Government could have tightened fiscal policy by running budget surpluses and limiting banks property lending by introducing higher capital requirements. That would have prevented the property crash.

The Irish Government's duty at this week's summit is to protect Irish interests, and this must involve measures to protect the euro. I am opposed to full fiscal union. I do not believe moves in that direction would be in the country's best interests. The proposal made earlier in the week by Germany and France suggests two major changes - that the sanctions for breaching the 3% deficit rule under the Maastricht treaty be made automatic, and that all eurozone counties implement a balanced budget rule under their own constitution which would be verified by the European Court of Justice. This suggests sovereignty in budget making would only be affected if the rules were broken and national courts would intervene before the European Court of Justice became involved. That is similar to the fiscal rules signed up to by the previous Government in the EU-IMF loan agreement; in summary, there would be fiscal rules, surveillance and enforcement of these rules. A major flaw with this approach is that while it would, undoubtedly, strengthen the euro, it would also make it more difficult for countries on the periphery to introduce counter-cyclical measures to deal with recessions. What we are being offered is surveillance only allowing pro-cyclical adjustment. We are being offered a long period of austerity rather than debt sharing.

No country or group of countries can pursue national self-determination and protect democracy while at the same time moving towards further globalisation. Something has to give. If we want to protect and deepen democracy, we must choose between the nation state and further economic integration. If the European Union wants to pursue globalisation on our behalf, that will affect the nation state and the democratic process. These are the fundamental choices facing each country in the Union. Deeper European integration will inevitably limit each country's ability to tax in a way that its own citizens want.

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