Alex White (Dublin South, Labour)

I respect his view although I disagree with it. I would be interested to hear Deputies Flanagan and Joan Collins say whether they would consider us to have a better chance of running our affairs if the treaty is accepted or if it is rejected. Does Deputy Collins believe we will have more or less austerity if it is defeated? Many articles have been quoted from colleagues on that side of the House to support their case. Mr. Krugman's ears must be very red. In an article of his on 11 March to which rather less reference was made, Mr. Krugman said: "You may ask what alternatives countries like Greece and Ireland had, and the answer is that they had and have no good alternatives". In other words, while he has offered a major critique of the strategy in the eurozone, he has formed the view that Ireland, among others, has little choice in regard to where it finds itself. I do not accept that we are without choices, but I am strongly of the view that if this referendum is defeated, we will have more austerity, not less. That is absolutely clear and without question. We have a deficit of €15 billion and nobody willing to lend to us. Were we to decide, as Deputy Flanagan advocates, to leave the currency, we would simply isolate ourselves from any prospect of recovery.

It is not for the optics that I acknowledge that the treaty is not perfect. In fact, I do not accept it is the solution to the problems in the eurozone. Moreover, I very much agree with some of the points made by Deputy Mick Wallace and others in regard to the huge economic imbalances that exist across the eurozone countries. That is a major issue that must be addressed. It may even be more at the heart of the collapse in Ireland than fiscal indiscipline ever was. I agree with Deputy Pádraig Mac Lochlainn that if the rules set out in the stability treaty had been in place for the past ten years they would not, on their own, have addressed or solved the problems that have arisen. They would not have tracked the bubble which was, in fact, an indirect or perhaps even a direct result of the imbalances to which I referred. The explosion of credit that emerged in the core of Europe after 2000 and the introduction of the euro was bound to have a differential impact on different countries given their varying economic circumstances. Our economy simply was not in a position to withstand and should never have been exposed to that type of influx of credit in the uncontrolled manner in which it occurred. I absolutely agree that fiscal rules alone would not have prevented the crisis. However, that is not an argument against fiscal rules. Rather, it is an argument that fiscal rules are not enough, that the fiscal discipline that is advocated is necessary but not sufficient. It is certainly not a case for throwing out the rules as something that is not required.

It is not difficult to ascertain the impetus behind this treaty. The design of the euro currency in the early part of the last decade was incomplete and arguably flawed. Member states thought they could have monetary union without any type of fiscal co-ordination, but there is no currency in the history of the universe that ever could survive in those types of circumstances. Rules were set out in the Stability and Growth Pact, but they were ignored by many countries, not so much those on the so-called periphery but by France and Germany, among others. What is now being proposed is, first, to take the rules from the shelf, dust them down and strengthen them, which is what was done last year. The provisions contained in the treaty are the strengthened rules that were reintroduced last year. Indeed, they are largely the same rules that have been in place since 1997, which have merely been dusted off and strengthened. In addition, a decision was made to introduce corrective mechanisms where the rules are not applied.

This is the main response the European Union has had to the crisis in the eurozone. To reiterate, while I am of the view that it is necessary that this should be done, it is not sufficient because we have not yet addressed the macroeconomic imbalances that continue to exist. Europe made a start on addressing those imbalances in the six-pack last year and made additional progress in this new two-pack set of regulations, but it has not done enough to address the risk that the same type of explosion of price bubbles could recur in periphery countries. It is moving in the direction of addressing the issue, but it should be given just as much attention as is being given to fiscal discipline. Unfortunately, that is not being done. Nor is sufficient attention being given to the necessity for a growth strategy in Europe. It will probably never be possible, despite what colleagues have argued, for a Keynesian, stimulus-type approach to be taken in one country within the eurozone. It will be possible for it to be done in the eurozone as a whole, and I support that, but given the configuration of a system where there is monetary union and fiscal union, no single country will be in a position to stimulate its own economy without the co-ordination and co-operation of other member states.

That is not to say that Keynes is dead, as some have claimed. Nor does it mean that neoliberalism is in the ascendant, as Deputy Clare Daly claimed, and there is no room for any other politics. I strongly disagree with that. However, when we have 23 essentially right-wing or centre-right Governments out of 27 in the European Union, there is a large political job to do. One will not do that political job by cutting oneself loose from the currency or choosing not to engage in politics in Europe. One will not succeed by abandoning any interest in whether the elections in France at the weekend, for example, will change the Government in that country. We will not achieve our objectives by deciding not to make common cause with other Governments, whether on the left or centre-left, in other member states. Instead we should be in Europe arguing with people, co-operating with people and making common cause with people. There are many people elsewhere in Europe who are interested in hearing the type of debate that is taking place in this Chamber. However, Deputy Flanagan and others are arguing that we should just look after ourselves. He claims that is not a nationalistic position to adopt but I would contend, with respect, that he is being the very essence of a little Irelander.

There is no future for this country on its own. I have made the point to Sinn Féin Deputies in the past that sinn féin as a concept - ourselves alone - is ludicrous in the modern world. We cannot solve all the major problems in the world, economic, financial and environmental, ourselves alone. Deputy Flanagan might believe it can be done but that does not make it so. What we must do is, for example, mutualise debt and deal with the necessity for restructuring it where countries have an overhang of debt. I am strongly of the view that the debt must be restructured in some considerable respect. That is a political fight in Europe. It is a political fight with countries and institutions that do not want to see it happen. If one believes in eurobonds and the mutualising of debt, let us go and argue for them. Let us go and fight for them, talk to other people who might agree with us and talk to other countries in similar positions. However, my colleagues across the House do not want that. Instead they say we should forget about neoliberalism, that we will turn our backs and paddle our own canoe. That will not work. Let us be serious politicians, as I am sure my colleagues on that side of the House are. As I said, I accept that fiscal discipline is necessary but I do not agree it is sufficient. We must employ other economic instruments that promote growth. The European Union has not, despite some welcome initiatives recently, been anything like as forthcoming or robust on the growth side as it has been on the fiscal discipline side. Therefore, it is a considerable challenge to build a new strategy in Europe in that regard.

One could ask why the new rules are being introduced. The rules were strengthened and corrective mechanisms were put in place, but one might still ask what the treaty is about. Again, there is much misinformation about this and perhaps genuine misunderstanding. The treaty is about taking a different approach from simply sending the Taoiseach to Brussels to sign on the line to the new agreement, along with the leaders all of the other countries. It proposes an additional step, whereby countries would anchor these rules in their domestic laws. That is the difference because although the rules already are in place, the proposal is that they be agreed to in this House. In other words, the Government does not simply agree to them when in Brussels, at some point after the referendum is passed, the Oireachtas will put them into domestic law through legislation. The rules will not be inserted into the Constitution, although people thought that would be the case. They will be put into law in our Parliament and the people will be asked to agree this should be done at some point in the future.

There has been much misinformation and misunderstanding about the rules. For example, I refer to the notion that the corrective mechanism which would be invoked were the deficit rule, or debt brake, to be breached would be a deeply draconian regime that would be imposed on us without consultation and so on. The Minister of State, Deputy Sean Sherlock, intervened briefly on that point - I agree with him - because the idea that the Commission will come in as a-----

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