Micheál Martin (Cork South Central, Fianna Fail)

I have met thousands of people all over the country over the last month while I have been canvassing in advance of the referendum on this treaty. They are approaching this vote with a deep seriousness. I have found they understand the core positive case for a "Yes" vote. If Ireland is to recover, we need to restore confidence in Europe. We need to save the euro and stay within it. Most importantly, we need secure and affordable funding. If we vote "Yes" next week, we will have shown that Ireland is playing its part and that a basic step to restore confidence has public legitimacy. We need equally decisive action from Europe's leaders.

The European Stability Mechanism is not a long-term solution in relation to sovereign debt. It is an important and essential step, but it needs to be bigger. It does not address the fact that the eurozone needs a fund which can purchase Government bonds when they are issued. The European Central Bank's purchases on the secondary market provided some breathing space at first, but then accelerated the crisis by enabling investors to leave the market. The provision of funds to banks in the hope that they would buy sovereign debt also gave short-term relief which has created a longer-term problem. The exposure of the financial system has been increased without a sustainable reduction in yields. There are only two actions which can allow countries like Ireland to borrow at affordable rates. First, the mandate of the European Central Bank could be changed to allow it to purchase bonds directly. Second, jointly guaranteed eurobonds could be introduced. Germany and some other countries have resisted these measures consistently. Most leaders, including the Taoiseach, have refused to push the issue. The time for being timid is long over. It needs to be put to Germany in particular that it had a chance to provide an alternative route and failed to do so. Its way alone does not and cannot work.

It is clear that the eurozone is experiencing a low-key but relentless run on its banks. Investor financing has dried up. The system is being held together by the European Central Bank. This is choking businesses and families that cannot access credit. There is a need in most of Europe for permanent recapitalisation, which can only come from a co-ordinated fund operating at European level. Leaders need to take immediate measures to make this happen. The situation is even more serious in Ireland. This has implications for investment, for the debts of the State and for hundreds of thousands of families. The financial crisis here emerged before there were any European policies to help. The primary goal of the measures adopted in Ireland was to help the eurozone as a whole. It is not acceptable that Ireland is obliged to maintain these debts in full. Any new European action on banks must include a write-down of these debts or place them on new terms which remove most of their impact.

As we heard yesterday from the Central Bank, the actions of the Government and the banks on mortgage arrears are too little and are allowing thousands more people to get deeper in trouble. Quite apart from the huge social impact, the economy is getting squeezed in two directions. The banks are scared about potential default and are hoarding reserves. Hundreds of thousands of people are withdrawing from the economy, in effect, as they focus on their mortgage debt. This situation cannot go on. We need European help to remove debt from the balance sheets of the banks and fund a major programme to restructure mortgage debt. Nothing else will work. A return to growth and job creation also requires increased investment. The election of President Hollande is to be welcomed. It has concentrated minds and led to a new willingness to discuss investment for growth.

Unfortunately, the specific measures being discussed tonight will do nothing other than confirm that the leaders do not appreciate the scale of the challenge. People expect to be led out of this crisis. They want leadership. The use of the European Investment Bank to fund major projects is obviously needed. It will have no impact if it is on the scale or terms being discussed. It is reported that a pilot project bonds scheme is being discussed. This will involve €230 million over the next year and a half. Given that the eurozone economy is €9.2 trillion, the idea that these project bonds will stimulate anything is risible. It would be worse than a token gesture. I hope that speculation is not well founded and that something far more substantive emerges from the meeting.

Just as significant is the point that what is needed is not just more loans, but the transfer of funding. The states that are most in need of investment cannot take on more debt. They need direct assistance. If the scheme goes ahead as planned, stronger regions will be the only ones which will be able to secure the funding. At a minimum, existing EU funding should be redirected to areas which have seen the biggest increase in unemployment, with a loosening of co-financing regulations. Over the last year, the leaders of Europe have repeatedly failed to show the ambition and resolve required to tackle a unique crisis. They have consistently tried to work with pre-crisis instruments, only to adopt new ones when every other option has run out. The situation could not be more grave. It is clear that the euro will not remain fully intact. New bailouts are becoming likely. The final agreement that was reached in December has failed and a new agreement is required. There must be an end to the timid and reserved approach of Europe's leaders. The Taoiseach and others must stop being passive bystanders and speak up for radical action.

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