Timmy Dooley (Clare, Fianna Fail)

I welcome the opportunity to contribute to this debate and I support the Bill. In particular, I support the establishment of the ESM. As the Tánaiste pointed out, this legislation will ensure it is enshrined in European law through the treaty on the functioning of Europe, unlike the EFSF, which tended to float somewhat outside the confines of the body of law that makes up the European Union. For this reason, it is important that the Irish Parliament seeks to address that issue at a very early stage and recognises it appropriately. It would have been difficult to get this measure through during the course of the most recent referendum campaign. The ESM will be in place very quickly when a number of countries have signed the instrument into law. It is hoped it will be functioning well before this measure is enshrined in EU law early next year, as the Minister of State said.

The new stability mechanism is a vital component of the European Union's response to the crisis. It is a measure for which we have been calling for some time. The forerunner to this fund, the EFSF, was an ad hoc measure effectively operating outside the body of law in place to address the crises that existed in Greece, Portugal and Ireland. It is worth noting that, at the time in question, Ireland moved rather quickly to seek to fall within the bailout programme and to seek funds from the EFSF in the hope of preventing the kind of contagion we have seen continue. Despite the fact that Ireland was well funded at the time in question and would have been such for some time, the then Government still felt it was necessary to take action, through accepting entry to a bailout programme, in an effort to stave off the speculators and show that the country was not going to cause further problems. Unfortunately, as I have said, that has not happened. We now find ourselves on the brink of a bailout for Spain and who knows how the situation in Italy will develop in the coming weeks. While the fund is in place, one wonders, if pressure is exerted from Spain for a larger bailout fund or if it involves one of the other countries such as Italy, if it will be big enough. I hope there is advance planning at European level to ensure there will be an adequate response and that we will not find ourselves again having to use the ad hoc approach that we had to use in the past in relation to the EFSF. I am sure Ireland will be contributing in that regard.

As other Members stated, it is clear that the people were cognisant of the necessity for the support of our EU partners in making funds available to this country through the ESM. We clearly hope we will be in a position to re-enter the markets place through the issuance of our own bonds as early as possible. Given the turmoil in international markets and the impact of the recession on many of the countries with which we trade and to which we export, it seems unlikely that we will be able to do this without an extension of the current programme, or perhaps a new one. It is right and fitting, therefore, that at an early stage this Parliament should show its support, having recognised that the people have given us that authority and overwhelming mandate.

When one considers the relatively low turnout, there was a high percentage in favour of the stability treaty which, in addition to the establishment of the ESM, sets in place the budgetary discipline measures required by other member states. For that reason, I, too, congratulate all those who campaigned on both the "Yes" and the "No" sides. The arguments were well and truly thrashed out. Much of the negative campaign was based on a tissue of untruths, particularly as it related to the establishment of the ESM and the notion that somehow it was possible for Ireland to veto its establishment. I always failed to understand why we would want to do that when it was something of which we would potentially have the benefit and for which we had called. Somehow there was an expectation that we would veto its establishment to hold somebody else to ransom, while at the same time there was the suggestion one would somehow weaken the efforts Ireland would have to make to provide for its own budgetary discipline. That was an argument the people did not accept and I am particularly pleased they did not.

As well as to the passage of the stability treaty, we should lend considerable weight to the establishment of the ESM which of itself, is a backstop. It is an insurance policy. It is not a solution to a particular problem, rather it is a backup in the event that the crisis escalates further or is not addressed as quickly as we would like from an Irish perspective. We must still make considerable progress. We had an opportunity earlier - I am sure we will have an opportunity tomorrow in the debate on the European Stability Mechanism - to discuss further the measures needed across Europe. There is a concentration this week on these measures and I hope we can continue the dialogue in the coming weeks. It is only through a continuance of that dialogue, both here and throughout Europe, that some changes will be brought to bear.

We must look at the potential for growth and associated policies. While the French are taking a lead role, it is important that we continue to set out our platform and ideas. While I do not want to be critical of the Minister, I am certainly critical of the Government as a whole in being relatively lethargic in addressing that component of the recovery stream. Without an appropriate growth strategy, we have little chance of addressing the stock of debt the State has accrued.

We must also look at significant reform of the ECB and in so doing so we must talk about its capacity to purchase sovereign bonds in the primary market. I was taken to some extent by what the Governor of the ECB, Mr. Dragi, said, not today but one week ago, that it was time for political leaders across Europe to decide what role they wanted the ECB to play and what character and format it needed to take. He said that was not a decision for him or the board of governors, rather that it rested within the remit of the political leaders. That was a refreshing statement which clearly showed a mindset within the ECB that there was a recognition that it could do more, that it could do things differently but not without a political mandate. The political leaders need to look to the ECB to be able to guarantee deposits across Europe in order that we will not have fluctuations or the movement of capital, as has been seen in Spain and by us. Probably the reason Ireland was bounced so quickly into a bailout was the reserves within the banking system here needed to be protected. We have seen the flight of in the region of €100 billion from the Spanish financial system. That makes it impossible for the banking system to survive in the coming weeks or months without some changes being made in that regard.

We need to look at the issue of eurobonds and project bonds, an issue I addressed with the Minister of State, Deputy Lucinda Creighton. We need a direct approach by the Government on how it will be dealt with.

We must be careful in what we say, both inside and outside the House, about the approach we will take in an effort to ensure pressure is brought to bear on Chancellor Merkel. There has been a suggestion made by some, as I understand it, within the Labour Party that we should challenge the Chancellor to the point where we would put it to her that we would be prepared to leave the euro, print money and go back to using the pound. Anyone who has studied anything in this regard will know that that would have a hugely negative impact. It would lead to a run on our banks and put our membership of the European Union in jeopardy. It would also impact on the rate of inflation significantly. We are a major importer of fossil fuels and a range of other goods and we would see their prices sky-rocket. We need, therefore, to put that suggestion to bed. We will leave it to a certain fringe element which is not taken very seriously on these issues. Certainly, we do not need to hear it from any of the main parties in this House which claim to be pro-European.

See this speech in context