Pearse Doherty (Donegal South West, Sinn Fein)

Cuirim fáilte roimh an deis labhairt ar an Bhille seo. Is mór an trua, mar a bhí pléite níos luaithe inniu, nach bhfuilimid ag fáil deise scrúdú iomlán a dhéanamh ar an pháirt seo den Bhille nuair atáimíd ag déileáil leis an Dara Chéim di. Is mór an trua go bhfuil bac á chur ar an díospóireacht. Sin ráite, ba mhaith liom cupla thuairim Pháirtí Shinn Féin a chur os comhair na Dála, ó thaobh bhunú an ESM, na lochtanna atá leis agus an gá go mbeadh institiúid ansin i lár na hEorpa atá ábalta airgead práinneach a thabhairt do thíortha atá taobh amuigh des na margaidh idirnáisiúnta.

The crisis in the eurozone is deepening every day. Nobel Prize winning economists inform us that the euro has only a 50-50 chance of survival. Since 2010, the populations of Greece, Ireland and Portugal have been paying the price for an economic crisis we did not create. We are being forced to pay the bills of the bankers, speculators, developers and politicians who ran our economies into the ground. While some of these individuals were home-grown, many were from the stronger economies of the European Union, including France and Germany.

All these national actors were encouraged in their reckless endeavours by a European Commission which was part of the failed policy consensus. The policies of light touch banking regulation, unsustainable tax regimes, cheap money and aggressive lending combined to create an unsustainable boom and a catastrophic crash. It should come as no surprise that the very same politicians and bankers who got us into the crisis have proved themselves unable to get us out of it. How could it be different? For two years political leaders across Europe have been dithering and procrastinating. They have held 18 European Council crisis summits, most of which have been marked by indecision and disagreement. When decisions have been made, they have either been insufficient or counterproductive.

Throughout the entire eurozone crisis our political leaders have been misdiagnosing its causes and, in turn, prescribing the wrong medicine. As a result, they have made the patient sicker by the month. If they are allowed to continue on their current course, they will kill off the patient entirely, with devastating consequences for the economies and societies of the member states of the eurozone.

The crisis in the eurozone is not a fiscal crisis; excessive deficits are a symptom of much more fundamental problems. The crisis was not caused by the profligacy of the periphery. The unsustainable debts of some member states are a symptom of much more systemic problems. The initial crisis in banking led to a debt crisis which, in turn, led to an investment and employment crisis. Focusing on deficit reduction alone, important as it may be, is a mistake. The two most urgent questions facing the eurozone are how to reduce unsustainable levels of debt and how to increase investment in job creation to stimulate economic growth and social regeneration. Unfortunately, our political leaders do not understand this.

The European Council, the European Central Bank, the European Commission and the Fine Gael-Labour Party Government continue to misunderstand the problem and, as a result, are applying the wrong solutions. This is the reason the eurozone crisis is getting worse, Greece is approaching a state of social, economic and political collapse, Spain is in the process of negotiating access to emergency funding, and the Irish and Portuguese Governments will more than likely seek additional emergency funding when the current programmes end.

For two years political leaders across Europe argued that the eurozone crisis was a fiscal crisis confined to the periphery of the eurozone. By this logic, the solution was to impose harsh fiscal discipline on the people of the periphery, while protecting the European banking system with unlimited bailouts. Crippling austerity and unlimited bank bailouts have been the sole focus of Government policy at home and in Brussels. When Fianna Fáil and the Green Party led the State into the troika programme in 2010, Sinn Féin argued the their approach would not work and we were right. When Fine Gael and the Labour Party committed to continuing the failed policies of their predecessors, Sinn Féin argued their approach would not work and we were also right. The policies of crippling austerity and unlimited bank bailouts are not assisting our return to the sovereign bond markets. The consequences of these policies are rising unemployment, declining growth, mortgage distress, emigration, inequality and poverty, in other words, a downward spiral of social, economic and political instability. The policies pursued by European political leaders, including the Government, have failed dramatically. Increasingly, even bodies such as the OECD, the IMF and, most recently, the European Commission are waking up to this failure.

The eurozone's problem is not a lack of fiscal discipline but a famine of investment which is forcing millions of people onto the dole; a decline in living standards that is relentlessly depressing the domestic economy; a crippling banking debt that is being loaded onto the shoulders of taxpayers and freezing country after country out of the sovereign bond markets; and the futile policies of austerity which not only fail to resolve the crisis but make it worse. For two years Sinn Féin has been arguing for a better way. We have put forward solutions aimed at reducing the debt, growing the economy and getting the public finances in order in a way that is fair and assists economic and social recovery. We have argued for a write-down of the portion of the public debt that originated with the banks, of which the promissory note is the most important element, to make our debt more sustainable and assist our return to the markets. We have argued for an EU-wide approach to the banking crisis, demanding a new and rigorous round of stress tests of all European banks to expose the full extent of their toxic assets, to be followed by a write-down of these toxic assets before recapitalisation takes place. We have argued for the European Central Bank to become a lender of last resort, either directly or indirectly, both to banks in need of recapitalisation and states locked out of sovereign bond markets. Crucially, we have argued for massive investment in job creation through national and European Investment Bank funds to get people off the dole and back into meaningful employment.

One cannot balance the books with an unemployment rate of 14%, nor can one cut and tax one's way out of the crisis. Only with real and sustainable investment in job creation can one return to growth and, in so doing, reduce the deficit to the sustainable levels we desire. In the context of this alternative strategy for job creation and growth, Sinn Féin supports the creation of a eurozone emergency fund to provide funds for member states frozen out of the bond markets. Our preference would be for the ECB to fulfil this role, as only it has the firepower required to shore up the euro. It is also the only body capable of providing such funding without exposing ordinary taxpayers and individual member states to the kind of liabilities foisted on the people of this state in recent years. Given the rapidly deteriorating situation in Spain and Greece, a vehicle for providing such emergency funding is urgently required.

The question we must ask during this debate is not whether the eurozone needs an emergency fund because clearly it does, nor is it whether Ireland should have access to such a fund because clearly it should; rather the key question is whether the European Stability Mechanism, as presented, will provide Ireland and the eurozone with the necessary tools to assist in stabilising the currency and allow governments to regain access to the sovereign bond markets. With many others, Sinn Féin rightly criticised the design of the EFSF when it was established. We argued that imposing austerity which was anti-job creation and anti-growth as a condition to receive emergency loans would be counterproductive. We argued that mounting toxic private banking debt onto the shoulders of the State and taxpayers would make our debt burden unsustainable. We argued that such conditions would block a return to growth and reduce the ability of the State to return to the sovereign bond markets. The fact that Ministers are starting to accept that the State is unlikely to re-enter the bond markets in 2014 is evidence that Sinn Féin's analysis has been proved correct. We also argued that the EFSF would not be big enough to cope with the growing debt and investment crisis across the eurozone. The fact that the European Council has come forward with a new permanent emergency funding vehicle in the form of the European Stability Mechanism demonstrates once again that Sinn Féin's analysis was correct. Unfortunately, neither the European Council nor the Government appears to have learned from the mistakes of the very recent past.

The ESM is based on the same flawed policy agenda as its EFSF predecessor. It has many of the same limitations and weaknesses of the EFSF. Sinn Féin has a genuine concern that the fund as proposed will not help to stabilise the Irish or eurozone economies. Just like the EFSF, we fear that it will make matters worse. At the core of the fund are the failed policies of unlimited bank bailouts and crippling austerity. These are the strict conditions referred to in the ESM treaty. The treaty is very clear when it states the conditions attached to future loans will be negotiated by the European Commission and the European Central Bank. What will these conditions be? There will be more austerity in the form of cuts to spending on front-line services in health and education; more tax hikes for low and middle income families; more sales of profitable and strategically valuable State assets; more damage to the fabric of our society; and more damage to the domestic economy. This approach has failed both Ireland and the eurozone.

For an emergency fund to work, it must be part of a strategy aimed at investing in job creation and economic growth. In Sinn Féin's view, the articles of the ESM treaty must be amended to include an explicit commitment to emergency funding being used to stimulate social and economic recovery, primarily in the form of investment in job creation. If the Government is serious about developing a Europe-wide growth agenda and the European Council is serious about developing the same agenda, amending the ESM treaty to transform it into a tool for job creation and growth is essential.

Sinn Féin is also concerned that, once again, taxpayers will be forced to bail out banks to an unlimited extent. The current total fund for the ESM is €700 billion, to which Ireland's contribution is a staggering €11 billion. While the initial call-up figure is just under €1.3 billion, once established the ESM can call on the remainder of the total. The treaty also gives the ESM board the power to increase the total fund at its disposal. This morning the newspapers were reporting that Spanish banks might require funds in the region of €100 billion which might come from ESM funds. Theoretically, such funds would be provided in the form of loans, either to the Spanish Government or directly to the Spanish banks. Does anyone in the House really believe a loan to toxic Spanish banks of around €100 billion would be repaid in full? Just as the Government will never recoup the vast majority of the €64 billion pumped into the Irish banks, the ESM will never fully recoup funds injected into the Spanish banks on the basis of the current ESM funding model.

The articles of the ESM treaty must be changed to reduce the risk of exposure to the taxpayer and the State. This could be achieved by providing an option for direct funding of the ESM by the ECB, either through the issuing of bonds or quantitative easing, depending on which option was more appropriate at a given time. This would also address another weakness of the ESM in its current form - its limited size. Giving an emergency funding vehicle the unlimited firepower of the ECB would send a signal to the aggressive speculative forces in the markets that the European Union would do whatever it took to protect its currency.

Sinn Féin also believes a eurozone emergency fund should be able to lend directly to banks and that such a facility should be retrospectively available to Ireland. However, let us be clear that such a facility should only be made available following rigorous stress tests of the banks in question and a write-down of toxic assets held by them. Only then should they be recapitalised. European political leaders must learn from the mistakes of the mishandling of the Irish banking system. Bondholders and banks must be forced to pay their fair share. This means allowing some banks to fail. It also means forcing heavy losses on bondholders. Only then should recapitalisation occur, ensuring the injected funds benefit the real economy and real people. Failure to do this will mean taxpayer's money will be handed over to European banks which, in turn, will pay bondholders in full.

We are also very concerned that under the current proposals, member states in receipt of funds from the ESM would be contributing to the fund. This raises the prospect of states contributing significant resources to the ESM and then borrowing them back at a cost. This simply makes no sense. If the ESM is to be based in whole or in part on contributions from member states, programme countries must be exempt from making contributions. That was the case for the EFSF; therefore, it should be the case for the ESM also.

The scale of the liabilities for the State and the taxpayer under the current proposals is a source of serious concern. The treaty indicates a potential liability of €11 billion, which figure could be much higher. Given the scale of the eurozone banking crisis, this is tantamount to writing a blank cheque on a scale never seen before. There are also problems with the lack of accountability once the fund is established, as well as with the immunity given to the fund and its board members. An emergency fund of this size must function in an open, transparent and democratically accountable way. Amendments to the treaty must be secured to ensure adequate scrutiny and accountability at the level of the European Parliament and the parliaments of member states. The immunity given to the ESM and its board members must be removed. Nobody should be above the law, especially political leaders making decisions on a fund worth €700 billion.

I repeat Sinn Fein's firm view that Ireland and the eurozone as a whole need an emergency funding mechanism, not only because the Government will need to access it in 2014 but also because such a fund is vital to stabilise the euro. There is no point, however, in agreeing to a fund that is not fit for purpose, will not achieve its stated objectives and will, in all likelihood, make matters worse. The ESM treaty the Government is seeking to ratify through the ESM Bill was negotiated and concluded in 2011. We have to ask ourselves what the Government was doing during these negotiations. Why did it agree to such a poorly designed fund and why in the 12 months that followed did it not seek to make constructive amendments? Fortunately for Ireland and the eurozone, there is still a window of opportunity to amend the ESM treaty and improve the fund. Other member states are actively seeking changes which could well be made at the forthcoming European Council summit at the end of June. The Governments of Spain and France are standing up for their citizens and working to get a better deal. They are arguing, as are Sinn Féin, that further changes to the treaty are required for it to be of assistance in the current crisis.

Next week, when the Bill is debated on Committee Stage, I will, on behalf of Sinn Féin, table a number of amendments to the Bill. They will call on the Government not to lodge the instruments of ratification for either the ESM treaty or the amendment to Article 136 of the Treaty on the Functioning of the European Union until a number of specific changes to the ESM treaty are secured. Sinn Fein believes five key changes are required for the ESM to do what it is being set up to do. First, there should be an explicit option to use ESM funds to invest in job creation and growth measures as part of a credible deficit reduction strategy, rather than maintaining the current focus on austerity. Second, there should be an option for direct ECB funding of the ESM to provide the necessary firewall to stabilise the euro, while limiting the liability to taxpayers and individual member states. Third, there must be a clause ensuring programme countries are not required to contribute to the fund, as is the case with the EFSF. Fourth, there needs to be a requirement to carry out strict stress tests and provide for a write-down of toxic debt as a precondition for ESM funds being used to recapitalise banks, whether directly or indirectly via loans to governments. Fifth, there is a need for greater accountability at EU and member state level and the removal of the immunity granted to the fund and its board members.

In the coming weeks the Government will have a real opportunity to work with our European partners to design an emergency funding mechanism that will help countries to regain access to the sovereign bond markets. This fund will play a meaningful role in defending vulnerable member states from speculative attacks by the markets and assist in creating jobs and promoting economic growth and social regeneration. Such a fund is urgently needed. However, Sinn Fein do not believe the ESM, as it stands, can achieve these objectives. Unless the ESM treaty is amended, Sinn Féin will not be in a position to support the Bill. More important, unless the dtreaty is amended, it will simply not work.

There is still time to improve the fund proposed. The question is whether Fine Gael and the Labour Party have the political courage and the political will to seek the necessary changes, as well as the political ability and skill to secure them. During the last 15 months the Government has demonstrated a remarkable inability to stand up for the interests of Irish citizens at the European Council. Its strategy appears to be one of sitting quietly and passively and waiting to reap the benefits of the hard work done by other governments. It is time for this approach to end. We will never know what can be achieved unless the Government starts making demands that are in the interests of citizens. It is time it became an active participant in European Council negotiations. It is time for Fine Gael and the Labour Party to make demands on behalf of the people, actively participate in the negotiations and come back to the Dáil with something better for Ireland and Europe as whole.

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