Billy Kelleher (Cork North Central, Fianna Fail)

I welcome the opportunity to contribute to the debate. I may sound repetitive because I expressed some of my views on the ESM last night during the debate on the European Communities (Amendment) Bill. However, while those comments were worth making last night, they are equally worth repeating in this debate. I welcome without equivocation the result of the referendum last week when the people put their faith in the institutions of Europe to deal with a serious crisis domestically and in Europe and to deal with the challenges in the global economy. There is a great deal of confusion about the messages emanating from the Government. Prior to the referendum campaign, it was stated clearly that the treaty was separate from the resolution of the bank debt issue but they became inextricably linked during the campaign. I am a little confused and if that is the case, I am sure many others are equally unsure of the Government message about what it is trying to do about the issue of private bank debt being saddled on the people.

Reference has been made many times to the decision on the bank guarantee and how the previous Government dealt with the banks. Clearly, at the time there was huge pressure on because Ireland stood alone in that no mechanism was available to assist a state with difficulties not only with its budget deficit but also with its banking system. The Union, together with the ECB and the political leaders of the major member states, have accepted there is a need to establish a fund, the ESM, to deal with the difficulties in Europe's banks and the pressures on the currency. However, Ireland stood alone and made huge efforts to ensure there would not be contagion. The previous Minister, the late Brian Lenihan, told me that they were brow beaten and intimidated by the ECB to accept a bailout. This remains the case. There has been no major change in policy by the ECB or the European Commission. As I stated during last night's debate, the Commission has reneged on and failed in its fundamental duty, which is to uphold the treaties that established the Union. It has failed on a continual basis to protect smaller member states. It has been castrated as an organisation and it is ineffectual. It is left to the leaders of the larger member states to set the agenda, which is unacceptable. We have reached a situation where the European Commission is essentially a passive observer, with the Germans now running the show in terms of policy. The European Union institutions were established to protect small nations, with the Commission acting as guarantor of the treaties. However, it seems to have absolved itself wholly of responsibility in this regard. The Minister should not be alone in making the case for Ireland; that is also the role of the Commission on behalf of all weaker member states.

Spain is facing enormous difficulties, with an ongoing trawl of its banks and an assessment of the difficulties in that regard. Nobody knows the full extent of the problems that may emerge in the Spanish banks. However, we cannot operate on the basis that Spain's difficulty is Ireland's opportunity - that cannot be the basis of our appeals to our European colleagues. Ireland's case stands alone, regardless of the outcome of the Spanish banking review and the assessment of its broader economy. The bottom line is that Irish people are saddled with too much private banking debt, with €62 billion of taxpayers' money having already been put into the banking system. The exorbitant interest rates imposed on the State were only belatedly and even reluctantly reduced. The Government will take credit for that reduction, but we all know the impetus in that instance was the situation in Portugal at the time. Whatever the reason for the change, it did alleviate certain budgetary difficulties, but the reality remains that the exorbitant debt that has been imposed on the people is immoral, unfair and unsustainable. The Minister knows this as well as I do. Nor is there any point in us continually applauding the European Union and the European Central Bank for establishing the European Stability Mechanism. The fund should have been set up much sooner. The ECB has been charged with ensuring there is stability in the eurozone and addressing the issue of inflation, but it has never seemed to take on board what should be its broader remit of protecting the euro, rather than always being concerned solely with inflation in the German economy.

There are several issues that must be included in the political agenda for this month's Council summit and beyond. First and foremost, Ireland must make a case, regardless of the outcome of the review of the Spanish banking system, that there is simply too much private debt saddled on the people and that there is an obligation and a duty on others to take their fair share of the burden. Action in this regard was promised by the Government parties prior to the general election. The Minister did not make such promises, but many of his colleagues did with wild abandon throughout the State. There was talk of not one cent more being paid over and, from the Tánaiste, an invitation to choose Labour's way or Frankfurt's way. The reality is that the Government did not need a referendum on the establishment of the ESM in order to secure a mandate to seek a resolution of the bank debt burden. It received that mandate from the people last year, but progress has been slow and reluctant and there has been a notable lack of diplomatic activity in advocating on the issue.

As I said, we obtained a small interest rate reduction when the crisis arose in Portugal which, irrespective of the reasons it was granted, was a positive development which alleviated, in a very small measure, the burden on the people. We then had the crisis in Greece, followed by the crisis in Italy, with the ensuing few weeks of stability succeeded by the crisis in Spain. This shows there is a fundamental flaw in the machinery and apparatus of the eurozone, the ECB and the Commission. We will have to revisit the question of how to ensure there is a regulated banking system across the eurozone that will prevent a situation where, within one currency area, we have capital flight from one country to another. Pressure on the Irish banking system, for example, has led to large transfers of deposits to other parts of the eurozone. This simply does not make sense and, if it is allowed to continue, will consistently undermine the peripheral countries. In a situation where the sovereign is the guarantor, while the ECB washes its hands of any such guarantee, it is inevitable that the weaker states will always be under pressure in seeking to retain deposits and attract capital. This is a fundamental flaw that must be addressed.

The issue of private debt must be put at the top of the agenda, but we have not had a good start in this regard. The Taoiseach told us last week from the steps of Government Buildings that he had enjoyed a great chat with the German Chancellor, Ms Angela Merkel. He has yet to tell us, however, what type of chat it was and what issues were discussed. Despite what some would claim, it is fundamentally important that we know what he has requested of the Chancellor. After all, it is she who is running the show in respect of the ECB and the Commission. What is discussed between the Taoiseach and the Chancellor is critical in determining whether we have success in dealing with the legacy issues. I will accept, on behalf of my party, all of the political responsibility for where we are, but the Government has been in office for 14 months. Its mandate was clear, based on its promise to secure a renegotiation of the bank debt. Action must be taken to ensure we can return to the markets and, more importantly, that we can provide jobs, attract investment and stand on our own two feet as a country in the years ahead. It is incumbent on the Minister to operate according to the mandate he and his colleagues sought last year. The endorsement of the fiscal stability treaty in the referendum last week, which we endorsed, is fundamentally separate from the issue of banking debt.

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