Stephen Donnelly (Wicklow, Independent) | Oireachtas source

Yesterday, I spent an hour on the radio debating with the German ambassador. Among other things, we debated Ireland's banking collapse and the subsequent €64 billion of debt. The ambassador is clearly a man of integrity and he is very well informed on financial and geopolitical issues. What he had to say on the banking debt was very interesting. In essence, he said the banking debt was our problem, that we had created it and that it was up to us to solve it. He said it was our choice to guarantee the banks and he also said there was no international pressure being put on Ireland to carry through payments of bondholders, payment of promissory notes and so forth.

What he said was reminiscent of what I have heard in other parts. A few months ago, members of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform met members of the Bundestag finance committee, and what they said was very similar. They said we caused this and we need to fix it, so we must take the hard medicine and be very cognisant of the support we are receiving from the German people. If the Tánaiste talks to our MEPs, as I am sure he does regularly, he will be aware they tell similar stories of the European political establishment - people feel this was our fault, that we need to get ourselves out of it and that Europe is supporting us. Further, they will tell us we are on the road to recovery. The message is that we caused the problem, it was an expensive problem, we need to fix it and they are supporting us, but things are turning good for us so we should just get on with it.

I make the point to the Tánaiste that not only are these views incorrect, they are very dangerous for the Government's efforts in trying to negotiate a substantial write-down on the €64 billion. Obviously, some of the banking collapse was caused in Ireland. Fianna Fáil did allow loose regulation and did guarantee the banks, supported by Fine Gael. However, there is no doubt international pressure is being put on the Government to continue paying unguaranteed bondholders and the promissory notes.

Of course, the banking collapse was not just our problem; it was Europe's problem and, in truth, it is Europe that has gained. We have not gained. Most of the banks are gone - they are dead, or should be dead. It was Europe that gained, particularly in terms of financial stability. Unfortunately, contrary to the figures thrown around at budget time, I do not believe we are on the road to recovery. Unemployment is not falling, or not really, emigration is rising, there are 35,000 fewer people at work now than there were one year ago and economic growth is tenuous. Indeed, if we were to take a close look at where that tenuous growth is coming from, a good portion of it is actually down to accounting measures rather than a real increase in productivity in the export sector. Sadly, we are not 85% of the way through the correction - that is based on one accounting figure for the promissory notes. We are actually less than halfway through. I take no pleasure in saying this. Unfortunately, I do not believe we are yet on the road to recovery. We need this deal and we need a balance between fiscal consolidation and investment to achieve that.

Why is this happening? I would say it is partly down to a diplomatic failing on behalf of the Government and, maybe, of all of us. The Government has focused on rebuilding Ireland's reputation, and for very good reason. However, I believe the balance is now incorrect and that the Government may have sacrificed much-needed honesty about what happened and what is happening here, and the pain the Irish people are taking for goodwill, important though that goodwill may be. My message before the European Council meeting is this. I believe it is time to redress that balance. It is time to have a robust and honest conversation with our European partners, including the ECB and the Commission, about what happened here, about who paid for what and who has gained, and about the fact we are really not being supported by Europe.

Our so-called rescue package, as the ambassador put it, was, in fact, a rescue package for the European financial institutions. I accept that the Tánaiste's position is difficult, but I ask him to take a much more robust position on these issues. I do not say this lightly and wish him good luck in his endeavours.

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