Micheál Martin (Cork South Central, Fianna Fail) | Oireachtas source

The Taoiseach may recall that I looked for the paper for months but it never appeared. We now learn it did not exist, although the Taoiseach got a good year out of it in the House.

As was written yesterday, Government Ministers have cried wolf on Europe too many times and no one any longer believes their public statements. As the Taoiseach is aware, he and his colleagues produced a budget and White Paper which laid out, on the basis of existing commitments, that Ireland would achieve full market re-entry, growth and debt sustainability. Today, he informed the House that this was untrue and these objectives could not be achieved without a deal with the European Central Bank. Less than two months after the budget, he tells us that the fundamental economic basis on which it was presented and pushed through the House was false. He has a duty to inform the House and Irish people what is the bottom line for the current negotiations and what is required to avoid the catastrophe the Tánaiste has predicted.

I reiterate that every Member of the House wants the Government to get as much as possible out of the negotiations. Outside a handful of Ministers, however, no one believes the negotiations have been handled competently or with the urgency they deserve. Some are advocating policies which sound like those advocated by the Tánaiste, Deputy Gilmore, before the previous general election. Their proposals are as credible as the Tánaiste's were at that time.

Members of the Opposition have limited opportunities to have even a peripheral impact on negotiations such as these. As the Taoiseach is aware, however, I and my party have used the opportunities available to us to impress upon other countries and the European institutions that there is a broad national consensus in favour of the idea of lifting the impact of bank related debt on Irish people. While the Taoiseach waited a year and a half to make the case that Ireland's debt was incurred substantially as a result of European Central Bank pressure, we have made this case repeatedly.

The Taoiseach is wrong to state that Ireland wants to swap an expensive overdraft for a cheap long-term loan. What Ireland has in the notes is a low cost short-term loan. As the Government finally seems to understand, the interest on the notes is nominally high, yet all but a small amount returns to the Exchequer. The net interest position of the promissory notes is low.

We need a deal because we do not want to swap low cost short-term loans for much higher cost medium-term debt. The best deal would involve a combination of an effective write-off and a long-term low interest series of bonds for the remainder. At a minimum, we need a deal that places the debt on a much longer term and at the lowest possible rate.

The notes were to have been an exceptional measure, taken at a moment of extreme instability. Ireland did not wish to incur the full debt. The notes were created at a unique moment that does not set a precedent. Underlying circumstances have changed fundamentally. The basic framework for dealing with bank debt is different.

First, rescue funds have been put in place that will give a guarantee to the effect that governments will not be left alone when tackling bank debt crises. Second, the ECB has introduced a wide range of new policies underpinning the liquidity and solvency of the banking system, which means that fears of contagion from individual failing banks have been removed. Third, and vital for Ireland's banks, Europe has moved from obsessively seeking to avoid burning bank bondholders to seeking to require their burning before state investment is allowed. In a succession of countries, the cost of saving banks has been cut by bailing in bondholders. It is no longer possible for a country to find itself in Ireland's situation, in that we needed to tackle the collapsing banking system without access to new supports and was obliged to honour all of its debts.

Ireland's case for relief from the full impact of these debts is strong. We were denied choices now opened to others. We took action in solidarity with a wider European system that was terrified of contagion. It would be economically and politically damaging to Ireland and Europe were the latter to fail to respond to these facts.

There are a number of technical barriers to Ireland achieving its ideal deal, that is, the writing off of a significant portion of debt. However, only one significant decision is required to deliver us the minimum that we need. As was again confirmed in this morning's newspapers, an ECB council that is increasingly irritated by the Government's grandstanding is holding the line that a write-off would effectively involve the monetary financing of a government, which is undeniably prohibited under the Union's laws. This ban is deeply damaging and represents the difference between the eurozone and other more indebted currency areas that have stronger growth rates, lower borrowing costs and lower levels of unemployment.

However, this is not an insurmountable barrier to helping Ireland. Giving Ireland the deal it needs would be a clear continuation of efforts to stabilise the financial system and protect the common currency. All actions to achieve these objectives are fully within the competence of the ECB. If the ECB's measures to reduce the cost of sovereign borrowing are legally acceptable, only by a bizarre twist of logic could restructuring our debts be illegal. Helping Ireland does not threaten the ECB's inflation targets, create a damaging precedent or lead to a backlash from member states.

Instead of giving us more banal generalities about what the Taoiseach is doing while presiding over a chaotic and damaging series of outbursts from various Ministers, he must clearly outline what we want and what we will do if we do not get it. Apparently, the Tánaiste has told the rest of Europe and all of South America that we are facing a catastrophe and the dissolution of the Government. The Taoiseach smiles at this comment. During Leaders' Questions in the past two days, he avoided the issue, but this is what the Tánaiste stated. More importantly, this is what his people are telling the media. Since last week, a clear difference in opinion has emerged in the Labour Party as regards its view of this issue. One could argue that doing so puts party before every other interest, but the word "catastrophic" was used. The dissolution of the Government in the event of a failure to get a deal has been crazily articulated by a Tánaiste. I do not know whether the Taoiseach has discussed the matter with him. The Taoiseach should ask the Tánaiste what he means and tell the House whether he really means it, whether it is spin or whether it is the truth. Is this an issue over which the Labour Party is contemplating walking out of government?

It is not good enough for the Tánaiste to make this comment or to claim that he made it to Chancellor Angela Merkel at an EU-South American summit and that he has authorised people to brief on his behalf about the dissolution of the Government being on the cards if a deal is not achieved. The Tánaiste also needs to spell out what he meant by "catastrophic". To be fair, the Minister for Finance, Deputy Noonan, stated yesterday that he was surprised by all of the panic and by people's wish to bring the issue to a head now. He can only have been referring to the Tánaiste, Labour spokespersons and people from the Labour Party who were briefing. There is a significant chasm between the Minister's approach to this issue and the Tánaiste's. The latter is on the road to megaphone diplomacy and grandstanding, perhaps for party political interests. We do not know. The man charged with overseeing the negotiations, the Minister for Finance, is singing a different tune and, in his own inimitable style, rebuking the Tánaiste and his colleagues for their behaviour and actions on this front.

As the Head of Government, the Taoiseach owes it to the Dáil to clarify the situation instead of making large, "rock solid" statements. Someone needs to spell out what the Tánaiste means by his comments and the authorised briefings.

A panicked response to poor polls and backbench unrest is doing damage to Ireland's cause and must stop. Regardless of what occurs by 31 March, the Taoiseach knows that he will claim it as a victory won through a brilliant strategy. If there was less grandstanding and a bit more honesty between now and then, it would do Ireland's cause much more good.

It looks as though a budget will be agreed at this summit following the work of President Van Rompuy. It is a bad budget deal for Europe because it stops the EU from playing a serious role in helping to restore growth and job creation, particularly in the hardest hit regions. It is a budget framed with a narrow view of Europe, one that makes many demands of the Union but refuses to give it the resources to meet those demands.

The Taoiseach stated that the summit's focus will be on cuts. President Van Rompuy has already cut back the budget from the Commission's target and, to bring everyone on board, claims that it must be cut again. This is occurring in the middle of the worst recession that Europe has faced since the late 1920s. There is a genuine case as well as capacity for a pan-European stimulus for the European economy. As the Taoiseach stated, 90% of world growth in the next two years will happen outside of Europe. There is no sense of urgency in the EU's external agenda. The budget is a pitiful failure as a proper response to the crisis in which Europe and its citizens, particularly those who are unemployed, have found themselves. I get no sense from the Taoiseach's speech or from Ireland's-----

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