Gerry Adams (Louth, Sinn Fein) | Oireachtas source

While the last European Council meeting focused on the European semester and the economic priorities for the EU in 2013, the reality is that events in Cyprus have dominated attention over the last ten days or so. It is clear, both from the economic priorities emanating from the Council and its approach to the Cyprus crisis, that the EU is wedded to the failed policies of austerity, or fiscal consolidation, as the Taoiseach calls it. There is nowhere the dynamism and determination needed to tackle the jobs crisis across the EU. However, it is on the Cypriot situation I want to focus my remarks. It is there that we see the real dysfunction at the heart of the EU approach to the economic crisis.

The fact that the Eurogroup, including the Minister, Deputy Noonan, would sign up to a bailout which contained a levy on bank depositors under and over €100,000, while sparing senior bondholders in the banks, quite frankly beggars belief. That was a huge mistake by the Government. The Taoiseach admits in his statement today that the issue was not discussed in detail at the summit yet he welcomed and signed up to this development. Following this, European leaders stood back over the last week and allowed Cyprus to be brought to the brink of economic collapse. Instead of assisting the people of the island, they have bullied it and accused the Cypriot people of being the authors of their own demise. So much for European solidarity. We do not see such allegations being hurled at larger European states when they get themselves in difficulty.

The revised bailout agreement means that senior bondholders will take a hit as will deposit holders over €100,000. While I welcome the decision not to hit deposit holders under €100,000, the reality is that the Rubicon has been crossed. International depositors looking at the mess in Cyprus may consider not just withdrawing their money from banks there, but from across the EU. It is claimed in some media that several large multinationals withdraw their money from eurozone banks every Friday in case something happens over the weekend, and that was before this latest crisis.

The prevailing sense is of a European establishment making it up as it goes along. The decision to try to hit depositors under €100,000 put into sharp focus ECB President Draghi's statement last July that the bank will do whatever it takes to preserve the euro. This appears to now include hitting depositors and possibly those with under €100,000 in a bank. The Irish Government welcomed this, which was a mistake. The Cypriot Parliament rejected it but the damage was done by then. Why should investors, especially large investors, trust the EU or the ECB? Fears that bank accounts could be raided in future bailouts were given added weight by the head of the eurozone finance ministers. who at first suggested that the Cyprus bailout could be a template for future action and then had to retract this.

The ECB put Cyprus under huge pressure to agree a plan by threatening to collapse the Cypriot banking system. The bailout that has now been agreed includes the increase in its corporation tax from 10% to 12.5%. This is a sovereign state having a new tax rate imposed on it. The Irish Government claims the EU cannot make us increase our corporation tax rate, yet the Government was part of the group forcing this on Cyprus.

Sinn Féin at the beginning of the Irish banking crisis called for bondholders to be burned. When we advocated the burning of bondholders in banks, Fianna Fáil, Fine Gael and Labour told us it would never happen, that the EU would never let it happen and that banks had to be bailed out at any cost. The EU appears to have now signed off on the burning of senior bondholders in Cypriot banks.

Last June, the Government told us that a seismic game-changer had been reached which would see the separation of banking debt from sovereign debt. It told us that in future bank crises the ESM would directly recapitalise banks and the sovereign would not be expected to take on a bank bailout. It told us that, because we had taken on this liability, we would be retrospectively recapitalised. The EU could have committed to using the ESM to cover losses needed for the Cypriot banks. It did not do this and the question is why it did not. Where now is the commitment to separate sovereign debt from bank debt?

Comments today and yesterday by some politicians in Europe throw into doubt whether the ESM will ever be used to recapitalise banks, whether retrospectively or not. Yesterday, the European Commission confirmed that it hopes the ESM fund will not be used for directly recapitalising banks. This seems to confirm comments by the chief of the eurozone finance ministers, Mr. Dijsselbloem, who yesterday questioned whether the ESM bailout fund will ever be used to rescue banks directly. Where now are Ireland's hopes that the ESM will be used to recapitalise the pillar banks? What about the €30 billion of taxpayers' money this Government and its predecessors gave to Bank of Ireland, AIB and Irish Life & Permanent?

There seems to be a complete U-turn on EU policy about the use of the ESM and the burning of senior bondholders. This is a U-turn which causes real problems for citizens of this State who had this debt foisted on us by Fianna Fáil. We now have a legacy bank debt which may never be dealt with.

The critical questions for the Government in all of this are what is the point of the ESM and where does Europe now stand on banking solidarity. What is the Irish Government's attitude towards the burning of depositors in Irish or European banks and why did the Government support it in the Cypriot case? Will the citizens of this State ever receive debt assistance for the debt this Government and the previous Government put on the shoulders of taxpayers to bail out banks with taxpayers' money? Will this be done through the ESM or without it?

Prior to the European Council meeting, the Taoiseach agreed in the Dáil to raise the Jerusalem report published by European diplomats. They raised serious concerns about the actions of Israel in building settlements and excluding Palestinians from their land. The Taoiseach made no mention of this in his statement today. Did he raise this report at the summit meeting as he promised?

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