Brian Cowen (Laois-Offaly, Fianna Fail)
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The informal meeting of the European Council on Thursday, 11 February was the first meeting presided over by the new President of the European Council, Herman Van Rompuy, under the new Lisbon treaty arrangements. It was also the first meeting since the appointment of the new Barroso-led European Commission, which includes Mrs. Máire Geoghegan-Quinn as Commissioner for the important portfolio of research, science and innovation.

I wish to pay a personal tribute to Charlie McCreevy who served as Commissioner for the past five years. As Commissioner for the Internal Market, he had responsibility for the financial services sector in Europe, which has been top of both the European and the global political agenda for the past three years given the turbulence in the international financial markets. He dealt with this portfolio in a politically sensitive and deeply committed way, including supporting a series of measures which are helping to ensure the economy of the European Union recovers. He is a highly respected politician on the international stage.

While the European Council forum is formally scheduled to meet four times a year, there can also be informal or special meetings which are more ad hoc in nature and do not usually have formally agreed conclusions. On this occasion, there was a formal outcome, namely, the statement of the Heads of State or Government on Greece. One consequence of the entry into force of the Lisbon treaty is that the European Council has a more prominent role in deciding and driving the overall direction of the Union and its policies. That said, I expect sectorial Councils will continue to have a major role in shaping the policy agenda.

Our meeting on 11 February was called by the President of the European Council to discuss the future economic policy of the Union. It was also to give direction to work to be taken on in various Council formations ahead of the spring European Council which normally concentrates on economic matters. This year's spring Council will be on 25 and 26 March. It had also been intended that we would discuss the aftermath of the December climate change conference in Copenhagen and the crisis in Haiti. In the end, however, we did not have in-depth exchanges on these subjects.

Instead, the challenges facing the Greek Government to meet the targets set in the 2010 stability programme and beyond took up a significant part of our meeting. A statement was agreed on this matter which, for completeness, I will now read into the Official Report:

All euro area members must conduct sound national policies in line with the agreed rules. They have a shared responsibility for the economic and financial stability in the area.

In this context, we fully support the efforts of the Greek Government and their commitment to do whatever is necessary, including adopting additional measures to ensure that the ambitious targets set in the stability programme for 2010 and the following years are met. We call on the Greek Government to implement all these measures in a rigorous and determined manner to effectively reduce the budgetary deficit by 4% in 2010.

We invite the ECOFIN Council to adopt at its meeting of 16 February the recommendations to Greece based on the Commission's proposal and the additional measures Greece has announced.

The Commission will closely monitor the implementation of the recommendations in liaison with the ECB and will propose needed additional measures, drawing on the expertise of the IMF. A first assessment will be done in March.

The Euro area member states will take determined and co-ordinated action, if needed, to safeguard financial stability in the euro area as a whole. The Greek Government has not requested any financial support.

Two core messages are contained in the statement. First, there is clear solidarity among the member states. Second, the member states acknowledge they have commitments and responsibilities which they must fulfil, most notably under the framework provided by the Stability and Growth Pact.

There are various agreed mechanisms to support member states in doing that. Since the European Council met on 11 February, ECOFIN met again last week and agreed that the Commission would report back to ECOFIN on 16 March on the implementation of budgetary measures by Greece. ECOFIN also agreed that additional measures would be taken, if considered necessary, to secure the budgetary target of a reduction of 4% of Greece's budget deficit in 2010.

It is important to acknowledge the scale of the adjustment which the Greek Government has undertaken to make. It is a very considerable, but a necessary, undertaking. We are supportive of Greece not just because we are friendly nations, partners in the European Union and members of a single currency, but also because we have the common interest of the euro area as a whole to protect. Greece's difficulties have been compounded by a lack of trust in the statistics it provided previously. The sharply increased degree of scrutiny now being applied is thus in the interest of both Greece and the euro area as a whole.

The other main topic of discussion was economic policy and the need for a new European strategy for growth and jobs. One important element concerns the means and timing of exit from current exceptional stimulus arrangements across the Union. Perhaps even more important is the degree to which we can reach and deliver agreement on medium to long-term structural change in Europe. Such change is necessary to allow us to deal with the challenges being thrown up by our demography, the sustainability of the European social model and pensions, the challenge of competing on a global level when many countries or regions continue to grow rapidly as we struggle, and the related environmental and energy challenges. New policy priorities will not, of themselves, achieve results; they must be implemented in an effective and verifiable manner across the Union. The mechanism for turning agreed policy into action is to be a new strategy for growth and jobs, succeeding the Lisbon strategy that ran from 2000 to 2010 but which, in recent times, has been somewhat overshadowed by the economic crisis.

The aim is for this new strategy to be considered in detail at the spring European Council and agreed at our June meeting. As a next step, the Commission is due to present a communication on the proposed strategy in early March, taking into account the key elements of our discussions to date. At the meeting on 11 February, President Barroso gave a presentation on the broader economic context. The decline in European GDP has been the worst since the 1930s. The result is 7 million more people unemployed than before the crisis, more than every man, woman and child on this island. Looking to the future, and the nature of the challenge facing us, the Commission estimates that 16 million more jobs than today will require a high level of qualification but there will be less demand for what is sometimes termed low-skilled work.

These are stark figures and they illustrate the scale of the economic crisis across Europe. The challenges we face today are by no means unique to Ireland. Right across Europe, not to mention further afield, governments are facing major challenges and are confronted with tough decisions as they seek to reduce budget deficits, to stem the haemorrhage of jobs, to re-stimulate their economies and to remedy their banking sectors. This is why, at EU level, we now need a new, targeted strategy to promote growth, create jobs and ensure competitiveness. The Commission has suggested the core elements of that strategy should be based on knowledge and innovation, an inclusive high employment society, and greener growth. These elements resonate very well with our own national efforts and priorities, including our smart economy plans and framework.

During our meeting, we also discussed how we can ensure that the agreed strategy is effective in delivering on its goals. We need to ensure shared responsibility and coherent action, while maintaining sufficient flexibility so that responses can reflect varying challenges and differing national circumstances. We also discussed how the various budgetary, economic and indeed climate change plans could be presented and considered in a more coherent way, considering they are closely related to each other. We agreed on the need for enhanced monitoring, benchmarking and reporting, where the progress of each member state is held up to greater scrutiny by the others. These arrangements must also be proportionate and not over-burdensome if they are to be both efficient and effective.

There was widespread agreement that the new strategy should be focused on a relatively small number of key strategic priorities. For my part, I stressed that the strategy must focus on areas such as competitiveness; research, science and innovation; completion of the Single Market; employment activation measures and training; a low carbon green technology economy; sustainable use of resources, including the development of agriculture and food resources; and boosting our access to global markets. Others of course will have their own priorities for which they can be expected to press.

The Union is at an interesting point. There is a shared desire to improve our economic performance so that we can deliver for our citizens. Working more closely with one another can play an important role in pursuing that. At the same time, the current difficulties have highlighted that we must all act within agreed frameworks that protect our common interest and our national interests. In the coming weeks and months, I will be endeavouring to ensure the priorities that are important to Ireland are taken on board as we craft a framework to guide the Union's economic direction in the coming decade.

Billy Timmins (Wicklow, Fine Gael)
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I propose to share time with Deputy Creighton. I wish Commissioner Máire Geoghegan-Quinn well in her appointment. I also wish the former Commissioner, Mr. Charlie McCreevy, well. He had many disagreements with this side of the House but one must admire his individual streak and his commitment. I wish him well in whatever line of work he takes up in the future.

The recent special summit did not have the desired impact in terms of reassuring the financial markets that the economic crisis in Greece would not threaten the stability of the euro. While I recognise the Greek Government has taken some decisive steps to stabilise the economy, it is essential the European Union makes it clear that no eurozone member will be allowed to default on its sovereign debt. The same resolve displayed during the banking crisis must be repeated in defence of the euro. I welcome the contribution by the Taoiseach outlining the strong measures the European Union has taken with respect to Greece. I refer in particular to the view that statistics were falsified. The mechanism by which Greece borrowed money was disguised but I am not sure whether it was knowingly or willingly intended to deceive. That this has been addressed by the EU in so open a manner augurs well for post-Lisbon Europe.

The Taoiseach referred to the EU response to the disaster in Haiti, the other main issue for discussion. It is important that the new clarity in external relations provided for in the Lisbon treaty is implemented in a clear and coherent fashion so there is clarity about the respective roles in the new structures. I have raised the matter of Irish Aid budget and aid agencies with the Minister for Foreign Affairs. We talk about learning lessons from the past but it struck me that as much effort was put into the PR aspect of the whole operation in Haiti as into solving the problem. Under the umbrella of Dóchas or the Department of Foreign Affairs, all the aid agencies should be brought in and we should examine the areas of expertise and the geographic locations of the agencies. Rather than having five or six aid agencies in one patch fighting for publicity and funding for the same operation, we should examine the feasibility of aid agencies operating in an area of expertise or a single geographic area.

Most of the European Council meeting was taken up with the European strategy for growth and jobs. This follows from the horizontal social clause in the Lisbon treaty, which states that every policy must be proofed against achieving a high level of employment. One relevant issue here and right across Europe is employment. We touched on the Government submission, which will be considered at the Council meeting in March. The strategy for growth and jobs has not been debated in this House and few Members are aware of the Government proposal. The Minister of State, Deputy Dick Roche, appeared before the Joint Committee on European Affairs and outlined Government thinking, answered questions and said he would take on board committee members' views. This is an important document. Agreement will reached by June but Members of this House have had no input. I ask the Taoiseach to consider allocating half a day to debate this topic. Unemployment is the subject of the Private Members' motion debated last night and tonight. As I was driving in today I heard the media talking about the lack of awareness in the Oireachtas of the importance of employment. This is probably the subject that has been discussed most in the past few months but it gets no coverage from the media.

The passports issue was not dealt with at this informal meeting. It is imperative that the Minister for Foreign Affairs, in conjunction with the Minister for Justice, Equality and Law Reform, tries to establish whether there is a link with the falsified Irish passports and how this information was gathered by whoever carried out the operation. It is really important. It is very difficult to protect the security of a passport because we hand them in at airports and hotels. It is important that we establish, in conjunction with our European partners, who used these passports and how they obtained the information. We must be prepared to take whatever steps are necessary if it is shown that another state authorised the use of these documents. It is a very hostile act to falsify passports of a friendly nation or any nation.

Lucinda Creighton (Dublin South East, Fine Gael)
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This important and timely meeting of the European Council shows that the European Union is serious about responding to the economic crisis and to events as they arise. We are seeing a new dynamic at European Council level. I hope the appointment of a permanent President is assisting that and will facilitate a greater coherence of approach.

I am concerned that the euro and monetary union in general are under attack or at least subject to a certain sceptical scrutiny by economists and commentators in this State. We must ensure that the debacle that is the Greek situation does not add fuel to the negative commentary we have been hearing in recent months. It is essential that there be close monitoring of Greece. I welcome the Taoiseach's indication that the European Commission will report, monitor and update ECOFIN on 16 March. Monitoring and scrutiny of what is happening in certain member states within the eurozone must continue and must be rigorous. Above all, it is essential that Greece does not default on its sovereign debt. That would be devastating to member states within the eurozone, to the currency and to the credibility of the eurozone as an economic trading bloc.

Deputy Timmins referred to the renewed strategy for growth, the so-called 2020 strategy. I am concerned that this is being rushed. Between the two referenda on the Lisbon treaty and the delay in the appointment of the new Commission, there is not much time for member states to focus on their response and input to the strategy. The Commission is under major pressure with new Commissioners who have only just taken up their portfolios. Many of us have been critical not of the aspirations but of the implementation of the Lisbon strategy in the last ten years. I hope this new strategy will not be similarly disappointing in terms of a failure to deliver on targets.

We all agree there is a need for greater regulation. From an Irish perspective there is a dire need for strategic investment in infrastructure. We are all aware of the need to improve our broadband roll-out and so on. This must be integrated into the 2020 strategy. Another issue that I hope will be taken on board arose at meetings of the Joint Committee on European Affairs and was communicated to the Minister of State, Deputy Roche. Amidst all the talk about the knowledge economy it is important to bear in mind that it is not feasible for all our employment to be centred around that. Not everybody will be in a position to play a part in the smart economy and, therefore, there must be some emphasis on manufacturing jobs and heavier industry. That must be included in the 2020 strategy. While we concentrate on the smart economy, we must also focus on ensuring we have some level of heavy industry in Ireland and Europe. There are many skilled tradespeople currently out of work in this State because of the collapse of the building industry. That must be factored into our input in advance of June.

Eamon Gilmore (Dún Laoghaire, Labour)
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I propose to share time with Deputy Costello.

Noel O'Flynn (Cork North Central, Fianna Fail)
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Is that agreed? Agreed.

Eamon Gilmore (Dún Laoghaire, Labour)
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This was a summit that had much work to do. The planned agenda included initial work on EU2020 - the replacement for the Lisbon Agenda - the post-Copenhagen negotiations, and Haiti. It was right that the focus of the summit should have been the economy. With 23 million Europeans unemployed and given the failure of the Lisbon Agenda, the EU2020 agenda is a vital part of the future agenda for the Union. Unfortunately, however, the summit was dominated by the public finances of Greece and the implications of the Greek position for the eurozone. Regrettably, the vital discussion on EU2020 was pushed to the background.

Several points are worth making about the approach taken by the summit to the Greek situation. First, it was right for the leaders to recognise that this is first and foremost a problem for Greece and that it can only be solved in Greece. The new Government there has made clear its determination to confront the country's deficit and it is appropriate that it be given the opportunity to do so. The PASOK Government under the Prime Minister, Mr. Papandreou, has repeatedly stressed its intention to take radical measures to address the public finances. It deserves the support of the other eurozone countries in its efforts. Equally, it was important that the eurozone countries issue a strong statement of solidarity and support making clear that the eurozone is willing to backstop the Greek position while it implements its adjustment programme. There are many who would have preferred to see more concrete proposals coming from the summit meeting rather than kicking the details off to ECOFIN. What is important now, however, is that both sides stick to their commitments, the Greek Government to its adjustment programme and the eurozone to its solidarity commitment.

The debate about the Greek position has been accompanied by an enormous amount of ill-informed commentary. Numerous commentators have referred casually to the end of the euro or the break-up of the eurozone as though that were a practical proposition. It is not. Nor is it a practical idea that any individual country could depart from the zone without enormous economic and social consequences. This kind of simplistic commentary does nothing to deal with the problem. As a result of the summit statement, the implicit guarantees that were part of monetary union have become more explicit, but they have not become all that much clearer. In future, a more explicit crisis-resolution mechanism will be required.

In the meantime, while fiscal consolidation is necessary in some eurozone countries, it is not good policy for all countries aggressively to curtail their deficits just yet. For Ireland, the counterpart of fiscal consolidation must be a revival in exports which depends on robust demand in our main markets, including the United Kingdom and Germany. As several commentators have pointed out in recent days, the unwillingness of Germany to boost demand for exports from other eurozone countries has direct implications for countries like Ireland that need to make fiscal adjustments. The debate needs to move on to these types of issues.

Another feature of the period running into the summit and of the whole controversy surrounding Greece has been the role played by credit default swaps, CDSs. If trading in CDSs can be used to undermine the stability of a country - and, by extension, the eurozone itself - then there is a logical course of action for governments to take. The market in CDSs for sovereign debt must be curtailed. The British economist, Will Hutton, has pointed out that England banned trading insurance policies in which nobody took responsibility for paying insurance as "the worst form of financial depravity" in the 18th century. While hedge funds may love CDSs, they have played a major role in undermining confidence in Greece. Mr. Hutton calls for a ban on CDSs in their current form.

The whole area of hedge fund regulation is one where the European Union needs to adopt a more robust stance. There is a proposal for a directive on alternative investment fund managers, which was proposed by the European Commission in April 2009. Regrettably, this proposal falls far short of the type of robust legislation that must be imposed on hedge funds. It proposes to regulate hedge fund managers rather than the funds themselves. It does not impose clear limits on extreme leverage and does not impose adequate or clear penalties for improper conduct. Europe must learn the lessons of the crisis and bring forward effective measures to rein in financial markets. Proper hedge fund regulation is a crucial part of that process.

While it is understandable that the situation in Greece pushed other issues down the agenda, it is nonetheless regrettable. The EU2020 strategy must be addressed with greater urgency. With 23 million Europeans unemployed, the European Union must come forward with a viable strategy for long-term growth and the generation of more and better jobs. The last strategy that set out to achieve this goal, the Lisbon Agenda, is increasingly seen as having failed. This issue must be made a priority for future summits.

Joe Costello (Dublin Central, Labour)
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I thank Deputy Gilmore for sharing time with me. In his statement today the Taoiseach made clear that since entry into force of the Lisbon treaty the European Council has a more prominent role in deciding and driving the overall direction of the Union and its policies, which I welcome. I welcome also that the President as chairman will drive those policies in the interim when the quarterly and informal meetings are not taking place.

It was disappointing to hear that even though there were other items on the agenda, only one item was addressed, namely, the fiscal position of Greece which, no doubt, was a pressing issue. Nevertheless, the climate change issue post-Copenhagen, also a prominent issue on the agenda, was not addressed. Likewise, the EU2020 strategy referred to by other speakers was not addressed. The EU2020 strategy has not been prominently addressed anywhere, not even in this House. I believe we should afford it considerable debate in this House. EU2020 strategy is a rather anodyne term. I suggest it should be a growth and jobs strategy, which would make clear that about which we are talking. What does EU2020 strategy mean? It is merely a carry on from the Lisbon strategy, the thrust of which is not fully clear. Growth, jobs and competitiveness are the important issues, as referred to earlier by the Taoiseach.

The passport issue, on which I did not speak this morning, is a serious matter, one which I have no doubt will continue to grab headlines during the run-up to the forthcoming Council meeting in March. This issue should be addressed in a European context as not alone were Irish passports and citizens' identities stolen and used in such a fashion, so too were the passports and identities of other citizens of the European Union, in particular citizens of our neighbours, the United Kingdom and France and Germany. I believe the Taoiseach should communicate with those countries on this matter. It is not acceptable that the issue was not raised by the Council of Ministers yesterday. I believe the Taoiseach should make it a major issue at the forthcoming meeting. If we are to have a preferential trading agreement and we are the largest trading entity with Israel, we should expect friendly countries to respond in kind.

That being said, I would like to comment on the climate change issue. Copenhagen was disappointing. The Minister for the Environment, Heritage and Local Government, Deputy Gormley, other Ministers and the Taoiseach spoke glowingly in this House of what could be done in Copenhagen. Until close to the end of the negotiations in Copenhagen, we were expecting a binding agreement.

Brian Cowen (Laois-Offaly, Fianna Fail)
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That was not my fault.

Joe Costello (Dublin Central, Labour)
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I will not say that.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Perhaps if the Deputy had been with me, we would have got there. We just missed it.

Joe Costello (Dublin Central, Labour)
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Yes, indeed. It was missed by everybody.

Eamon Gilmore (Dún Laoghaire, Labour)
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I thought the Taoiseach had with him men who are good at these things?

Noel O'Flynn (Cork North Central, Fianna Fail)
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Deputy Costello has one minute remaining. I must then call Deputy Morgan.

Joe Costello (Dublin Central, Labour)
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We expected more than we got. We got very little. We got nothing binding, no agreement between the major countries. The United States, China, Brazil and South Africa ganged up and met separately as did the developing countries but the European countries did not appear to have any real handle on the situation. It was extremely disappointing given all that was promised. I hope the Taoiseach will be prepared for the forthcoming major conference in Mexico next year. It does not appear as though he or any of the others, including the Minister, Deputy Gormley, who came back with his tail between his legs, were prepared last time.

Eamon Gilmore (Dún Laoghaire, Labour)
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We were let down again.

Brian Cowen (Laois-Offaly, Fianna Fail)
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That is unfair. It is not like Deputy Costello.

Joe Costello (Dublin Central, Labour)
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That is not the way we like to see matters progressed. I am sure the Taoiseach would have been delighted to see his colleague in Government get something. The Minister, Deputy Gormley, was for the entire year stating he was going to sort out the world's problems in regard to climate change.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Ably provoked by Deputy Costello.

Noel O'Flynn (Cork North Central, Fianna Fail)
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The Deputy's time has expired.

Joe Costello (Dublin Central, Labour)
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This issue should be on the agenda next month and should be promoted by the Taoiseach.

Eamon Gilmore (Dún Laoghaire, Labour)
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The Labour Party will stand by-----

Arthur Morgan (Louth, Sinn Fein)
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I apologise to the Taoiseach for missing the first part of his contribution but I was attending the Committee Stage debate on the Finance Bill. The Taoiseach will know from experience what that encounter is like.

Sinn Féin does not support the actions Greece is being asked to take by the EU Commission. Nor for that matter does it support the Irish Government's analysis and approach to our own economic woes. Sinn Féin believes there is a fairer, better way out of the global and domestic recessions. The European statement reads:

All euro area members must conduct sound national policies in line with agreed rules. They have a shared responsibility for the economic and financial stability of the area.

Let us examine this, which is the forerunner to Greece being asked to inflict economic sabotage on its people so as to fall in line with outdated EU rules in terms of the Stability and Growth Pact.

What is a "sound national policy?" The EU and, unfortunately, the Irish Government would have us believe that a sound national policy is one that deflates an economy to the point of imposing serious hardship on its people. It is one that curtails workers' rights so they cannot infringe on economic decisions and one that steadily erodes public services so that people are pushed into consuming private services, usually bought cheaply from the State in a sell-off initiated by a "sound national policy."

The Irish Government pursued its own brand of "sound national policy" in the budget of December last when it cut the wages of public sector workers, social welfare, health and education funding and took, in total, €4 billion out of the economy. The Fine Gael and Labour parties supported the Government's €4 billion analysis. Three months later, the live register continues to grow, house prices continue to fall, the banks still are not lending and our consumption sector is in free fall. The Government is happy because it appears we are no longer considered the naughty children of Europe, as though that is all that matters. This same medicine is being passed on to Greece to ensure it brings down its budgetary deficit by 4% in 2010.

I want to point out the elephant in the room. It was the EMU's one rule fits all that caused much of the problems of the small economies in Europe. The access to easy credit by these developing economies, like Ireland and Greece, combined with the loss of monetary control, fed the bubbles that arose in the PIIGS, Portugal, Italy, Ireland, Greece and Spain, countries. The command that every economy stay within the 3% Stability and Growth Pact, when different countries have different needs, further damaged economic development. It was not true; the larger countries, for example France and Germany, broke the pact on several occasions and suffered no real consequences.

The insistence now that economies bring back their domestic deficits to within this 3% is utter madness. Attempting to reduce a structural deficit in a time of recession is counterproductive. Deficit reduction should be counter-cyclical to allow Government's the sovereign decision making needed to right an economy in decline. Borrowing for investment should be allowed if such investment is designed to stimulate an economy and, therefore, grow it. Of course, there are always exceptions made by the EU. In the Irish case, workers must suffer pay cuts and those who have lost their jobs must live on less, because we are not allowed to borrow to pay for a jobs strategy or societal needs. We can, however, borrow €54 billion to give to banks for toxic loans as long as we place that borrowing through a special purposes vehicle and keep it off the general Government balance sheet. This is the type of lunacy being allowed by the EU and now being inflicted on Greece.

The EU and this Government have turned Ireland into a debt-servicing vehicle to protect the euro. It is not important for them that unemployment and emigration will continue to rise and that our public services will fall into disarray. Given we have no monetary control over the euro and our main trading partners are non-euro members, they want us to further deflate our economy to make ourselves cost competitive, which means more hardship for people across the country. I extend my sympathy today to Greece. To have an economically inept EU leaning over one's shoulder and telling one how to run one's country is a sad reality in which to find oneself. Ireland has been run by incompetents for years and we have had our own experience of EU pressure so we can fully understand this Greek tragedy.

Martin Mansergh (Tipperary South, Fianna Fail)
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The Taoiseach's earlier remarks on the outcome of the informal meeting of the European Council were comprehensive, clear, informative and important. It is, therefore, worth stressing the two core messages that he identified in the statement by the Heads of State or Government of the European Union on 11 February. The first of these is the clear solidarity that exists among the member states. The second is that all member states recognise that they have commitments and responsibilities which they must fulfil, particularly as regards the framework provided by the Stability and Growth Pact. This statement by the Heads of State and Government provided a clear defence of, and support for, the integrity and cohesion of the eurozone against a background of the recent global economic and financial crisis.

The Heads of State and Government fully supported the efforts of the Greek Government and its commitment to do whatever is necessary, including adopting additional measures to ensure that the ambitious targets set in the stability programme for this year and thereafter are met. They also called on the Greek Government to implement all these measures in a rigorous and determined manner to effectively reduce the budgetary deficit by 4% in 2010. It is also important to draw attention to another aspect of the statement namely, that "all euro area members must conduct sound national policies in line with the agreed rules. They have a shared responsibility for the economic and financial stability in the area". The position taken on Greece implicitly reminds all concerned that the Stability and Growth Pact, and adherence to its rules, continue to provide an essential framework for sound budgetary policies and that there has to be a continued firm commitment to the pact in these difficult times.

This is of particular relevance to Ireland and highlights the need to continue with the policies to stabilise the public finances that are already in place. The 2010 budget was the latest in a series of measures, beginning in mid-2008, designed to restore order to the public finances. The budget re-emphasised the Government's commitment in this regard. Difficult and painful measures were necessary in the 2010 budget. An expenditure adjustment of €4 billion was delivered. As a result of these decisive actions, it is forecast that the deficit will be stabilised in 2010. The Exchequer returns for the end of January 2010 were broadly in line with expectations. Much more needs to be done to improve our public finances and we have set out commitments in this regard up to the end of 2014. While the Government is not complacent about the numerous challenges that still confront us, including the expectation that economic activity will contract again this year, there are indications that the economy is stabilising and there are emerging signs that we may be close to the bottom of the current downturn. There is growing consensus among observers that positive economic growth will now return during the second half of this year, although we will have to wait until next year before we experience growth on a full-year basis, as the international recovery gains momentum, competitiveness improves and the domestic economy recovers.

Following the direction given by the informal council last week, the ECOFIN Council adopted a comprehensive and ambitious package of recommendations to Greece, covering fiscal and structural policies, based on proposals from the European Commission and following discussion with all member states. These recommendations require that the Greek authorities take steps to reduce the deficit on the public finances below 3% of GDP by 2012, in line with their obligations under the Stability and Growth Pact. They are also invited to implement specific economic reforms considered consistent with the smooth functioning of the eurozone.

With regard to Ireland's response to the Greek situation, we welcome the efforts of the Greek Government to tackle the substantial economic and fiscal challenges which the country faces. These measures are key to addressing the fiscal and competitiveness challenges of the Greek economy. We also welcome recently announced measures which clearly show the determination of the Greek Government to consolidate the public finances and restore competitiveness. There is an urgent need for these measures to be implemented in a credible manner.

We are very supportive of the Greek Government in its plans to deal with a difficult economic and fiscal situation. This is primarily in the interest of Greek citizens, but also in the common interest of all eurozone countries and the entire EU. We are confident that the necessary measures will be implemented speedily and efficiently, and that the Greek authorities will succeed in overcoming the fiscal and macro-economic challenges they face.

Another important topic discussed at the European Council was the planned successor to the Lisbon strategy for growth and jobs - EU 2020, as it is currently called. The Lisbon strategy for growth and jobs, which has been in place since 2000, is due to expire this year. It encouraged member states to engage in a programme of wide-ranging structural reforms to enhance the growth potential of the EU economy. Before the global economic and financial crisis, the strategy had helped create more than 18 million jobs within the EU.

The Taoiseach's comments clearly outline the importance of this proposed strategy to deliver medium-term and long-term structural change in Europe. As he has highlighted, the reforms that this new strategy will involve are necessary to allow us to deal with many serious challenges. These include those being thrown up by demography and how to sustain the European social model, including pensions. There are also challenges of how to compete on a global level when many countries or regions continue to grow rapidly as we struggle, and the related environmental and energy challenges. The details of this new strategy will not be presented by the Commission until 3 March and will not be finalised until June. I am quite sure about thing, however: the new strategy will not support a "business as usual" approach to structural reform.

Deciding on new policy priorities and structural changes will not, of itself, achieve results. Those policies and reforms must be implemented, in an effective and verifiable manner across the Union. This will be done through a reform agenda and framework which will ensure that it is pursued at EU, eurozone, member state and, where appropriate, regional levels.

Noel O'Flynn (Cork North Central, Fianna Fail)
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A few more minutes are available in the Minister of State's slot.

Martin Mansergh (Tipperary South, Fianna Fail)
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I may make a few extra points. The leader of the Labour Party correctly talked about the importance of Ireland as an exporting nation and referred to the need for increased demand. I believe he particularly had in mind countries that are running large balance of payments surpluses. While that is true, in addition to increased demand particularly from those countries that are well able to accommodate it, we need to improve and are in the process of improving our competitiveness.

There has been much discussion of stimulus packages which some countries are in a better fiscal position to implement. In our case as a small open economy, the danger - apart from any other consideration - is that much of the stimulus would go abroad. It also misses the point that the best stimulus we can give the economy is a fairly sharp correction to our competitiveness. That relates to reducing our costs. Obviously in some cases reduction in costs would be beneficial and not painful, but in other areas for example in public service pay, which forms part of the overheads of Government, is quite painful. As we know, in much of the private sector, loss of jobs, and pressure on earnings and time worked, etc., are painful. There are relatively few sectors of the economy not experiencing pain at present. It is a necessary process that is part of the logic of eurozone membership.

We are excessively subject to what one might call monetary illusion. In the mid-1970s and mid-1980s we had substantial reductions in real wages, but these were concealed by inflation and devaluation. I have seen studies that showed there was a bigger loss in real incomes in the 1980s than today despite the fact that we now have nominal wage cuts. I would like to see the trade union movement, in particular, taking that on board and absorbing it into its thinking. We owe a great deal over the past 20 years to the broadly constructive attitude of the trade union movement, in particular, as well as other social partners. It is a pity that matters have gone the way they have, for the moment, and we all hope dialogue will resume, on a realistic basis.

I could not agree more with the leader of the Labour Party about the celebrity commentators and one or two others who argue that Ireland should leave the eurozone. There are, undoubtedly, speculative forces that are trying to attack or undermine the eurozone. However, it is a major step forward, with major long-term strategic advantages for this country. The measures we have taken over the past 18 months have been geared towards ensuring we maintain our position within the eurozone as well as our financial and economic independence.

At a regional policy meeting last week, I was sitting next to a Latvian Minister. The IMF has gone into Latvia and there has been a reduction of 50% in public sector wages. The government there has very little say about the measures proposed by the IMF; it simply has to carry them out. In the news today, I notice that the EU Commission either has or is just about to approve the opening of negotiations with Iceland. For a long time, Iceland was fiercely against belonging to the European Union, but it now sees the benefits.

I am somewhat curious about Sinn Féin's policy in relation to this. In the South it has been against all EU treaties, including the one that established the eurozone, but, in the North, part of its policy is that Northern Ireland should join the eurozone. All human life and policy is about overcoming one's internal contradictions, of course, as Marx once said, but I would be interested to know how that particular circle is to be squared.

I pay tribute to the generally constructive tone in the European debates we have in the House. All parties recognise the enormous importance of Europe for Ireland. Certainly, if one wants to see in the future, as I and many others do, a united Ireland on an agreed basis, this is only credible in a united Europe. Therefore, that is why I find the Sinn Féin Party's euroscepticism very odd in terms of reconciling it with its republican philosophy, because the type of national sovereignty people had between the two world wars, and which we struggled with until the end of the 1950s, has gone. Sovereignty is important and, as the German Constitutional Court said, the European Union is an association of sovereign states. I do not believe there are many states in Europe that want to alter the situation, but it means pooling and sharing sovereignty. We have infinitely more possibilities and potential in the situation as it exists now than, for example, 50 years ago when, although we were sovereign, we did not belong to any organisation, apart from the Council of Europe. Nobody else took much account of us.

It is very different today, when what we have been doing, not least in struggling with our economic difficulties, has achieve broad recognition to the effect that Ireland is on the right path and that we are doing the right thing. This model is being recommended for other countries to examine as well.