Dáil debates

Wednesday, 22 June 2011

11:00 am

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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Question 1: To ask the Taoiseach if he has spoken directly to the French President Nicolas Sarkozy since he came to office; and whether they have discussed the issue of the EU/IMF Bailout. [16162/11]

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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Question 2: To ask the Taoiseach if he intends to engage directly with French President in the weeks or months ahead. [16278/11]

Photo of Micheál MartinMicheál Martin (Leader of the Opposition; Cork South Central, Fianna Fail)
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Question 3: To ask the Taoiseach his contact with the French President Nicolas Sarkozy since 9 March 2011; the phone calls he has had with the French President; if he has had any direct meetings with him and if he has any plans to have any phone calls or direct meetings with the French President in the next few months. [16294/11]

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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Question 4: To ask the Taoiseach his priorities for the forthcoming meeting of the European Council. [16605/11]

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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Question 5: To ask the Taoiseach if he will raise the issue of the Government's request for a rate cut on the interest of the EU/IMF bailout at the forthcoming European Council meeting. [16606/11]

Photo of Enda KennyEnda Kenny (Taoiseach, Department of An Taoiseach; Mayo, Fine Gael)
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I propose to take Questions Nos. 1 to 5, inclusive, together.

As I will make a statement to the House following parliamentary questions, I will confine myself to a few brief remarks. The proposed agenda for this week's European Council meeting is a wide-ranging one covering economic issues, migration, asylum and international questions. In the area of economic policy, the meeting marks the conclusion of the first European semester and will include endorsing country-specific recommendations on foot of recent proposals made by the Commission. This is in light of the commitments made by member states in their national reform and stability and convergence programmes. The Council will also take stock of progress on all other strands of the comprehensive economic package it adopted in March.

There will be a review of progress in implementing asylum and migration policies and issues raised by recent developments in the southern Mediterranean. There will also be a review of progress in negotiations on Croatia's accession to the European Union. The Council is expected to note the outcome of work on the inclusion of the Roma population in the EU and on the launch of a strategy for the Danube region. The Council will also be called on to decide on the appointment of a new President of the European Central Bank.

I have not spoken by telephone with President Sarkozy. However, I met him at the European Council meetings in Brussels on 11 and 24-25 March. There has also been regular contact between our Administrations at official and diplomatic levels. I expect to see President Sarkozy again this week. Arrangements beyond that have not been finalised.

The principle of an interest rate reduction has already been agreed in respect of EU funds being drawn down under our EU-IMF programme of financial support. Work on this issue by finance Ministers is under way and I remain hopeful of a satisfactory outcome. Our position is that the interest rate should be priced to support recovery and to facilitate a return to markets. We will continue to take every appropriate opportunity to press this case.

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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I will address these questions in a thematic way. There are two issues, the first of which is the way the Taoiseach responds to questions. I asked direct questions - Nos. 4 and 5 - about the Taoiseach's priorities and whether he would raise the issue of the cut in the bailout's interest rate at the forthcoming Council meeting, but he did not answer either. There is a difficulty with how we do our business. Second, the manner in which the Government is dealing with the EU is a debacle. It is a bit like the emperor having no clothes - depending on which Minister is speaking, it will be on, it will not be on, we are going to burn bondholders, we are not going to burn bondholders. All the while, the unsustainability of our large debt is being ignored.

Promises are being continually broken. For example, it was promised that not one red cent would be given to the banks, but they were then given €24 billion. That is €13,000 from every worker. Remember the universal social charge and the public service issues we discussed, in particular the health service. The Labour Party should be ashamed of its involvement in these measures.

Will the Taoiseach reflect on my genuine point about how we conduct our business? Is the Government committed to burning the senior bondholders in Anglo Irish Bank and Irish Nationwide, as the finance Ministers promised recently? Will the Taoiseach tell our European partners that we will no longer take orders from Frankfurt and that we will not sell off our State assets or impoverish our citizens from this point forward? This debt is unsustainable.

Photo of Enda KennyEnda Kenny (Taoiseach, Department of An Taoiseach; Mayo, Fine Gael)
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The programme for Government is designed to implement a series of measures that will restore Ireland's good fortune and restore the opportunity for people to have prosperous lives, careers and work opportunities. This requires dealing with a range of problems - the banks, unemployment and job creation initiatives - as well as the central question of closing our budget deficit in Ireland, which is part of the reason for a comprehensive spending analysis and review. That is our business and that is what we have to deal with. As a Government, that is where we are focused.

In respect of the European Council, the Deputy is aware that, under the Treaty of Lisbon, the President of the Council - in this case, President Van Rompuy - is the person who determines the preparation of the agenda for the continuity of the work of the Council. He does that in co-operation with the President of the Commission and on the basis of the work of the General Affairs Committee. No less than four weeks ahead of a regular meeting, the President submits a draft agenda to the General Affairs Council in close co-operation with the member state holding the Presidency and with the President of the Commission.

I have responded to questions here before. I expect not only to attend the meeting, but to participate in an inclusive fashion in the discussions that take place about the situation, as we see it, in so far as Europe is concerned and the challenges that Europe faces.

Deputy Adams is aware that, in the programme for Government, we are committed to realising €2 billion in respect of the sale of non-strategic assets at the appropriate time and under appropriate conditions. He is also aware of the list of potential assets submitted by Mr. Colm McCarthy, who made a series of recommendations, but the Government will, in due course over its lifetime, decide which non-strategic assets should be sold, in what conditions and in what respect. There is no intention of impoverishing anyone. What is involved is rectifying the trouble our country is in economically. This is an economic challenge and the support and contribution of everyone will be required to meet it. That is what we will do.

On Thursday and Friday, I will participate in the discussions that take place at the European Council meeting. I expect to meet all of my colleagues there during the course of the two-day summit. As appropriate, I will raise the issues in respect of Europe and in respect of Ireland, as I see fit at the meeting. Obviously, the big issue is consideration of issues arising from the vote of the Greek Parliament to set out on a road of serious austerity measures. In so far as Ireland is concerned, we are in a programme, we are meeting its demands and conditions, challenging though they are, and we are heading in the right direction. Our job and the Deputy's job is to point out initiatives that can take place that help our indigenous economy, restore confidence and get our people back to work. The Government will make its decisions in due course for debate in the House about how we close our budget deficit. The decisions made must be based on priority, maintaining services and doing more with less.

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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I do not understand the strategy. The Taoiseach has heard me say so previously and I have tried to appreciate what the strategy does, but I can predict what he will say at the Council meeting. He always starts off his remarks by committing the Government entirely to the bailout. Why on Earth would the Council take him seriously when he is telling it that the Government is committed to doing what the Council wants us to do? Every day of the week, we can see the social consequences of this commitment in our constituencies. I ask the Taoiseach to take on board the hard reality learned a long time ago by our mothers and grandmothers that one cannot solve a debt crisis by taking on more debt. It is time the Taoiseach took direct responsibility for negotiating with the EU, IMF and ECB and started defending all of those people who are being impoverished, although I accept that may not be the intention of Government.

As the Taoiseach said prior to entering government, this is a Fianna Fáil plan. While Fine Gael and the Labour Party were before entering Government opposed to it they are now implementing it. This is not the Government's plan: it is implementing Fianna Fáil policy. I say that not to score party political points but simply to make the point. The Government is doing exactly what the previous Government did in terms of this bailout.

Photo of Enda KennyEnda Kenny (Taoiseach, Department of An Taoiseach; Mayo, Fine Gael)
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It is incorrect to say we are doing exactly what the previous Government did. We have inherited a situation whereby the sovereign is unable to borrow money. That is a fact. Our challenge and that of the Opposition is to get our country back to a point where it can borrow money on the bond markets and thus be in charge of its economic destiny. That is the challenge facing the entire country into the future. It will not be easy. We face many challenges, all of which will be spelled out clearly as we unveil the full truth in the context of the comprehensive spending review.

I have said on many occasions that we cannot tax or cut our way back to prosperity. There is no difference of opinion between us in that regard. However, the only way forward is to make progress in respect of developing our economy, strengthening our indigenous economy, increasing productivity and our exports, which are very strong, having credit available from banks for business and demonstrating we have rebuilt our international reputation. The Government has decided on the bank situation, the deleveraging of non-core assets internationally and will make available €10 billion per annum for each of the next three years for lending to small and medium enterprises. I want the banks to be able to show the people on a bimonthly or quarterly basis what new lending they are making available following which I, Deputy Adams and Deputy Martin can discuss what new businesses in Cork, Louth or anywhere else are in a position to obtain credit for expansion of employment under appropriate conditions.

When in Deputy Martin's constituency last week, I had the privilege of turning a sod on a major site in Mahon where 300 people will be working over the next few weeks. It is a €50 million investment.

Photo of Micheál MartinMicheál Martin (Leader of the Opposition; Cork South Central, Fianna Fail)
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That shows what was going on before this Government took office.

Photo of Enda KennyEnda Kenny (Taoiseach, Department of An Taoiseach; Mayo, Fine Gael)
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Yes, I understand that. The American company involved expects to double its workforce here. A man on the site said to me on that day: "It's great to hear the sound of buckets rattling round this site again." That is the type of expression of confidence we must get back. The Government is focusing on those priorities in order to get us back to a point where we can borrow on the international markets and be in charge of our own destiny.

The Minister for Finance, Deputy Noonan, in the context of setting out the achievements of Government since its election made the point that bond holders in Anglo Irish Bank and Irish Nationwide Building Society are in a different position to other banks. We cannot decide this matter unilaterally. The discussion in that regard will take place with the European Central Bank in the autumn. It is not a matter for discussion at the forthcoming European Council meeting on Thursday and Friday. I have already made clear that discussion will take place with the European Central Bank in autumn because the matter cannot be decided unilaterally.

Photo of Micheál MartinMicheál Martin (Leader of the Opposition; Cork South Central, Fianna Fail)
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Arising from the Taoiseach's reply to Question No. 3, I find it incredible there has been no substantive bilateral meeting or discussion with President Sarkozy on better settlement terms for Ireland. The Taoiseach has acknowledged that in February all EU Governments agreed the need to improve conditions attaching to financial support for Ireland and other countries. This was formalised on 11 March with the expectation that matters would be finalised within weeks. It was stated by officials from the Taoiseach's office that he was leading a major diplomatic initiative in relation to the conditions attaching to European Union funding. This was said on the morning of the Taoiseach's only bilateral meeting with an EU leader involved in providing funding.

The Taoiseach made clear on a number of occasions during the past two weeks that a lower interest rate is being held up by the personal veto of President Sarkozy. Brief encounters at the side of noisy Council meetings do not constitute substantive bilateral engagement. Given, by the Taoiseach's own admission, that this matter is being held up by the personal veto of President Sarkozy, perhaps he will explain why he has not gone to Paris over the past three months for a substantive bilateral meeting with President Sarkozy to sort out the issues. Part of the reason may involve the Taoiseach having to explain why his staff went out to hype up the dispute at the meeting on 11 March. However, that can be got over very quickly.

If it is the case, despite agreement of all Heads of State on 11 March, that President Sarkozy has vetoed the reduction in interest rates, as the Taoiseach said he has, the only issue then is why the Taoiseach has not met with him. I find it extraordinary that the Taoiseach has not even had a telephone conversation with President Sarkozy on this matter and that his contact amounts only to meeting him at summit meetings. We all know what happens at those meetings, namely, there is back stabbing and shaking hands on the margins. That does not constitute a substantive bilateral meeting. Given all that has happened and the prioritisation of the debt reduction, I find it extraordinary that the Taoiseach has not had a substantive meeting with President Sarkozy. The Minister for Finance is not in a position to negotiate with President Sarkozy, the man the Taoiseach says is holding up the reduction in the interest rate. Will the Taoiseach agree that he should now initiate substantive talks with President Sarkozy on the settlement terms for Ireland?

Photo of Enda KennyEnda Kenny (Taoiseach, Department of An Taoiseach; Mayo, Fine Gael)
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The decision taken by Government to have diplomatic engagement is paying dividends. In this regard, I note the report of Tony Connelly this morning. This requires that Ministers attend meetings and work outside formal meetings in rebuilding Ireland's reputation. I am sure Deputy Martin would have had something else to say had I come in here following the meeting on 11 March and said I conceded to the request of the French President that we should increase our corporate tax rate. The indication appears to be that on that basis we would get an interest rate reduction.

The Leaders agreed an interest rate reduction should be applied. From our point of view, we have met the conditions and criteria set down in our bailout deal, based on the assessment carried out by the Troika. It is not a case of constantly being on the telephone to the Elysée. I agree with Deputy Martin that a meeting on the margins of a formal meeting does not constitute a substantial bilateral meeting. However, the Ministers for Finance have been given responsibility for this matter and they are negotiating on it. I can confirm that officials from my Department and the Department of Finance and others have been in regular contact with their counterparts in Europe. The Minister for Finance has engaged constructively with his counterparts, including his French counterpart. Madame Lagarde was most helpful and supportive this week in Luxembourg in respect of the change on the preferred creditor status within the EMS, which is important in its own right.

If and when it is appropriate to arrange a substantial bilateral meeting with President Sarkozy arising from the conclusion or otherwise of the work of the Ministers for Finance I will be happy to do so. I have never set a date for a conclusion of this issue or the question of an interest rate reduction. It has always been my expectation and belief that it will be concluded successfully. As I said, the negotiations and discussions continue.

Photo of Micheál MartinMicheál Martin (Leader of the Opposition; Cork South Central, Fianna Fail)
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If there is a fundamental difference on an issue with a Head of State, I find it extraordinary that a meeting has not been held to deal with it. This is an issue that has already been agreed. An interest rate reduction essentially was agreed to at the meeting on 11 March; it is its implementation that has been delayed. Ultimately, it will be agreed to. Having all of these hyped-up briefings before and after meetings about the great spats we are having-----

Photo of Seán BarrettSeán Barrett (Ceann Comhairle; Dún Laoghaire, Ceann Comhairle)
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A supplementary question, please.

Photo of Micheál MartinMicheál Martin (Leader of the Opposition; Cork South Central, Fianna Fail)
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-----does not add anything to French-Irish relationships and so on. Has the delegation to the Finance Ministers been a manoeuvre to circumvent Mr. Sarkozy? Are people afraid of him or are they simply trying to resolve the issue around him? It is difficult to comprehend, given the priority the Taoiseach attaches to the issue, the reason he has not sought a meeting with him.

On general issues for the Council, the simple reality about the schedule for the Council meeting this week is that we are not even on the agenda. ECOFIN met for two days-----

Photo of Seán BarrettSeán Barrett (Ceann Comhairle; Dún Laoghaire, Ceann Comhairle)
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This is Question Time, if the Deputy would not mind asking a question.

Photo of Micheál MartinMicheál Martin (Leader of the Opposition; Cork South Central, Fianna Fail)
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I am coming to it, as I am entitled to do. The Minister for Finance, Deputy Michael Noonan, was left trying to claim credit for a change we had not sought to a fund we did not want to access. Ultimately, there will be an interest rate reduction and the Taoiseach will obviously claim that some deep strategic manoeuvre was responsible for it. Why has an Irish rate reduction which was agreed to in principle three months ago not been on the agenda of Finance Ministers or, indeed, Foreign Ministers this week? Why is it not on the agenda for the summit?

Photo of Enda KennyEnda Kenny (Taoiseach, Department of An Taoiseach; Mayo, Fine Gael)
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I have explained this previously. It is not a case of trying to circumvent anybody. The decision to devolve authority to the Finance Ministers was made deliberately. It was made because lending countries told me directly that they would only go to Parliament once. Therefore, we need to have accurate figures and know the truth of the scale of the requirement from Ireland arising from the bank debacle. As I was not in a position to give an accurate figure to other leaders, the matter was not decided. The reason I was not able to give that figure, as the Deputy knows, is that the stress tests on the banks had not been completed. Therefore, in the absence of clarity and truth about the matter, the leaders decided to wait until the stress tests had been completed and to devolve authority to Finance Ministers to conclude the negotiations on the interest rate reduction. As I said, Greece was not involved in the EFSF bailout, as it was in a slightly different position. However, an interest rate was agreed to for Greece, as well as an extension of the time allowed for repayment. As Ireland was not in a position to give an accurate and truthful account of the scale of its requirement because the stress tests had not been completed, the leaders, including President Sarkozy, said they would devolve authority to conclude the negotiations to the Finance Ministers. The negotiations are ongoing. That is where the matter lies and progress is being made. I hope we can bring a conclusion to the matter. While I would like it to happen very quickly, I have never been in a position where I genuinely could put a date on when it might become a reality.