Dáil debates

Wednesday, 22 June 2011

European Council Meeting: Statements

 

12:00 pm

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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This week's meeting of the European Council will be particularly busy. There are a significant number of issues on the agenda which are of importance for both Europe and Ireland. The Council will meet tomorrow evening and continue its business into Friday. Our discussion tomorrow will be devoted to economic issues. On the morning of 24 June we will discuss asylum and migration issues. Discussion of foreign policy matters, including Syria, Libya and the Middle East generally, will take place in our final session over lunch.

Finance Ministers dealt extensively with the question of Greece at their meeting on Sunday and Monday and the ball is now firmly in the Greek court. Having won a vote of confidence last night, the Greek Government now needs to secure the support of Parliament for new budgetary measures if the fifth tranche of funding under the Greek programme, amounting to €12 billion, is to be released. The question of a second, longer term package for Greece is to be discussed further by Finance Ministers in July. Although I expect that Heads of State or Government will take stock of this situation, I agree with President Van Rompuy who, when he met with me here in Dublin last Friday, made it clear he does not wish the situation in Greece to dominate the European Council meeting. There are other important matters to be discussed and it is important they be given due time and attention.

As the House will be aware, discussion of the situation in Greece has particular significance for Ireland, as another member state in an agreed programme, albeit on a very different basis from Greece. Any agreement on future arrangements for Greece must avoid any negative read-across, or risk of contagion to others, with potentially serious consequences for Ireland. We know from experience that the markets do not differentiate the situations of member states as finely as they should. The Irish people are making great efforts to get our economy back on track. The Government has made clear its commitment to ensuring that Ireland pays its way, honouring the commitments into which it has entered. At the meeting I will work to ensure that Irish interests are fully safe-guarded. I will also continue to emphasise the importance of ensuring that all aspects of a programme support the shared goals of early recovery and return to borrowing on the markets. One element of this is the pricing of loans, and I will continue to press the case for early implementation of the March agreement to lower the interest rate under the EFSF. At that time, it was agreed that a lower rate would better take into account the debt sustainability needs of recipient countries. This analysis remains sound and what has been agreed should be put into effect, including for Ireland. In this regard, I very much welcome the agreement earlier in the week that the permanent EU funding mechanism which will enter into force in 2013 - the European Stability Mechanism - will not apply preferred creditor statements to any loans made to member states currently in a programme under the EFSF. This will assist us in making as early a return to the markets as possible, which has always been our goal. While we do not intend or expect to be a client of the stability mechanism, the mere possibility of having loans subordinated to those under the mechanism was already causing difficulties for Ireland and others, given the uncertainty it created for potential lenders. This uncertainty has now been removed. The Finance Ministers are to be congratulated on this. The change will be reflected in the treaty necessary to establish the European Stability Mechanism. The European Council will sign off on this agreement. In the light of the political requirements of some states, formal signature is expected to take place at a later date.

President Van Rompuy has indicated to me that he wishes the economic discussion to be wide-ranging. It will involve the endorsement of the country-specific recommendations proposed by the Commission and adopted by the Council following the submission of national reform programmes and stability programme updates by member states. This is the final step in the new European semester. When the recommendations have been endorsed, member states will be expected to reflect them in their forthcoming budgetary processes. It has been recommended that Ireland should continue to implement the EU-IMF programme as the best means of getting the economy back to growth and recovery and restoring our ability to return to borrowing in the open markets as quickly as possible.

More generally, each member state is being asked to give priority to ensuring there is a sound macroeconomic environment. This can be done by restoring financial sustainability, correcting macroeconomic imbalances, repairing the financial sector, reducing unemployment, particularly through labour market reforms, and making renewed efforts to prioritise growth. There will also be a discussion on the commitments that member states have made under the new Euro Plus Pact. Over 100 measures have been pledged by those participating. Ireland's commitments are drawn from the EU-IMF programme commitments and the national reform programme. It is expected that the European Council will welcome these commitments as a first step. It is intended that we will return in December to take stock of the progress being made in implementing what has been agreed. The meeting is expected to confirm the appointment of Mario Draghi as President of the European Central Bank.

Significant progress has been made in recent years to develop a strong common European policy in the field of asylum and migration. This is an important feature of a European Union which has at its core the right to free movement within its borders. There is little doubt that recent events, including those in the southern Mediterranean, have placed the system under pressure. The brunt of such developments has been particularly felt in a number of member states. For this reason and in a spirit of solidarity, the Minister for Justice and Equality, Deputy Alan Shatter, recently announced the Government's willingness to receive a small number of refugees from Malta. Consideration has been given for some time to improving the operation of the current Schengen area, but this has now been placed in sharp focus. The European Council will have discussions on issues such as making sure there is trust in the system, ensuring Europe's borders are effectively and coherently managed, providing for effective and reliable monitoring and the possibility of invoking a safeguard mechanism in response to exceptional circumstances, with due regard to the principle of free movement.

I do not necessarily expect this week's meeting to be able to reach final agreement on these sensitive issues, but I expect it will give added impetus and momentum to the work. As the House will be aware, Ireland does not participate in the Schengen area. However, we share an interest in ensuring there is a consistent and strategic policy to manage mobility in a shared environment. In that context, an important objective must be to address the root causes of migration at a structural level. That is why the European Council will agree to develop a partnership with the countries of the southern neighbourhood, on which the Commission recently brought forward a communication. This could include a structured dialogue with the countries of the region on migration, mobility and security, aimed at delivering tangible benefits to both sides.

Accession negotiations with Croatia are reaching a successful conclusion. The European Council is expected to call for them to be formally closed by the end of the month, with a view to the signature of an accession treaty by the end of the year. Ireland has supported the Croatian case for membership for a long time. We congratulate the Croatian Government and people on reaching this important milestone.

The House will recall that before the second referendum on the Lisbon treaty, Ireland secured legally binding guarantees on taxation policy; family, social and ethical issues; and defence matters. It was agreed at the time that the guarantees would be attached to the treaties by means of a protocol at the time of the next accession treaty. Contacts with the relevant authorities, including the Council legal service, are under way to ensure this work is taken forward as speedily as possible. It will be necessary to give effect to the decision that the Commission will continue to comprise one Commissioner per member state.

The European Council will also discuss a number of important international issues, including the situation in Syria and Libya and the Middle East generally. The Minister of State, Deputy Lucinda Creighton, will report on these aspects of the matter when she speaks at the conclusion of the debate.

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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Although this week's meeting of the European Council is the regularly scheduled June meeting, it is nevertheless still a crisis meeting. The Council has spoken at great length about the problems facing the European economy as they have deepened. While it has agreed on the need for comprehensive measures to tackle them, it has consistently failed to follow its words with credible action. The agenda for this summit is short and unambitious. All the major points were agreed at meetings of Finance and Foreign Affairs Ministers. In spite of the sheer range and scale of problems facing member states, the President of the Council announced yesterday that he intended to bring the summit to an end earlier than originally provided for.

If one examines the debates held before the last two summit meetings, one will almost be depressed by how little progress has been achieved. The great sense of urgency evident among countries at the start of the year has almost disappeared. Rather than a genuinely inclusive discussion among member states and institutions, we have a more narrow and exclusive debate. It seems policy is being developed through media briefings rather than in face-to-face discussions. The hands-off approach of the Taoiseach and other leaders in the last three months has failed. This summit should be used to say with absolute clarity that delay is no longer an option. If member states want to save the euro, contain the debt crisis and restore credibility to the European Union, they must stop talking and start acting. The first thing they should do is restore to the agenda the issue of the conditions applied to financial support for Ireland and others. The Finance Ministers have failed to handle this issue. It is time for the leaders to take it over.

A scheme to provide financial support for member states was agreed to in the first half of last year. Its objective was to help Greece and bring confidence to the market. That did not happen. By the time of the Irish deal in November, it was agreed that changes needed to be made. The Taoiseach and others like to talk about a lousy deal, but they know the truth is that the terms of the deal were fixed and not open to negotiation by anybody. This was recognised by the Minister for Finance, Deputy Michael Noonan, in his opening remarks following the announcement of the deal. He rapidly changed his line when he saw that political gains were to be made by going on the attack. The need for new terms was negotiated in the following months, agreed to in February and formally ratified on 11 March. There was no equivocation. Every member state accepted that, as the communiqué states, terms "should be lowered to better take into account debt sustainability of the recipient countries". Final details relating to Ireland were postponed and handed to Finance Ministers purely in order that the bank stress test results could be published first. These stress tests turned out exactly as predicted and there was no reasonable basis for further delay.

I think even the Taoiseach would now accept that the self-aggrandising hyping of his brief chat with President Sarkozy on the margins of the meeting served no positive purpose.

Photo of Enda KennyEnda Kenny (Mayo, Fine Gael)
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Some countries thought it might make €50 billion.

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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An exactly similar exchange between the former Taoiseach, Brian Cowen, and President Sarkozy happened at the previous meeting and was not allowed to get in the way of the important agreements reached in February.

Grinning about having a so-called Gallic spat and praising one's own toughness against a colleague might be good for polishing the image at home but it did nothing to help get the deal finalised. It shows an interest in media spin taking precedence over building a relationship, and a number of reports have shown that what annoyed President Sarkozy was not the discussion with the Taoiseach but the hyping of it afterwards.

The French demand relating to corporation tax is long-standing and it is unachievable. They know it and they will accept it. As matters progress, it appears that this is more likely to be because of the intervention of others worried about how the issue is dragging on rather than because of bilateral contacts. There will be a lower interest rate for Ireland's borrowings and other terms may also be improved. It will happen because the cost of not agreeing it could be immense for the whole of Europe. The problem for Europe is that it has already agreed that the financing conditions agreed last year are unsustainable. To leave unsustainable financial conditions in place would be a direct signal that the European sovereign debt crisis will get worse. Before the March Council the Government stated that it was seeking changes which would be worth €400 million a year to Ireland. This figure has been halved since then. It is still an important amount which would make a contribution to easing some of the fiscal adjustments planned for the next three years.

The four year fiscal plan prepared last autumn and accepted as the basis of funding from the EU and IMF is credible and provides the foundation for restored confidence in the economy. There is much positive feedback internationally for the decision of Fine Gael and Labour to both implement the plan and claim credit for a budget they voted against. The Tánaiste is right to give speeches about what he terms the many fundamental strengths of the economy just as he was wrong to call it banjaxed three months ago.

Better terms on the international funding will reinforce the idea that we are on a sustainable path to recovery and show that Europe is willing to resolve the debt crisis. The Taoiseach should use the well-established support for Ireland's position by the Presidents of both the Commission and Council to force the issue to a conclusion this week. The change to the status of borrowings from the ESM is welcome and it does have potential benefits for Ireland and others. The efforts to which the Government went on Monday to claim credit for it are, once again, short-sighted.

It has always been my party's position that private sector burden sharing in bank debt should be implemented. The late Deputy Brian Lenihan brought legislation through the Oireachtas to enable this. As is well known, others effectively vetoed this owing to fears about knock-on effects. Given the refusal of the Taoiseach, Tánaiste and Minister for Finance to ask US Secretary of the Treasury, Timothy Geithner, about his role, there is some doubt as to whether he was an important player in this. What is not in doubt is that the ECB opposed burden sharing and continues to do so.

The Taoiseach yesterday confirmed that the Washington announcement by the Minister, Deputy Noonan, concerning burden sharing for Anglo Irish Bank is a continuation of existing policy and will not be raised until the autumn. This raises the question why such efforts were made to push the story last week and why no one thought to brief the main interested parties about it before the Minister did his press events. It appears to have been mainly about manipulating domestic coverage of the 100 days anniversary. Certainly, there was and is no strategy actually to achieve something on burden sharing in the near future.

Much more detail would need to be provided before we can know whether or not a Vienna Initiative style of debt roll-overs can work for Greece. What is sure is that this is the very least that needs to be tried. Over dinner on Thursday night the Council will, according to the President, "take stock of the progress on the various elements of the comprehensive approach agreed upon in March". As I have said, the approach was agreed but the implementation has been stalled. If the leaders fail to take a comprehensive and generous approach to reaching a conclusion tomorrow evening, the next summit may deal with an even deeper crisis, covering more countries and threatening the existence of the euro.

Also scheduled to be agreed over dinner is the appointment of Mr. Mario Draghi to be President of the European Central Bank. It is a great pity that we have not worked with other countries to query this appointment and do not appear to have tabled any measures for the reform of a deeply flawed institution. It appears poised to undertake a series of interest rate increases that could destroy weak economies owing to a flawed targeting of commodity-driven inflation. Its failure to give clarity on affordable medium-term funding is making recovery more difficult for a number of banking systems. Its arrogant and unprofessional approach to the media is denying it the stature which is essential for public legitimacy of its broad powers. As a commentator wrote yesterday:

The ECB's strategy of threatening peripheral banking systems (and the regular coverage this receives in the media) has become one of the destabilising factors that have contributed to worsening the current crisis. It is time for this poorly-thought-out strategy to cease. The ECB's obligations under the European Treaty mean that it cannot help peripheral countries via keeping interest rates low for the next few years. But it can continue to act as a lender of last resort to the banks in these countries in a way that reassures (rather than worries) financial markets.

Mr. Draghi's comments to the European Parliament last week were unacceptably dismissive of the statement by the Minister, Deputy Noonan, about burden sharing. His comments about medium-term funding were actively damaging. We should not be nodding through his appointment over dinner without any sense that he appreciates the failings of the ECB and shows that he has a reform agenda.

The Council is due to spend a significant period discussing migration policy. The papers published to date have a certain air of unreality about them. They talk about the great achievements of the Union in terms of free movement but fail to mention that these achievements are under threat. The unilateral abrogation of Schengen rules by France and Denmark was a dramatic move. It appears that the French move was justified by the scale of its issues on the Italian border. Ireland's non-membership of Schengen is an accident of history due to the common travel area with Britain, but it is also no great issue. It is not clear that any great benefits would accrue from membership. What is important, however, is that the Union sorts out a policy which respects its rules and does not allow a situation develop where members can take a selective approach to constitutional obligations.

The formal closing of all negotiating chapters with Croatia is welcome and overdue. Croatia was put through considerably tougher negotiations than many previous accession countries. The delay imposed by Slovenia was a disgrace. The Croatian Government took a number of stands that were politically tough but mean that its country has implemented important reforms which have strengthened its economy and society. There is a major problem due to the significant change in public sentiment against the Union, particularly because of measures relating to the Hague tribunal. I hope the Council and member states will acknowledge the role they must play in talking to the Croatian people before their accession referendum.

The proposal before the Council to strengthen sanctions against the Syrian regime are welcome and we should support them. It would be a constructive use of the leaders' time if they would also agree to increase Union support significantly for democracy promotion in the countries experiencing the Arab spring. The elections in Egypt and Tunisia have great potential but also carry great risks. The people of those countries and others have expressed their powerful desire for real democracy. Europe should take the lead in helping ensure they get the free and fair elections they deserve. Europe should also move to put in place support for civil society organisations which are essential for the healthy functioning of the democracies after elections. The failure to do this more comprehensively in some post-Soviet countries was a fatal error. I would certainly support the idea of Ireland increasing its allocation to this issue and working in closer co-operation with the Union and other members. This could involve increased levels of joint funding programmes.

President Barroso was wrong this week to talk about this being Greece's moment of truth. This is Europe's moment of truth. The principle of solidarity between members is under threat. The euro is in danger. The institutions are failing to react credibly and comprehensively. The citizens of Europe are looking for a sign that the millions of jobs they need can be created.

This week's summit has an agenda which is low on ambition and devoid of the sense of urgency which is so badly needed. Vital issues are being left to drift long after the need for action has been agreed. Tough talking and media posturing are of no use. We need a summit with a renewed sense of purpose and we need it to agree measures which will help individual countries to recover, protect the common currency and reinforce the vision of a Europe of shared interests.

Photo of Pádraig Mac LochlainnPádraig Mac Lochlainn (Donegal North East, Sinn Fein)
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As expected the Greek Parliament passed a vote of confidence in the Greek Government late last night. This should lead to a second bailout but it depends on new, brutal austerity measures getting through the Parliament. Two laws must be passed by 30 June so that procedures will move at the euro group on 3 July. The IMF will then release a fifth loan instalment. If the bailout is agreed it will copper-fasten an overall proposed €120 billion loan on the Greek people. The plan will include a sale of more than €50 billion of Greek assets, equal to one fifth of the country's annual GDP and €28 billion in cutbacks and tax increases. Was the quid pro quo bailout hammered out this past weekend by Brussels and Washington? As part of the terms of agreement for the next bailout, the IMF and EU insist that Greece pass further new austerity measures. When this is done, the Irish debt crisis will return to the top of the agenda once again, of this there is no doubt.

The Government has failed to place Ireland on the agenda at the EU Council meeting this week. It has allowed the unravelling of the Greek situation to bury any serious consideration of the same events that are heading our way. The issues at the council meeting this week include economic policy, migration, Croatia, the inclusion of Roma people, the endorsement of the launch of the Danube strategy, discussions on the new package and issues relating to Libya, Syria and the Middle East. Where are we on this agenda? The European Commission chief, Mr. Barrosso, is back to pressing his influence, publicly stating yesterday that the Greek people must accept there is no alternative and that austerity and privatisation is the only way forward. He stated that the EU and the IMF will not suffer any other programme, that everyone must take responsibility and that the EU is prepared to support Greece if Greece is prepared to follow the terms of the agreement the EU negotiated with the Greek Government. In his typically dogmatic style, he also stated that the prospect of a deal to cut the cost of the Irish bailout was simply not up for discussion at tomorrow's EU summit.

Ireland's Government accepts the EU premise that permanent austerity for Greece and Ireland is the only game in town. There is no end in sight. Let us consider that reparations demanded of Germany following a World War ended only this year. Is this the type of punishing timeline we face? Most rational and responsible commentary by economists, independent observers and media throughout the globe holds that providing second, third and fourth bailouts to countries in financial crisis cannot cover up the fact that the monetary union is fundamentally flawed and that weaker states cannot compete with the core. Rather than face up to the situation and begin to think creatively, the Fine Gael and Labour Party Government is determined to pursue and cement the failed economic policies of the previous Government. In its view any attempt to debate alternative proposals amounts to treason.

A second, third or fourth bailout will not solve the Greek debt crisis. Further austerity measures will only deepen the crisis. The Greek people know this and this is why they are protesting furiously day after day, demanding that their Government reject the EU bulldozer. They seek a viable alternative. The only other possibility open to them is to exit the euro, return to the Greek currency and restoration of control over their national economy. It is no coincidence that the pressure mounting for more and more bailouts comes from core EU countries, the very countries that facilitated and profited from the excess lending that contributed to these crises in the first place. International observers agree that the faster Greece accepts the inevitability of default, the faster it will return to solvency. Anything else simply prolongs the agony. The Greek people know this and the Irish people know this. Why is the Government hell-bent on walking us into the same situation? As an article in The Guardian newspaper pointed out on Monday:

Europe's leaders have no plan B. They see no need for it because they are still committed to plan A – the European dream of fraternity and solidarity. This must be defended at all costs, even if it means permanent austerity for Greece, Ireland, Spain, Portugal and any other country that can't cut the mustard.

Where is the Government's back up plan for what is waiting around the corner: the great taboo that no one will mention? Will we once again be caught in the headlights, scrambling for solutions and dependent on our so-called betters in Europe to save our skins so that we can save theirs? Is it beyond the wit of Ministers to think, consult and develop their own agenda? Where is the creative and brave alternative?

Insanity is defined as repeating the same mistake again and again. Is this the stage we are at now? The Government is sleepwalking the people into a delusional Shangri-La concocted by the troika in the interests of the ECB and the powerful states of Europe. The Government should be honest with the people. There has been enough of the window dressing and the mad chat that Europe is favouring us with loans at extortionate interest rates. Loans must be paid back and a loan is not a gift. Santa Claus has not come to town. The EU and ECB are committing us to crippling debt for decades to come.

In assessing the Greek situation last week, The Financial Times pointed out that although proposals such as leaving the euro are considered inconceivable today, such inconceivable proposals may not seem so far fetched five years from now, especially if some of the peripheral economies stagnate or go further into recession. The newspaper stated that:

The eurozone was glued together by the convergence of low real interest rates sustaining growth, the hope that reforms could maintain convergence; and the prospect of eventual fiscal and political union. But now convergence is gone, reform is stalled, while fiscal and political union is a distant dream.

Debt restructuring will happen...But even debt reduction will not be sufficient to restore competitiveness and growth. Yet if this cannot be achieved, the option of exiting the monetary union will become dominant: the benefits of staying in will be lower than the benefits of exiting, however bumpy or disorderly that exit may end up being.

Is our Government considering these questions and observations that are being expressed externally and at home or are we still covering our eyes and ears to what we simply have no wish to hear? What is the Government's plan B? There is none. It amounts to debt heaped upon debt, more borrowing and digging and deepening of the hole, more of the same and no alternative in sight. This is exactly what the Green Party and Fianna Fáil Government started in 2009 and now we are right down the same Greek path.

Last week, the Minister for Finance stated that the Irish Government is in a strong position to impose losses on bondholders of two failed lenders despite strong doubts that it would permit a move so far beyond solutions being discussed for Greece expressed by the European Central Bank. The revival for the pre-election pledge to go after senior bondholders in Anglo Irish Bank and Irish Nationwide Building Society coincidentally occurred at the same time the Government celebrated 100 days in office. Frankfurt has not changed its resistance to any measures to impose losses on senior bonds and the ECB could not have made this more clear. Unfortunately the Minister's window dressing of events proved to be little more than a publicity stunt and political manoeuvring. This begs the question: where do the Government's priorities lie. Is it investing time and energy in saving face or committed to real action that will affect the lives of people throughout the State? Is the Government committed to the EU or the people of this nation? Time has more than run out. What message are we delivering to our European partners at the EU Council this week while we watch the future of our nation being tragically played out in Greece? Our Minister for Finance is negotiating more lending. This used to be termed "fiddling while Rome burned". Are we completely blind, completely bullied or is it a tragic combination of both?

The other issues I wish to raise relate to the discussions on the Middle East. I am sure the Taoiseach will refer to the Arab spring and the campaigns for democracy across the region. In regard to Palestine, this State, through successive Governments, has a long and proud history of defending the Palestinian people's interests. At various times in our history our Governments have put forward concrete, constructive solutions at international level and engaged directly with the players. I ask the Taoiseach and the Tánaiste and Minister for Foreign Affairs and Trade, Deputy Gilmore, to return to that policy and to be proactive in defending the interests of the Palestinian people. One need only consider the reaction when the United States President, Barack Obama, talked about the need for at least a two-state solution, recognition of the Palestinian people and a state based on the 1967 borders, an entirely reasonable proposition which would see the Palestinian people having just 22% of their original lands. That reasonable proposal was ferociously rebutted by the Prime Minister of Israel, Benyamin Netanyahu. It was a disgraceful and outrageous rebuttal in a context where the siege of Gaza continues. Many heroic Irish people are trying to intervene in that siege as part of the peace flotilla seeking to bring much needed resources to the people in the area. I appeal to the Government to up its game and to lead the charge at European Union level, as the Tánaiste said he would do. We must push forward the momentum that is required for a peaceful resolution of the crisis and the recognition of a Palestinian state.

In terms of the so-called Arab spring across north Africa and the Middle East, it is important the international community is consistent in how it intervenes across the region. We have had, and rightly so, a United Nations resolution in regard to Libya which seeks, as it was described, to protect the interests of the Libyan people and to protect them from attack by Gadaffi. That initiative is now being turned into a drive for regime change by the French, Americans and British. We cannot have that initiative on one hand while on the other hand we ignore the rights of people in Bahrain, Yemen and, most recently, in Syria. There must be a consistent approach across the region. Wherever people stand up to campaign peacefully for their democratic rights, the international community must step in assertively to defend the right to protest, assist that process and defend human rights.

There is great cause for concern in the relationship some agencies in this State seem to have with the Bahraini Government. The Royal College of Surgeons in Ireland, which has a base in Bahrain, refuses to speak out against the actions of the Bahraini Government, including the imprisonment of doctors trained and accredited by the RCSI. It is outrageous that the college did not speak out against a situation where doctors were imprisoned for doing their job and following the hippocratic oath. There must be consistency on this issue at European Union level and a message must go out that our interest is only in human rights and democratic rights and not the oil and resource considerations within those states.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I call Deputy Shane Ross. Deputy Ross is sharing time with Deputy Richard Boyd Barrett, by agreement.

Photo of Shane RossShane Ross (Dublin South, Independent)
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I welcome the opportunity, before the European Council meeting, to debate this issue. I hope it will mean the Dáil has some input into Government policy as presented by the Taoiseach at the meeting.

I echo some of the points made by the last speaker. There is a certain unreality to debates in this House about Europe, the euro and the European economy, especially the issue of default, which is not mentioned very often by name. The problem is that the Government, with its large majority, has, for obvious reasons, set its face against default. Fianna Fáil is also opposed to it. There is no one who would advocate it, but there are people who would say it is inevitable or likely. That puts the Dáil out of step with the markets, out of step with many independent commentators, and out of step with a great deal of international opinion.

The markets, which function as a type of forensic judge of what is likely to happen and what independent people consider is likely to happen because they put their money where their mouth is, are signalling that both Greece and Ireland will possibly default. This is not acknowledged in this House often enough. It is imperative, even if we are not going to be told about it openly, that the Department of Finance, the Minister for Finance and the Taoiseach have a plan B in the event of a forced, as opposed to a voluntary, default by this nation.

The key to the question of what happens tomorrow is whether we have a European strategy at all. What is needed is an attitude whereby we will go to Europe and say we are putting Ireland first, that our interests are Ireland, Irish interests and Irish taxpayers, not external interests, external money or external investors. We welcome external investors in a certain capacity but they are not the bondholders. We must make that absolutely clear. Ireland is constantly receiving plaudits for being so diligent in paying back the punitive loans negotiated by the last Government. I do not want to hear plaudits from Olli Rehn along the lines of Ireland being good at paying back the money and why can the Greeks not behave like the Irish do. I do not want to hear plaudits from the spokesman for the European Commission who asked again last week, waving his finger at Greece, why that country could not behave like Ireland and pay back its debts. The message in respect of Ireland is that these guys can take their punishment.

We should not take this punishment; we should refuse to take it. We should have Olli Rehn and the boys telling us our behaviour is unacceptable, but instead we are the good boys. We should respond by showing our ingratitude to the IMF and Europe and by taking a new, more aggressive strategy which puts Irish taxpayers first. As I said during Leaders' Questions yesterday, it is no good continuously going to see Christine Lagarde and coming out with absolutely nothing - no return on the interest rate or anything else. Ms Lagarde will be gone to New York within a week and we will have to start again with a new French Minister of Finance. The strategy of courting the French has failed abysmally.

The Taoiseach said yesterday that the European Stability Mechanism, ESM, borrowing status has changed and that this will encourage foreign investors to invest more readily because they will not be bottom of the queue. However, the markets did not respond to this development, which was received as a minor matter. If the effect of the change were as indicated, the markets would have responded with a reduction in the cost of Irish bonds. Nevertheless, I welcome the Minister's announcement that the bondolders have been burned. I welcome that there was, for a few days, an indication that Ireland was standing up to the ECB. However, let us take a more constructive, more proactive and more aggressive attitude. Let us be proud of what we are doing and give a commitment, first, to have a referendum on the bailout, second, to burn the bondolders and, third, to renegotiate the debt. We should go into the European Council meeting tomorrow with a programme which the members of the Council will fear and respect rather than applaud us for. The equation is that applause from Europe means poverty for the Irish taxpayer.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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The Deputy must conclude.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Will the Taoiseach tell our European counterparts at the European Council meeting that the IMF deal and the demands of the ECB, in its determination that ordinary working people and the vulnerable in our society should pay the gambling debts of bankers, speculators and the super-wealthy, is grossly unfair and is worsening the economic crisis and not improving it? Will the Taoiseach tell our European counterparts their demands mean that parents of children with special needs do not know whether their vulnerable children will have a decent education next autumn and that they are terrified about their children's future and education because of cuts that are being imposed and demanded by the European Union and the IMF? Will the Taoiseach tell our European counterparts that low-paid workers, who already have been savaged with the universal social charge, are now terrified and that as a result of the EU-IMF demands to dismantle the remaining protections on their pay and conditions, many of them now fear they will be unable to pay their bills or rent or to survive in the coming months? Will the Taoiseach tell our European counterparts that cutting the incomes of low-paid workers and middle income families is crushing demand in our economy? Will he state that despite what he suggested in his speech, this measure is not helping economic recovery but will mean more job losses and further economic depression?

Will the Taoiseach tell our European counterparts that their programme is resulting in health cuts that mean that eight accident and emergency units are to be severely cut back and effectively closed and that as a result, people will die while rushing to hospitals that are too distant and which already are overrun with people on trolleys? Will the Taoiseach tell our European Union counterparts that more people will die waiting for vital operations because of the cuts they are imposing on our health service? Will the Taoiseach tell them that as a result of the cuts they are demanding, tens of thousands of families who have been waiting for years on council housing lists have just been told on foot of a Government proposal that they will never get a council house? The Government has instructed that local authorities should now lease properties from developers and NAMA in order that they can pay back the bankers and speculators in Europe. Will the Taoiseach tell our European counterparts that it is grossly unjust to steal our State assets to pay off the gambling debts of bankers and spectators?

In other words, will the Taoiseach tell them it simply is not working and it is unfair that working people and the vulnerable should pay for the actions of gamblers and spectators? Will he tell them the people of Ireland cannot understand the reason they are being asked to pay for the greed of the super-wealthy? Will the Taoiseach tell them that most economic commentators, the markets and ordinary citizens simply do not understand the reason both they and the Taoiseach fail to understand an elementary fact of economics that even a child could understand? If one takes money out of the pockets of ordinary people who spend it in shops, businesses and the economy and if one then puts that money into the vaults of French, German and British banks, it will make the economy worse, not better.

Will the Taoiseach therefore tell them the Greek people are right to protest? They are right to resist attempts to force them to sell beaches and islands or to close their hospitals. They are right to resist attempts to privatise their public transport system, their health system and so on to pay off bankers and speculators. Will the Taoiseach tell them that ordinary people, such as those parents of children with special needs who were protesting yesterday in defence of those children were right to protest? Moreover, people will come out on the streets in July in what I hope will be a sea of protest on the arrival here of the IMF and EU to tell the Taoiseach what budget he should write and what further pain he should inflict on ordinary people in Ireland. Will the Taoiseach tell our European counterparts that those people are right to protest?

Finally, on a separate matter, the Taoiseach should ask our European counterparts to make a public statement appealing to Israel to allow safe passage for Irish citizens and other citizens, who are trying to bring help and solidarity to the besieged people of Gaza who are being crushed by the ruthless oppression that is being visited upon them by the Israeli State.

1:00 pm

Photo of Stephen DonnellyStephen Donnelly (Wicklow, Independent)
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On my 16th birthday 20 years ago, I spoke in Strasbourg at the European Parliament as part of an Irish delegation. I was so nervous that approximately one hour later, my legs collapsed and I found myself staring at the ceiling of a French supermarket. At that time, I was proud to be both an Irish and a European citizen and I am glad to state I still am. At the time, I had great hope for the European project and I still do. There have been 65 years or more of relative peace in Europe and in western Europe in particular. There has been a fantastic advancement of human rights across Europe and, in many cases, into Ireland from Europe. Moreover, there have been great advances in trade and co-operation between the European nations. Consequently, I am proud to be European and I believe the European project to be extraordinarily important.

Unfortunately, two recent events have drastically undermined the European project. The first of these is the reprehensible response of Europe to Ireland's banking situation, as has been referenced repeatedly. The decision to force Irish citizens to pay the debts of private sector investors is economic lunacy and much more importantly, is entirely and grossly immoral. Deputy Boyd Barrett is entirely right; there is a strong link between Ireland being forced to pay private sector debts and the fact that Irish people will die. There will be fewer operations and longer transit times to accident and emergency units and as a result, Irish people will die. This is neither theory nor highfalutin macroeconomics but is what is going to happen. This is what our so-called partners in Europe are forcing us to do to protect their financial institutions and very wealthy friends. This is outrageous and Deputy Ross is correct to state the Taoiseach probably will be lauded for ticking all the boxes of the IMF deal. As the Argentinian economy and society collapsed under the weight of IMF austerity measures some years ago, that country was being held up as the poster child of the IMF because it was doing all the right things. Argentina only began to recover when it told international financial institutions and the IMF to get stuffed and finally took hold of its own destiny.

The second issue pertains to the corporation tax rare. An extraordinary situation arose whereby President Sarkozy flew into Dublin and in the French Embassy there, gave his word that were the Irish people to vote again on the Lisbon treaty and to pass it, under no circumstances would Ireland's corporation tax rate ever be put onto the table. Not only is it on the table but essentially it is being stated the others will continue to profiteer grossly from Ireland's actions in bailing out their banks, unless Ireland puts its corporation tax rate up for sale. I suggest President Sarkozy explicitly lied to the Irish people and is acting in a deeply dishonourable manner. This should make Members extremely nervous about what appears to be the Government's current plan, which is to survive until 2013 and if more money is then needed, which appears to be extremely likely, to hope our European partners will help us out and there will be some multilateral burden-sharing. However, those to whom we are entrusting that plan have lied to us and are using our current weakness, as a result of helping their economy, to behave in a deeply dishonourable manner.

I welcome the opportunity to speak in advance of this meeting and in this context I have two messages for the Taoiseach and the Government. First, Ireland is in the middle of a hostile negotiation and this is not a friendly or a multilateral matter. While I appreciate there are many complex elements to it in respect of international relations and coalition building, this is a hostile negotiation. The ECB and Jean-Claude Trichet are holding a gun to Ireland's head and have explicitly stated that were Ireland to refuse to pay back their friends in the private sector, they would pull the money from Ireland's banks and would destroy its economy.

These are the people we are meant to trust and to work with. I strongly welcome the announcement by the Minister, Deputy Noonan, that the Anglo Irish Bank and Irish Nationwide bondholders will be burned. I urge the Government to extend the same principle to the other banks. The Minister's logic that it is now possible because Anglo Irish Bank is no longer a bank is fine, but the moral argument applies to every senior bondholder of every single bank. It is the moral argument that needs to win out in the end.

The second opportunity I suggest to the Government is the opportunity to change the conversation in Europe. From all my interaction with European economists, journalists and citizens, I note they are all saying the same thing, which is that they in Europe are bailing out Ireland, that Ireland has acted irresponsibly, that Europe is helping us but we are acting like spoiled children. The message that needs to get through to them is that Europe is not bailing us out, rather we are bailing out Europe. The Irish people are being forced to pay €100 billion of debts that are not and were never theirs in order to bail out Europe's irresponsible banks. Every single European person to whom I have spoken and to whom I have explained the situation has agreed that I am right. I have now begun to hear our own media challenging the foreign powers. I urge the Government to bring this message to Europe and to say that we are bailing out Europe and, as such, Europe must engage in burden sharing. The debt is €100 billion and if this can be split into the Irish people paying €25 billion, the bondholders paying €25 billion and our European partners paying €50 billion, our national debt will come down significantly, we will be back in the markets tomorrow and we will be back in control of our own destiny.

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
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I have much to respond to in my time of five minutes. I will begin by addressing some of the points and remarks of the Deputies opposite, whom I thank for participating in the debate. I also thank the Deputies on this side who have sat through the debate, even though there has not been an opportunity for them to contribute. It is to be hoped this can be arranged next time.

Deputy Donnelly said our so-called EU partners are simply protecting their banking institutions and this is one way of looking at it. However, such a view demonstrates a lack of understanding of the situation in the member states and the motivation for much of the lack of understanding of our position and, indeed, the position of other member states in a similar situation. If one considers which European prime ministers or Heads of Government have been calling for so-called burden sharing or burning of bondholders - two phrases I really loathe - the first person who comes to mind is Chancellor Merkel.

I have heard Deputy Donnelly and others refer to the fact that the German Government is simply protecting the interests of German banks. This is not an accurate point because the reality is that domestic forces are at play. One could criticise the understanding of German taxpayers with regard to the eurozone crisis but there is no doubt that the German leaders are currently responding, rightly or wrongly, to the deep concerns of German taxpayers who are afraid that the burden which is being shouldered by the Irish, the Greeks, the Portuguese and, potentially, by others will ultimately end up being their burden. Whether we agree or not, one has at least to understand the viewpoint of the German taxpayers if one wishes to arrive at a solution. In my view, there is a lack of understanding in much of the commentary in this country, in particular in much of the debate in this House.

Deputy Micheál Martin said since January there has been a lack of progress across the eurozone. This is an extraordinary comment when one bears in mind that just last March, a whole range of measures were agreed. These are significant measures which I argue should have been in place since the Maastricht treaty. These include measures such as economic governance and the euro plus pact, for example. I refer to some of the essential elements of the agreement on economic governance, such as surveillance of budgetary positions, surveillance and co-ordination of economic policies, a speeding up and clarification of the implementation of the excessive deficit procedure, requirements for budgetary frameworks, the critical prevention and correction of macroeconomic imbalances, enforcement measures to correct excessive macroeconomic imbalances in the euro area and, critically, the enforcement of budgetary surveillance in the euro area. These are significant steps that have been taken since this Government took office. It is disingenuous and quite a shift in viewpoint for Deputy Martin, who was such a strong proponent of closer economic co-operation on these matters just some months ago, to dismiss it now as insignificant or to say that nothing has happened in the eurozone or across the member states since January. This is simply not true; it is factually incorrect. These developments with respect to economic governance, commitments on competitiveness and moving the European economy forward are probably the most significant steps that have been taken in the eurozone since it was established.

I refer to some of Deputy Mac Lochlainn's points. It is all very well and all very simplistic and populist to say that austerity measures and cuts will not solve our problems. However, I must pose a question I have asked of Deputy Boyd Barrett in the past. Ireland needs to have in place a programme of funding to keep this State ticking over. Deputy Boyd Barrett alluded to working people and Deputy Joe Higgins also frequently refers to working people. However, what about the people who are not working, the 450,000 or so people who are on the live register? If we turn our backs on this programme next week, who does Deputy Boyd Barrett propose will pay the dole payments which those people will be expecting to collect next week? Who does he expect will pay the pensions?

Photo of Pádraig Mac LochlainnPádraig Mac Lochlainn (Donegal North East, Sinn Fein)
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That is not the point. It is a straw man argument.

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
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Who does he expect will be in a position to pay for all the various benefits paid to hundreds of thousands of people in this State, such as carers, pensioners, people in receipt of disability benefit, the blind, whose pensions were cut by the previous Government, and so on? The country will be bankrupt and we will not be in a position to pay these benefits. We need a bit of reality in this debate. It is all very well to rail against the programme but if the Deputies opposite do not have a solution to how the State can fund itself subsequently, then it is pretty irresponsible I am afraid.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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I ask the Minister of State to conclude.

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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Their language and the Minister of State's language is indistinguishable when she is over there.

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
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I regret I do not have time to address some of the other issues.