Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context

Question 33: To ask the Minister for Finance in view of recent events in Greece and Italy and the news that the French and German governments are actively considering a radical restructuring and re-sizing of the Euro, if he is actively preparing for the possibility of a collapse of the Euro or any attempt by France and Germany to exclude indebted States from the Euro or to impose significant transfer of fiscal and macro economic powers on indebted States as a precondition for remaining in the Euro; and if he will make a statement on the matter. [34881/11]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The scenario to which the Deputy refers is a purely hypothetical one and I will not add to speculation in that regard. Indeed, I note that over the weekend there was clarification from Germany and France that they are not proposing any break-up of the euro area but rather are talking about making the euro area work better.

However, it is abundantly clear that we are at an important juncture. The intensification of the crisis since the announcement of a referendum in Greece and the subsequent increase in Italian borrowing costs are, of course, a matter of concern. While the situation is fluid, the recent political developments in both Italy and Greece are helpful in terms of easing the uncertainty that existed over the past week or so.

I wish to emphasise the considerable progress that has already been made in terms of improving the functioning of the EU and the euro area in particular. I refer to the EU semester; strengthened surveillance via the so-called "six-pack" of governance measures; support for vulnerable economies via the EFSF and the EFSM; a permanent crisis resolution mechanism in the form of the ESM; the Euro Plus Pact to inter alia improve competitiveness; and strengthened financial regulation.

These are all important developments and demonstrate that the EU can unite and work in the interests of all. This shows that the European Union can make significant decisions and progress which, not so long ago, would have been seen as almost unthinkable. I take great encouragement from this.

I refer to the comprehensive package announced by the euro area Heads of State and Government on 26 October. This is essentially a five-point strategy involving a credible solution to the Greek situation; boosting the effective capacity of the EFSF; recapitalising Europe's banks; enhancing surveillance; and improving economic governance in the euro area.

I wish to assure the House that work is continuing on implementing these important decisions. It is in all of our interests that we move forward as rapidly as possible in that regard.

Additional information not given on the floor of the House

Not surprisingly, some have suggested that greater surveillance and enhanced governance somehow implies an unacceptable loss of national sovereignty but I do not agree. The Government's view is clear; we are in a monetary union with other member states and therefore, more co-ordination of policies is essential. In fact, it must be recognised that the lack of co-ordination among member states in the past is one of the main reasons we find ourselves in the current predicament. It is, therefore, important to tackle the root causes of the problem. We simply cannot have a currency union without further integration and greater co-ordination. In these circumstances, putting in place, albeit retrospectively, the appropriate institutional architecture, is crucial.

Of course, enhanced policy surveillance and governance must be sufficiently balanced, and in this regard, the Government sees an important role for the Community-based method as it balances the interests of smaller member states. The Government also takes the view that as much as possible should be achieved at the level of the EU 27. However, it is also recognised that the level of integration and co-ordination will be necessarily higher for countries participating in a monetary union than for those outside it.

Finally, I wish to stress that the benefits of monetary union should not be forgotten. For instance, the deepening of trade and investment links between participating states has been of significant benefit, while consumers benefit from lower prices and ease of travel. In addition, we are receiving significant support from the ECB during our current economic difficulties.

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context

I thank the Minister for his reply. The Minister regards this as a hypothetical situation and he does not wish to add to it but none of us wants to see the collapse of the eurozone or of the euro. However, we need to realise that decisive action must be taken that is different from the current type of action. The eurozone is like the Titanic and the damage is so great that unless it is patched up very speedily it will slowly sink. The Minister's job as Minister for Finance is to ensure that there are enough lifeboats and that they are operational in order to get the Irish people to dry land. The Minister says he does not want to add to the speculation but the German finance Minister is able to say when questioned that the Germans are developing contingency plans for a collapse of the euro. He told one media outlet: "We would be a horrible government if we did not think through what it needs to do if things go wrong." If the German finance Minister can talk about developing these contingency plans, why do we not do the same?

I have one supplementary question. The Minister knows fine well the position of Italy, Spain and France. He replied to a question of mine on a previous occasion by saying the Department of Finance is discussing these matters. I ask if he is developing plans. Is there any co-ordination between other Ministers for Finance in other states, some of whom are developing plans?

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The Deputy referred to the German finance Minister. I would refer him to a very long interview that minister did with Le Monde, published on Sunday, in which he gave an absolute commitment to the future of the eurozone. He stated his ambition was for the euro to grow to be the most significant reserve currency in the world, that he was confident of its future and that we needed greater fiscal consolidation and a financial transaction tax. The Minister dealt with a variety of other issues, as recently as Sunday. Any suggestion that at either leader or finance Minister levels the authorities in France or Germany are planning the demise of the euro is entirely incorrect. There is no such intention. Obviously, we are aware of the ongoing debate and are keeping in very close contact.

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context

I wish the Minister would answer the question. He spoke of being wrongly quoted. Nobody claims that France and Germany are planning the demise of the euro. That is ridiculous. No European leader wants that. However, other finance Ministers are taking action. I again quote the finance Minister of Germany-----

Michael Kitt (Galway East, Fianna Fail)
Link to this: Individually | In context

No quotations, please.

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context

-----to the effect that it would be a horrible government that did not make such plans. Those countries have got their act together - have we? Are we developing contingency plans for the eventual break-up of the euro, something I am sure nobody throughout Europe wants to see? However, it could happen and we would be a horrible Government if we did not prepare for the impact on our citizens if such a situation were to transpire.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

I am glad to see the Deputy pledging support for the euro after his party campaigned against it in the Maastricht and Lisbon treaty referendums-----

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context

The Minister should answer the question.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

-----and in every other treaty that advanced the European cause. I am very pleased by that.

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context

We have great structures as a result of those treaties.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The Deputy quoted the German finance Minister as evidence but that utterance could apply to anybody in government, any time, anywhere. It would be a very bad government that did not plan for the future. That is all the Minister said. We take the same position.

Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context

He said he has contingency plans for the break-up of the euro.

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

It would be a very bad government that does not plan for the future.