Wednesday, 17 December 2014
Pre-European Council Meeting: Statements
This week's meeting of the European Council presents an important opportunity to demonstrate that the European Union is taking further concrete steps to address the falling growth rates and high unemployment which characterise the current economic situation throughout Europe. It will focus, in particular, on setting out the strategic orientation of a plan to boost investment levels in Europe. It will also consider issues relating to the 2015 European semester. In addition, I expect the European Council to underline the European Union's firm commitment to tackle aggressive tax planning and unfair tax avoidance as part of broader global efforts in this regard.
On the external relations front, the European Council will return to consider the situation in Ukraine which remains disturbingly fragile. The European Commission President, Mr. Juncker, and the High Representative, Ms Mogherini, will provide an update on actions taken by the European Union in response to the Ebola crisis. The European Council may again consider how the European Union can most effectively stem the flow of fighters from different countries to conflict zones.
This week's European Council will be the first since Presidents Tusk and Juncker and their respective teams took up their new positions. I look forward to working closely with them in the period ahead.
Irish economic recovery remains firmly on course. We expect GDP growth of 4.7% this year. According to the Commission's forecasts, Ireland will be Europe's fastest growing economy. The tough decisions already taken by the Government will bring the deficit below 3% of GDP next year, allowing us to exit the excessive deficit procedure. Significantly, our unemployment rate is falling and down to 10.7% from a high of 15.1% in 2012. This positive outlook is tempered by the fact that recovery in the wider European Union is feeble at best. GDP growth this year is expected to be approximately 1.3% for the European Union as a whole and as low as 0.8% in the euro area. The situation is compounded by decidedly low inflation. In its autumn forecasts the Commission acknowledges that risks are tilted towards the downside. A prolonged period of economic stagnation in Europe would undoubtedly present serious challenges for Ireland's future economic growth. Sitting back and waiting for recovery to take hold spontaneously is simply not an option. It is welcome, therefore, that in his first remarks as President of the European Council Donald Tusk made explicit reference to the need for ruthless determination to end the economic crisis.
The focus this week will be on how to improve Europe's investment framework and simultaneously boost investment levels. Productive investment in the European Union is lagging 15% behind pre-crisis levels, making it clear that concerted and creative action is required to get the necessary levels of investment flowing again. Our discussions will centre on the investment plan for Europe which was recently proposed by President Juncker. The plan aims to mobilise €315 billion in net additional investments in the economy in the next three years. The proposals are designed to attract private investors by reducing complexity, sharing risk and delivering priority projects with economic and social benefits that would not otherwise be realised.
The investment plan has three key strands including the creation of a new European fund for strategic investments, which would deploy an initial guarantee of €16 billion from the EU budget and €5 billion from the EIB to leverage a total investment package of €315 billion, the bulk coming from private investors. Member states will also be encouraged to contribute to the seed capital of the fund. A credible investment project pipeline will be established in tandem with an assistance programme to channel investments where they are most needed and there will be an ambitious roadmap intended to make Europe a more attractive location for investment, including through removing regulatory barriers.
There are many aspects of the proposed new fund that will require work over the period ahead – for example, governance arrangements, modalities for project selection and how to ensure that private investment is leveraged to the maximum. The European Council will not be discussing the finer detail but is instead expected to endorse the broad strategic orientations of the plan. A legislative proposal to be brought forward by the Commission early next year will provide further operational detail.
At the European Council I intend to convey Ireland’s strong support for the establishment of the fund and for wider efforts to improve the investment climate in Europe. This includes making real and rapid progress on aspects of the Single Market which have yet to be delivered in full, in particular the digital agenda, energy union and services. It is also important that negotiations on trade agreements, especially those with the United States, be advanced urgently.
The Commission proposal to set up the fund has received its share of criticism, with questioning from some quarters as to whether the leverage ratio of 1:15 is realistic. Of course, the fund is not and cannot be some magic bullet. However, when implemented in tandem with structural reforms and growth-friendly fiscal consolidation and with the full use of monetary policy instruments by the ECB, it has the potential to make a tangible difference. It will complement already programmed expenditure under the Structural Funds and the ongoing lending of the European Investment Bank.
Early and decisive implementation of the fund and associated projects will be essential for the credibility of the initiative. That is why we are looking at the ambitious target of mid-2015 for mobilisation of the first new investments. Commission Vice President Katainen has already kicked off a 28-country road show to showcase the initiative, starting last Monday in Romania. The decisive backing of the European Council this week for the initiative will lend important impetus.
As the detail of the fund is worked out, we will also be considering carefully how it might be of benefit to investment in Ireland. While project criteria remain to be clarified, the factors likely to influence decisions are the added value for the EU, over and above what is possible through existing instruments; economic viability and value; whether a project can commence in the coming three years; co-operation across frontiers; and, above all, the potential of the project to attract private investment. Another important issue will be how the Commission will follow up on recent indications that it will look positively at capital contributions from member states when assessing how they are delivering on their Stability and Growth Pact commitments.
A taskforce led by the EIB and the Commission recently compiled a list of projects from across Europe that could be considered ripe for investment, whether from the new fund or elsewhere. Ireland, along with other member states, submitted a broad list of projects across a range of economic sectors which could commence within the next three years. Given the timing constraints, this was very much intended as a preliminary and indicative list. It will, of course, be further examined and revised and I expect it will be narrowed down significantly over the coming months. Relevant Departments, co-ordinated by my Department, will closely engage with the negotiation of the legislation setting up the fund. They will also work to see if there are possible opportunities for Ireland, over and above those projects for which other funding sources are available. Of course, if the fund helps significantly to boost investment and growth in the Union generally, that will also have knock-on positive effects for Ireland. Boosting investment is one of three pillars that will underpin the European Semester in 2015 – the other two being structural reform and fiscal responsibility. These are set out clearly in the Commission’s recently-published annual growth survey, and the European Council this week is expected to reaffirm its commitment to all three pillars.
As Deputies will be aware, the Commission’s opinions on member states’ draft budgetary plans were also published recently. Ireland was one of five member states found to be fully compliant with the provisions of the Stability and Growth Pact, along with Germany, Luxembourg, the Netherlands and Slovakia. This is a real vote of confidence in our management of our public finances. The Government is committed to continuing its policy of prudent fiscal management as Ireland exits next year from the excessive deficit procedure.
The European Council is also expected to welcome proposals made by the Commission to streamline the European semester process. These are intended to facilitate more meaningful dialogue between member states and the Commission before specific country-specific recommendations are proposed. Ireland's aim is to use the new arrangements to support a richer national-level dialogue including with relevant Oireachtas committees and with economic and social interests, on how the European semester can best feed into and reinforce our national recovery effort.
The European Council is also expected to note that there will be a substantive discussion of economic co-ordination within the Economic and Monetary Union at its meeting next February, on the basis of initial work by the President of the Euro summit with the heads of the Commission, the Eurogroup and the ECB. Ireland is ready to play a full and active part in discussions, and I will update the House accordingly in due course.
It is now expected that the European Council will briefly consider tax avoidance and aggressive tax planning – issues which are currently very much in the international media and political spotlight. Ireland is committed to working with our partners in the EU as part of a wider global effort to tackle these issues. In this regard, the European Council is expected to look forward to the proposal recently promised by the Commission on the automatic exchange of information on tax rulings in the EU. We are contributing very actively to the work in the OECD on base erosion and profit shifting, which is essentially about modernising international tax administration and fitting it for the globalised world economy which is now a reality. What we have consistently stated is that from a tax policy perspective Ireland will play fair but will also play to win. This belief led the Government to make a number of amendments and enhancements to our tax regime to best position that regime for the future. These changes, announced on budget day, were accompanied by a new roadmap for Ireland’s tax competitiveness. This roadmap updates last year’s international tax strategy and contains a comprehensive package of competitive tax measures which will help ensure that Ireland maintains and expands its position as a thriving hub for foreign direct investment well into the future. Our actions and commitments have been broadly welcomed, including by EU Commissioner Vestager and by the OECD. At the European Council and in other EU fora, Ireland will contribute constructively to taxation-related discussions, as we always do, while simultaneously holding a firm line that matters of direct taxation remain a member state competence. Let me underline once again that our single and transparent corporation tax rate of 12.5% is not under discussion. Our partners can have no doubts as to our unswerving determination on this. I understand there will be an investigation of the taxation measures in all countries.
The European Council will consider the current situation in Ukraine. I understand that President Tusk rightly sees this issue and the general question of the EU’s relationship with Russia as the single most important geopolitical issue facing the Union. He believes it is timely to have a broad debate among leaders, although no proposals to change the EU’s current policy or sanctions arrangements are on the table. Ireland remains deeply concerned by the ongoing crisis and in particular by the levels of violence and troop movement on the ground in eastern Ukraine. While there has been some reduction in the level of violence in the past week or so, the situation clearly remains fragile. It is vital that all sides, including Russia, renew their commitments to the Minsk agreements and work to ensure that they are fully respected. A lasting ceasefire remains key to the success of current efforts to reach a sustainable and peaceful end to this crisis. Such a resolution must be based on respect for Ukraine’s independence, sovereignty and territorial integrity and with clear guarantees on border security, disarmament of all illegal groups and the withdrawal of foreign forces. The formation of a new government in Ukraine following the successful parliamentary elections in October is welcome. It must seize the mandate for reform given by the people of Ukraine and move quickly to begin implementing much needed political, economic and constitutional reforms. A genuine and effective reform process must be an integral part of the strategy to help de-escalate and resolve the crisis. We are hopeful that the EU’s measures in relation to Russia, coupled with continued political and diplomatic engagement with the various sides involved in the conflict, will ultimately lead to a breakthrough and a negotiated solution to the conflict. The EU remains open to taking further steps as required, in light of developments on the ground. The EU stands ready to support Ukraine at this time of transition and through the challenges that lie ahead.
The Minister of State, Deputy Dara Murphy, will update the House on the remaining elements of the European Council agenda. I will return to the House next month to report on the outcome of this week’s meeting.
Along with others, I intend to raise at the European Council meeting the question of the outrageous wanton murder of children in Pakistan which was so devastating.
I will be in Brussels tomorrow and I am not sure if the Dáil will sit next week. If the House sits, that is fine but in the event that it does not sit, I take this opportunity to wish everyone in the Oireachtas a happy and peaceful Christmas, in particular the staff who serve us so well, members of the media and Press Gallery and all those who support Members in their work. I hope that despite the occasional words we have in the Chamber, everyone will enjoy Christmas with their families. I appreciate all the support provided during the session.
I wish the Taoiseach and his family a happy Christmas. We will re-engage in the new year.
This week's Council meeting will be the first under the Presidency of Donald Tusk. While Mr. Tusk has not yet had enough time in office to shape the agenda, his appointment is a cause of optimism for all those who want a more active and responsive Europe. He was a progressive and successful Prime Minister of Poland and consistent friend of Ireland. As Minister for Foreign Affairs, I had regular and close working relations with his Government. I have no doubt that building on the strong bonds of friendship between our countries will be a priority for Ireland. I wish President Tusk well and encourage the Taoiseach to issue an early invitation for him to visit Ireland and, if possible, address the Oireachtas.
While I welcome Donald Tusk's appointment, I do not welcome the fact that the Taoiseach failed again to raise the case of Ireland's treatment on bank related debt during the appointment of a senior European Union official. In 2011, the Taoiseach nodded through Mario Draghi without any discussion with him. This year, he has supported Jean-Claude Juncker and Donald Tusk without once raising the issue of what their approach would be to the adverse impact of now abandoned EU policies on Ireland.
It is more than two years since the Taoiseach returned breathlessly from a summit to state that the link between sovereign and banking debt had been broken and recompense for Ireland was in the bag. The Ministers for Finance and Public Expenditure and Reform, Deputies Noonan and Howlin, respectively, confirmed that Ireland was seeking money but refused to indicate how many billions were being sought. Today, we are in the absurd position that the Taoiseach will not even state if we are seeking anything, let alone explain the reason his claims of 2012 have failed to materialise. This is par for the course from a Government which is more interested in negotiating press conferences than engaging in a real campaign to obtain full justice for Ireland's case. Deputies should reread all the statements on the issue made at the time by the Taoiseach and then Tánaiste as well as media commentary and contrast them with the language and rhetoric the Taoiseach now uses on the same decision and issue.
In the past, we observed the ridiculous spectacle of the Taoiseach expressing the hope of securing a particular interest rate cut for Ireland at a summit and, when Greece negotiated a cut four times greater than the figure we sought, proceeding to praise himself for his visionary leadership. Last week, the policy of pushing nothing but picking up what was coming in any case was eulogised by Ministers as decisive in turning the country around. What is striking is how these fairytales, once so persuasive, have been completely seen through. No one believes them any more. What is worse is that the campaign of self-congratulation is directly getting in the way of Ireland asserting its right to fair treatment. We will not receive fair treatment by accident but only if the Government does what it has thus far failed to do, namely, set out exactly what Ireland wants and how it proposes to get it.
On the promissory notes deal, if current policy continues, the Central Bank of Ireland will sell off its holdings of Irish bonds faster than planned. As a result, the entire claimed benefit of the deal would disappear and the policy would cost Ireland more than the previous scenario. Ireland needs to get serious in its engagement with the European Central Bank. While the ECB has political independence, as is appropriate, this does not mean a country cannot forcefully represent its opinions. The refusal of the ECB to participate in the banking inquiry is a disgrace and must be challenged. Its intervention in European Union policy and in respect of Ireland's ability to burn bondholders was decisive, particularly in 2010, in the failures which pushed us out of the bond market and obliged us to assume additional layers of debt.
The final three years of Mr. Jean-Claude Trichet's presidency of the European Central Bank were a disaster for Europe and Ireland. No meaningful inquiry can report without addressing the ECB's role. As I noted, representatives of the ECB attended the Bundestag and should not, therefore, get away with taking a selective approach to these matters. Let us also remember that the European Central Bank is also our central bank and its role is to serve the citizens of this State as much as those of any other European Union member state. Its arrogant and unacceptable attitude should not be allowed to stand.
It is also completely unacceptable that the European Central Bank continues to retain profits from its holdings of Irish bonds. If this money were returned to Ireland in full, as it is to Greece, it would make a significant contribution to reversing damaging cuts in important public services.
This is a moment when the European Central Bank, under the presidency of Mr. Mario Draghi, is preparing to undertake unprecedented action to save Europe from deflation. If Mr. Draghi had been the president of the ECB five years ago, Ireland's position would have been radically different and the bank would certainly not have pursued a policy of allowing damage to accumulate before adopting new policies. It appears likely that Mr. Draghi will announce the start of a major programme of asset purchases on 22 January 2015. This is by far the most important economic stimulus being discussed in any forum in Europe. A major counter-attack is under way, in particular by Germany, which is threatening to take the European Central Bank to court to stop the stimulus. The Bundesbank chairman went as far as to describe the rest of Europe as lemmings which were about to lose everything with quantitative easing. While many politicians in many countries have contributed publicly to the debate, thus far, not a peep has been heard from Ireland. A defining debate is reaching its final stages. It may decide whether there is a European recovery or a period of long, slow deflation and recession. Ireland should stand squarely with those who argue that carrying on with the same policies is not acceptable. Every European institution has a duty to go to the limits to try to stop the deflationary spiral.
Ireland also has an opening in that even the Bundesbank president has stated that national central banks could carry more of the burden of asset holdings. If the European Central Bank were to transfer to the Central Bank of Ireland its Irish bonds and allow the bank to retain and build its stock of Irish bonds, it would be of immediate and significant help to Ireland. The Taoiseach should get off the fence and start supporting a radical change in the actions of the European Central Bank in order that it becomes an enabler rather than a destroyer of growth in the European economy.
The published agenda for the summit gives only a general outline of what is to be discussed under the heading, Economic and Social Policy, although it mentions the initiative of the Commission President on investment spending in the next three years. The figure involved in the initiative is not €300 billion and it will not be an additional €300 billion. It is in the order of €10 billion in existing funding that is to be directed to measures which, it is hoped, will allow the rest to be leveraged from the European Investment Bank and private sector. This investment is too small to stimulate the European economy and is almost designed to fail to meet its targets. I hope it fulfils its targets and that the Government has developed a plan for maximising the return to Ireland. If there is such a plan, it has been kept secret for some reason. The Taoiseach cited a number of projects that have been submitted for early consideration under this fund. Perhaps he will provide me with a copy of the list of projects. There is no reason such a list should not be published.
The issue of corporation tax may arise again. It is not yet clear whether Luxembourg did anything illegal on the issue of transferring tax liabilities when Commission President Juncker was the country's Prime Minister. What is clear, however, is that much of what has been said about corporation tax in recent years has been hypocritical and the focus on Ireland has been wildly disproportionate. Our corporation tax is fair and transparent. If others want to end tax competition, it is their duty to outline how they propose to support smaller and peripheral economies to compete fairly and retain employment.
Rebalancing investment towards the larger economies would be a basic betrayal of the European compact in place since the Maastricht treaty was ratified. The House has not sufficiently debated this issue. On the one hand, certain people want to throw away our entire corporation tax regime while, on the other, the Government appears to be moving towards acquiescence to an agenda being promoted by the OECD and richer countries which want some of this tax revenue. The base erosion and profit shifting, BEPS, process and moves towards a consolidated tax rate in Europe have the potential to be injurious to Ireland's foreign direct investment proposition and capacity to attract inward investment. We should be cautious about embracing some aspects of this agenda without fully thinking through the implications for future investment in Ireland.
The summit is also due to consider briefly the response to the Ebola crisis. As I said before, in proportionate terms, Europe's response has been generous and effective, and should be increased. The west African countries which are worst hit need our help and resources. Where there has been real partnership between local communities, national administrations and international aid organisations, major progress has been seen. We know what needs to be done and there is no excuse for failing to commit to provide whatever funding it takes to turn back this horrible virus.
While it does not appear on the formal agenda, it is likely that the situation in Syria will be discussed again. This has the potential to turn into one of the greatest human tragedies of the 21st century. The scale of the displacement of people is breathtaking, and the misery being imposed on Syrians is growing all the time. This matter was addressed briefly yesterday during Leaders' Questions. I repeat here my belief that Europe must step up its aid to refugees. Ireland can be proud of its record as the highest per capitadonor, and I acknowledge the personal commitment of the Minister for Foreign Affairs and Trade, Deputy Charles Flanagan, to this issue at meetings of the Foreign Affairs Council.
I would also like to agree with comments made here yesterday about how the Kurdish forces are central to pushing back the Assad regime and ISIS.Both claim to be different, but are offering nothing but misery and brutality to the Syrian people.
Turkey’s growing authoritarianism is something we must stand against. The widespread attack on free media is unacceptable. Within Turkey the PKK has shown its goodwill. At this moment it is an essential - perhaps the essential - element required to stop barbarous armies. It is time for Ireland and Europe to recognise this and support the PKK in Syria and Iraq.
The bombing yesterday of over 100 children and their teachers while they were at school should be utterly condemned by the Council, and every effort should be made to assist the global efforts to suppress such barbaric acts by the Taliban. It was a truly barbaric attack on innocent young children, who were mowed down while at school. The European Summit should place this issue on its agenda, if not in an emergency manner at the next meeting then in the following one, and address how Europe intends to respond to the increasingly barbaric and reckless approach to human life, children and so on. It is an issue which has shown no sign of abatement.
Given this week’s near-implosion of the rouble, there will obviously be a discussion about Russia and its occupation and partitioning of Ukraine. The Russian people are facing into the possibility of a deep and damaging recession. This is the direct and inevitable result of the policies of their government. The hyper-nationalist, authoritarian and aggressive behaviour of Vladimir Putin’s government has been a disaster for Russia. I find it amazing that for much of the last year we have heard fellow-travelling calls to do nothing and stand by as Putin invaded a neighbouring country and funded a devastating conflict. Sinn Féin has constantly refused to clearly call on Russia to get out of Ukraine and has followed its allies in the European Parliament's former communist group in attacking Europe and the United States as being to blame for Russia’s aggression. Of course, this was not something mentioned by Deputy Gerry Adams when raising money in New York recently. In Russia, basic legal norms have been abandoned and the only rule today is that whatever the government wants, it can take. The free media has been destroyed, opposition parties have effectively been banned and a near-hysterical anti-West propaganda campaign has been implemented.
Russia should be a friend and partner of Europe, but Europe must stand with basic democratic values and with the interests of smaller nations against Russian aggression. Europe must also understand that the new democratic government in Kiev needs more help. It needs debt restructuring and significantly increased direct aid. Russia will not let up on its efforts to crush any neighbouring state which refuses to bow to Moscow in what President Putin last month called its "rightful sphere of influence". We cannot step back from a significantly higher scale of aid to a country and people in dire need.
There is no doubt that at the summit the Taoiseach will have an opportunity to talk to the UK Prime Minister, David Cameron. I hope he will take the opportunity for the two of them to reflect on the shambles of last week in Stormont. The DUP and Sinn Féin have refused to act responsibly in government, but the way to respond to this is not to introduce the type of negotiating tactics which have served the UK so disastrously badly in Brussels. Take-it-or-leave-it walkouts or threats to withdraw are not what one expects from the parties, and they have done enough of this over the years. It is not something one expects of governments.
I welcome the fact that Mr. Cameron’s recent speech on freedom of movement stepped back from his earlier extreme position and the impulses of the majority of his party. As in so many areas, after nearly four years in office the Government has never set out a strategy for basic European issues. It has no negotiating strategy. There is some discussion of a treaty in the next two years, for example, emanating from the discussions about Britain and its relationship with the EU. It has no stated objectives on bank debt, no position on the EU budget’s future, no position on the powers of the ECB and no position on the possible exit of the UK other than "We’d hate to see you go." Perhaps in 2015 we will finally see the Government commit to a more active and engaged European policy. The speeches about supposedly rebuilding our reputation are self-serving nonsense and simply expose the "PR first" approach. Let us have a proper debate about Europe and our role in it. It is too important to go on in this stumbling and uncoordinated way.
I apologise for the absence of Deputy Gerry Adams. I would like to be associated with the Taoiseach's Christmas good wishes to the staff and Members of the House. We are all looking forward to the Christmas break and coming back reinvigorated, renewed and ready for the fight next year.
I note that this European Council meeting will be primarily focused on economic and social policy. We are told on almost a daily basis that we have regained our economic sovereignty. Yet, in replies to my party, the Minster for Finance, Deputy Noonan, and the Minister for Public Expenditure and Reform, Deputy Howlin, have made it clear that new EU rules will dictate our budgets for a very long time to come. The next budget will have to be agreed against the backdrop of the so-called expenditure benchmark. This is essentially part of the preventive arm of the EU rule book.
In a reply to my colleague, Deputy Pearse Doherty, the Minister, Deputy Noonan, gave an indicative figure of a permissible expenditure increase of only €400 million. Even that figure is dependent on a high growth figure, which unfortunately failed to materialise in the last quarter. We know that the Taoiseach has committed the Government to decreasing the top rate of tax next year. That decrease will also be taken into account when adding up the €400 million .
The Minister, Deputy Howlin, has noted that:
beyond 2015, there will be a number of expenditure pressures emerging over the coming years, most notably those related to demographics and their impact on the social protection, health and education sectors. The expenditure ceilings for 2016 and 2017 contained in the Comprehensive Expenditure Report provide for expenditure increases in these areas to accommodate these demographic pressures.The Taoiseach can correct me if I am wrong, but it seems that because of the expenditure benchmark, next year the Government will have only €400 million to play around with and has already committed to the new tax cut for the better off. The difficulty is that more children are going to school, there are more patients in hospital, longer queues, more patients on trolleys and more pensioners living alone and having to survive on a basic income.
It is to be hoped there are more people at work, but we did not reach the targets in the last quarter. Many jobs have been the result of people who have left our shores. All of us in the House want to see growth.
Is this what economic sovereignty looks like? Ireland has met the austerity targets, and now we have expenditure benchmarks to prevent actual investment in the economy. Economic sovereignty is not what we hoped it would be and what it used to be, but perhaps this is the new world in which we are living. The Minister, Deputy Howlin, told us the Government is negotiating on this matter. That would normally be a positive statement, but unfortunately it does not instil huge amounts of confidence, as it comes from a Government that has failed to convince the European Parliament, the European Commission, a single other member of the European Council or the ESM to support the recapitalisation of Ireland's pillar banks.
In a telling and worrying aside, the Minister, Deputy Brendan Howlin, whose party has effectively supported every EU treaty, now says he does not believe a one size fits all policy suits. Unfortunately, it is a little late for that admission, considering how far we have gone down the road in that type of analysis. However, his admission is a breakthrough of sorts. My colleague, Matt Carthy, MEP, recently wrote directly to the ESM chief, Klaus Regling, to try to cut through the spin. Significantly, Mr Regling replied: "It does not seem likely that the DRI will be used retroactively." This is a concern, yet we are being told in the House that this a vague possibility and that the Government can still apply for it.
Many Irish people believe the European Union has kicked us around with its harsh austerity targets. We now know that Jean Claude Trichet, in his letters to the then Finance Minister, bullied Ireland into adopting pro euro positions. We do not know on whose mandate or on what legal basis he did this, but we know that he did it and that Fianna Fáil and the Green Party folded. Now the new EU rules will not allow us to make important investments to improve the viability of the economy and the question of getting back the people's money put into bad banks is moving further off the table. We are told that we have regained our economic sovereignty, but the question is: economic sovereignty for whom and for what?
The forthcoming European Council meeting will also discuss the Commission's plans to mobilise €300 billion in investment between 2015 and 2017. I have continually called in the House for greater investment by the European Union to kick-start fledgling economies and tackle social inequality. This investment plan sounds good when we read the headlines, but when we read into the detail, it simply does not work. Jean-Claude Juncker intends to take €16 billion from the EU budget to fund this package, yet the European Parliament committee is all over the place in this regard and still waiting for the Council to present it with the latest draft budget which will undoubtedly provide for more cuts and hardship. Meanwhile, member states, SMEs, research centres and universities are still awaiting payment. People are waiting for what they were promised, not empty promises that distract attention from previous shortfalls.
The growing deficit of €23.4 billion also needs to be addressed. The European Union must be able to pay its massive debts and this proposal from Jean-Claude Juncker will do nothing to help ease that predicament. I agree that we need investment, for which Sinn Féin, with many others across Europe, has consistently called. However, this proposal is not the way to go about it, as it will create nothing more than a financial house of cards. Mr. Juncker having oversight of it is like throwing the fox into the hen house, considering that he was President of the Commission which presided over the worst austerity crisis, while, at the same time, enabling states to be tax havens. This proposal is nothing but a road map for disaster. It appears that for the Commission, it is simply business as usual, but what we need is a public investment programme and a new approach to end austerity. That is our argument and the message we hear across Europe. People want to see a different approach and this argument has dominated their debate.
Last week Jean-Claude Juncker, remarkably and disturbingly, stated he wanted "familiar faces" to be in power in Greece, ahead of parliamentarians gathering to elect the President. He also called on Greeks to ensure they avoided "extreme forces" coming to power. The EU economics Commissioner, Pierre Moscovici, said at a press conference in Athens on Tuesday that the Commission would respect all democratic decisions of the country, "but of course we also have our own preference." We know that this means the Commission wants to have its pals back in power and the same approach being rolled out for the Greek people to be rolled out across Europe. This is clear political interference by the European Commission and its ham-fisted veiled threats are a crude ill-thought out attempt to influence these crucial elections. Does the Taoiseach condone these veiled threats and, more importantly, will we get an answer to this question? Will he publicly call on the Commission to refrain from interfering in any election within member states, as the Commission has previous form in this regard? Former European Commission President Jose Manuel Barroso said it would be "extremely difficult, if not impossible" for an independent Scotland to join the European Union, ahead of Scotland's crucial independence referendum. This directly influenced and interfered in that referendum and all sides agree that his interference did not help.
I understand international affairs will be discussed at the European Council meeting also. Last week the Dáil passed a Sinn Féin motion calling on the Government to officially recognise the state of Palestine. I welcome the support of the Government and all parties which supported the motion which was warmly welcomed by the Palestinian Government and its people. Tragically, a Minister in the Palestinian Government, Ziad Abu Ein, died on the day the motion passed, after he was physically attacked by Israeli soldiers while attending a peaceful olive tree planting ceremony in the occupied West Bank. The European Parliament is poised to vote "Yes" today on a motion on the recognition of Palestine. Will the Taoiseach raise the issue of recognising the state of Palestine at the forthcoming European Council meeting and will he explain that both Houses of the Oireachtas now support this position?
The US Senate report on torture by the CIA provides shocking confirmation of the extent to which torture was part and parcel of how the CIA operated for many years. It reveals that the torture in secret prisons run by the CIA was even more extreme than previously known and that it included appalling practices such as rectal feeding, waterboarding, sleep deprivation and direct threats to the families of detainees. It also exposed the complicity of some European states in these awful practices and crimes. Although we know that many European states were complicit in the torture and rendition operations of the CIA, as has been well documented by the media for a decade or more, no European officials or politicians have been held to account. We are aware that this happened on the watch of many Governments, but the response is always that there is no such evidence or information. However, it is clear that this has happened to detainees, some of whom were just dumped in the desert or on the side of a road and then had to pick up the threads of their lives.
Many of America's European allies were deeply involved in the CIA programme and the CIA's activities would not have been possible without the direct help of Britain and, possibly, 20 other European nations. European states that took part in the CIA operations were complicit in violating fundamental human rights, the Geneva conventions and the UN convention against torture. Will the Taoiseach specifically raise this issue at the European Council meeting and call on European states to come clean on their role in this unjustified torture programme? Given the growing and overwhelming evidence that CIA aeroplanes involved in rendition operations passed through Shannon Airport, surely it is time for the Government to admit that mistakes were also made here and initiate a full investigation into Ireland's involvement in torture by the CIA and the rendition of individuals through our air space.
Like others, I welcome the remarks of the Taoiseach regarding the children who were murdered in Pakistan and I would like to be associated with them. The images on television of children lying on the ground with visible wounds and being interviewed about what they had been through appalled everyone. It was proposed that a book of condolence be opened in the House and, as a former education and skills spokesperson, I would like to be associated with that.
To end on a more positive note, I wish the Minister of State well in the discussions. He has huge responsibility but the different positions being adopted in Europe, particularly in respect of investment, are important. We clearly need new investment and we need to work our way out of the crisis facing many European states. There are two ways forward and I would like to think that Ireland will step up to the plate and clearly get behind working our way out but, as part of that, investment is needed and a budget to suit.
I would like to focus on the so-called investment plan for Europe put forward by the Commission President, Mr. Juncker, which supposedly contains €315 billion worth of investment. It was described by him as a fresh start for Europe and it has the establishment parties across Europe patting themselves on the back as they say they will now deal with the massive collapse in investment to the tune of almost €400 billion since the crisis hit across Europe. The Taoiseach joined in this earlier, although he noted that the fund has received its share of criticism with questions from some quarters about whether the leverage ration of 1:15 is realistic. That is a slight understatement, given the programme has no money. Not a single euro will be brought to bear in this investment programme. It is a clear case of the emperor having no clothes but, instead, we have the establishment and sections of the media talking up something for which there is not a single euro.
Europe has gone from zero euro to €315 billion and this is reminiscent of the financial engineering that went on before the collapse of the bubble and the crisis that we are living through. Mr. Wolfgang Munchau writing in theFinancial Timessaid it reminded him of a synthetic collateralised debt obligation and an attempt to get from nothing to something. When people go through the figures, they will realise the programme is built on sand. A total of €8 billion taken from existing under-funded EU programmes was placed in the programme. That was doubled by saying everything would not collapse together and, therefore, a guarantee of €16 billion could be given. Another €5 billion was added from the European Investment Bank to give €21 billion. This was tripled by leveraging it on the bond markets to get to €63 billion. This was then multiplied by more than five to get to €315 billion on the basis of supposed expected private investment at a ratio of €5 in private sector money for every euro of public sector investment, which is not real money. There is no new money in the programme but the Commission and the Council want to be able to talk about a public investment programme to deal with the crisis.
The root of this is a shift towards the privatisation of public infrastructure and the socialisation of private risk because private investors are classified as a senior tranche of investors and if there are losses, even in excess of the €8 billion of EU funds that have been invested, the taxpayer will pay the bill. The private investors are given a senior classification and they do not have to pick up the tab. We have witnessed this model for the subsidisation of private risk previously with the taxpayer taking all the risk and the private sector creaming off the profits. This also points to privatisation. Mr. Juncker set out a great vision in his speech to the European Parliament of schoolchildren in Thessalonika walking into a new classroom decked out with computers and a hospital in Florence saving lives with state-of-the-art medical equipment. Private investors will only invest in hospitals or schools for two reasons - the first is if there is a fee, which means people will pay per use, or, second, if they are paid directly by the state. Either way, the public will pay and they will pay more than if there just had been simple public investment in these facilities because the private sector needs to be guaranteed a significant profit.
The Taoiseach referred to €315 billion in net additional investment in the economy. How does he know any of this will be net additional investment? How much of this is dead weight? How much of this would have happened anyway? The taxpayer will subsidise the investment and take all the risk. There is no guarantee this programme will generate new investment that would not have taken place anyway. The only difference is the taxpayer is taking on the risk. This is not a response to the collapse in investment; major public investment is the appropriate response. For example, ITUC has called for a investment of €250 billion or 2% of GDP. That could be funded at a time of historically low interest rates. The State could borrow and invest and this would pay for itself economically and socially or it could go after the massive amounts of unused capital, the hoarded profits and the €21 trillion held by millionaires in this country, which is greater than the sovereign debt of all the EU member states.
I refer to the outrageous decision of the ECB not to answer questions at the banking inquiry. The inquiry is a political stunt that was likely to produce nothing from the outset but now it is a complete dead letter with one of the key players in the entire debacle that has bankrupted the country and driven Europe into crisis refusing to answer questions about its role and the pathetic failure of the State, which knows how important it is that this evidence be given, to demand of Europe that the institution make itself accountable.
To add to Deputy Murphy's comments, the investment programme is a pyramid scheme subsidised and guaranteed by the ordinary working people, taxpayers and citizens of Europe and it is the door into the privatisation of public infrastructure, services and utilities across the Union. What we are doing is a scandal. There is an amazing parallel between the off balance financing and manoeuvres to set up Irish Water and charge people for the consumption of water, which the Government is pursuing, and the overall project for so-called investment in Europe, which is precisely predicated on the same off balance sheet private sector financing guarantied by the state. The profits go to the private sector and all the risk goes to the citizens if everything goes belly up. It means that the financiers will call the shots demanding user charges and dictating the nature and character of investment leading to the privatisation of infrastructure and services across the country followed no doubt by demands for more productivity, wage cuts and so on for those working in those services and on the infrastructure. The programme pays lip service to public investment whereas in reality it is the vehicle through which the privatisation of the European economy will be advanced and the Government is playing a vanguard role along with Mr. Juncker in pursuing this neoliberal strategy, which had such disastrous consequences for the European economy only a few short years ago.
Of course, the other side of this coin which points to the alternative is the issue of corporate tax. Again, the Irish Government is on the wrong side of the ideological and political conflict about how one finances real investment in the real economy because we are busy developing knowledge boxes and giving multinationals a four or five-year lead-in so they do not have to pay any tax but it is their profits not just in this country but across Europe that should be taxed in order to finance the infrastructure and public investment programmes that we need. Let us not forget that regardless of whether it is Irish Water or in Europe, it is the big industries and multinationals who use the most. They are the biggest users of our public infrastructure and instead of getting them to contribute towards that infrastructure, those services and that investment by taxing them directly and funding public programmes, we borrow money off them, become indebted to them and essentially become subjects of the big multinationals.
It is a fantastic step forward that today the European Court of Justice, ECJ, has de-listed Hamas from the list of terrorist organisations - apparently on a technicality. This recognition is long overdue. Whatever we may think about Hamas, it is the legitimate representative of the Palestinian people. In order for there to be any solution to the Palestinian-Israeli conflict, we must engage and talk to Hamas. It is a pity it took the ECJ to do it rather than the political leadership of this country and other countries in Europe but I hope there will be follow-through on it.
I am glad to see that Fianna Fáil has now endorsed the call I have been making for the past month in this House for us to do the same with the PKK in respect of what is happening in Syria. It is not good enough to cry crocodile tears for the disaster that has been inflicted by the Assad regime and ISIS on the people of Syria without giving endorsement and legitimacy to the PKK which is leading the fight on the ground against Assad and ISIS and which is protecting the Kurdish people in Kobane and other places in northern Syria. Can we have movement from the Government now that we have started to do the right thing in terms of representatives of the Palestinian people? Can we do the same for the legitimate representatives of the Kurdish people?
Some of us on these benches are becoming veterans of the kind of sanitised speeches which the Taoiseach brings in here and reads every time before he goes to one of these meetings in Europe. This is, unfortunately, no exception. Like many other Deputies, including Deputy Boyd Barrett, I expected the Taoiseach to come in here and say that top of the agenda - I am insisting on it going on the agenda this evening and tomorrow - is the refusal of the ECB to come before the banking inquiry. That was an extraordinary decision from Europe yesterday and it summarised the attitude of the ECB and many European leaders to Ireland and, in many cases though not in this one, the attitude of the European Commission to Ireland. It is totally unacceptable that an inquiry of this sort should be rendered almost totally useless and redundant by the fact that those who are supposed to be our friends have torpedoed it by refusing to appear or to give it any sense of meaning. The ECB has proved that it is no friend of Ireland, that it is arrogant and that it does not really care about the banking inquiry or the origins of the banking inquiry now that it has got its pound of flesh from the Irish people. That is the reality. It also indicates the attitude of many European powers to Ireland. Page five of the Taoiseach's speech states that:
As Deputies will be aware, the Commission's opinions on member states' draft budgetary plans were also published recently. Ireland was one of five member states found to be fully compliant with the provisions of the Stability and Growth Pact, along with Germany, Luxembourg, the Netherlands and Slovakia. This is a real vote of confidence in our management of our public finances.Does that mean that 20-odd nations do not give a hoot about the requirements of the Stability and Growth Pact? Does that mean that Ireland is patting itself on the back by being up there with the big boys and behaving as though it is a prosperous nation at a great cost to the people of this country? I do not want to be up there with Germany, the Netherlands, Luxembourg and Slovakia - not with the current state of the economy. We cannot afford to be there. How is it that France and other countries can give two fingers to the ECB and the European Commission in respect of keeping to the Stability and Growth Pact while Ireland seems forced to bow and scrape and seems to take pride in doing so and in taking such a craven attitude to European requirements? This, unfortunately, is what is happening.
The Taoiseach went on to say proudly and probably wrongly that we are the fastest growing economy in Europe. I do not think it is true but I do not expect the Minister of State to take any other attitude. Do the Taoiseach and the Minister of State know about contract manufacturing? Do they know what it means? Do they know how these growth figures are actually added up and what they come to? The Taoiseach, the Minister of State and the Government have decided to ignore the warnings of the Government's own fiscal advisory council recently when it pointed out that many of the exports which are responsible for growth, and it said it did not know how much so the Minister of State does not know either, are accounted for by what is called contract manufacturing. This is a totally artificial system of booking exports from one country to another and nothing at all happens in Ireland except there is a booking.
The Irish Fiscal Advisory Council warned that it did not know how much this accounted for in our growth figures but it estimated that it might be about 2.5%. If one takes 2.5% away from the figure of 4.7% this year, one is back at 2.2%. If one takes 2.5% away from the figure of 3.9% next year, one is back at 1.4%. That will make us an awful lot less smug about our growth figures. To parade those figures around here either without the knowledge that they are bogus, and they are certainly massaged, or pretending that they are real is completely dishonest. Let this be a serious warning to the Government about these growth figures. If it is pretending that the next budget can be based on figures of this kind, which are so inflated by something that is unknown and which it does not acknowledge, it is doing something that is particularly wrong. It is also cooking the books and I suspect that cooking the books is not something its European masters will approve of.
I also join with other Deputies here in extending my sympathies and condemning the horrendous acts yesterday in Pakistan which resulted in so many deaths. While I attended yesterday's meeting of the General Affairs Council which prepares the European Council agenda, events were unfolding. I have no doubt that they will be discussed by the Taoiseach and others at the European Council meeting.
As the Taoiseach outlined, the investment package, which is using real public money to leverage private funding and will deliver billions of euro of capital projects across our Continent, featured prominently in our discussions yesterday and was broadly welcomed by all member states. While it was clear that much work needs to be done and done quickly to get the initiative off the ground, the support from around the table ahead of tomorrow's European Council was very encouraging. We also received a presentation from the Commission on its annual growth survey which situates the investment agenda within the context of an overall economic approach, including structural reforms and fiscal measures. The annual growth survey will also be the subject of important political exchanges in all relevant Council configurations over the coming months. Proposals for streamlining the European Semester, referred to by the Taoiseach, were also generally welcomed.
Deputy Martin asked that President Tusk be invited to Ireland. The Taoiseach has asked me to inform the House that both President Tusk and President Juncker will be invited to visit Ireland next year.
As I attended the Foreign Affairs Council on Sunday evening and Monday, I will briefly outline the foreign policy issues, other than Ukraine, which are likely to feature in discussions at the European Council. The European Council will return to consider the Ebola crisis and the EU's response, with an update from President Juncker and High Representative Mogherini. Unfortunately, the spread of the Ebola virus in West Africa has not been arrested. The underlying trend is still upwards and the number of people affected is growing, particularly in Sierra Leone. At the same time, however, it is important to acknowledge that significant progress is being made. New Ebola treatment centres have now been opened in the three most affected countries, namely, Liberia, Sierra Leone and Guinea. Ireland has helped in these efforts. The Ebola treatment centre in Port Loko, Sierra Leone, which began work earlier this month, was co-funded by Irish Aid. Discussions on Ebola at the European Council follow more detailed consideration of the issue by EU Development Ministers last week. The Council will, I hope, place a new emphasis on the importance of addressing longer term issues associated with the crisis, including resilience, poverty reduction and the capacity of the health systems in the three countries most affected. Ireland will continue to play its part, through the work on the ground of our embassy in Freetown and through financial support. This year, we are providing over €18 million directly and through NGOs to the countries in West Africa most affected by the crisis.
Although not formally on the agenda at this point, it is considered likely that the issue of foreign fighters, that is, EU citizens travelling to conflict zones, will be raised at the European Council following conclusions adopted in August. Unfortunately, international terrorism continues to pose a serious threat to global peace and security. The changing nature of this threat is illustrated by the participation of nationals from more than 80 countries in the conflicts in Iraq and Syria. Their involvement poses a direct threat to the security and stability of the region in which they are fighting. The skills they acquire in the conflict may be used to carry out terrorist activities elsewhere, including in their home countries. The August European Council called for the accelerated implementation of EU measures to stem the flow of foreign fighters. Significant developments since then include the establishment of a dedicated task force on foreign fighters and the adoption in October by EU Foreign Ministers of an EU strategy on counterterrorism and foreign fighters.
There has unfortunately been less progress in relation to an EU passenger name record directive, which would provide for the transmission of certain passenger name record data to police and security authorities for the purposes of combating terrorism and serious crime. The European Parliament has not yet passed this important proposal. The Minister for Justice and Equality has written to each of Ireland's MEPs encouraging them to support the proposed directive, as a tool of proven value in combating terrorism.
I thank Deputies for their contributions to this debate. I look forward to addressing the House again in January on the outcome of this tomorrow's European Council and I wish everybody a happy Christmas and a good break before we return in 2015.