Paschal Donohoe (Fine Gael)

I want to emphasise why it is in the interest of our country to support this measure. There are two reasons. First, the performance of our exports and of the European economy is of great importance to our national prosperity. Any measure we need to take to ensure the stability and credibility of the euro and the eurozone is in our national interest. This measure clearly is. A more immediate reason to support it is that any difficulty that develops in the selling of Greek Government bonds will raise the interest rate on those bonds and will affect the rate of interest we pay on our national debt. It is in our short-term financial interest that the risk being factored into the buying of government bonds in Europe be reduced because it will then cost us less to sell our debt. For those two reasons, this Bill should be supported and we need to see it passed.

It is an uncomfortable measure to see happening. No one, least of all the people in Greece, want to find themselves in a position such as this. Despite how uncomfortable the measure is, we should not be surprised at what is happening. In the broad sweep of economic history, every time a region, or the world, goes through a major financial crisis, especially if it is led by what is happening to the banking structures in different countries, the crisis invariably leads to an issue with the selling of government debt. If debt is moved off the balance sheet of the private sector and put onto the public sector, it inevitably leads to difficulty regarding the financing of that public sector debt. We saw that happen in the 1990s in Latin America where the funding of sovereign debt led to issues. We are now seeing it play out in Europe. The reason it is causing such difficulty in Europe is that we share a common currency. The stresses being created in one country, because it cannot sell its government debt, automatically feed into difficulty in all countries.

We can look at the debate in two ways. We should look to the past and to the future. While I agree with much of what my colleagues on both sides of the House have said in analysing the past, I have one point of difference with regard to the Stability and Growth Pact. The conventional wisdom is that the current difficulty would not be happening if countries had met the criteria of the Stability and Growth Pact. This is mostly true. We must bear in mind, however, that some of the countries that are now dealing with these difficulties did meet the criteria of the Stability and Growth Pact. Spain, for a while, was the poster boy for delivery of the pact's criteria. Italy, France and Germany have had more breaches of the criteria than Ireland or Spain, yet they have managed to circumvent our difficulties.

This points to a second weakness in our evaluation of the economic success of participating countries in the eurozone. We have done so almost exclusively on a fiscal basis. We say a country is doing well as a member of the eurozone if it delivers its budgetary objectives, but gigantic contortions and stresses have been going on behind the scenes in these national economies while they have been delivering the fiscal objectives laid down by the European Union.

Ireland is a classic example but so is Spain. As we examine how we are to move forward, we must broaden the measures by which being a successful member of the eurozone is evaluated. Although it is easy to say this, it is vital that it be said. While, tragically, austerity forms part of the solution to these difficulties, it is not the full solution. That there are countries that were meeting the budgetary criteria but still found themselves in difficulty demonstrates that there is a gigantic lesson to be learned from history.

There are three elements of this debate that we should consider as we proceed. The first is obvious and one with which we in Ireland are grappling. It concerns the fact that we need to find a way to ensure the success of measures for fiscal consolidation. While I hate the phrase "fiscal consolidation", we need to solve national budgetary difficulties.

Individuals, understandably, allocate a lot of blame to the performance of the financial markets. Although their performance in recent months has been reprehensible in many ways, we must bear in mind that they have so much power in the first place because political decisions were made that gave them that power. If the right decisions had been made regarding how much money a country should be borrowing responsibly, we would not find ourselves in circumstances in which the financial markets have power we wish they did not have. We cannot welcome investors when we want their money and blame them as speculators when we find ourselves in difficult circumstances, as we do now. If a country such as Ireland had made the right decisions between 2000 and 2007 and listened to what the European Commission was saying about the national finances, we would not be as much in thrall to the financial markets as we are now.

With regard to the meaning of fiscal co-ordination, I have no difficulty with it being rolled out across Europe as long as we respect the sovereignty of national governments in making crucial decisions on taxation, as was done in respect of the Lisbon treaty. However, we need to be clear that fiscal co-ordination means different things to different people. When we talk about it, it is assumed it means every country must focus on how it should contract its budget and take money away. However, fiscal co-ordination in this case means, crucially, that Germany should make the decision to get consumers spending again. This would allow a crucial export market on which we depend to do better.

I am in complete agreement with Senator Alex White that we must ensure what occurred does not happen again. This will mean sweeping reform of the Stability and Growth Pact. If we are really concerned about preserving our economic security and sovereignty, we should be reasonable, mature and brave about having that debate.