Feargal Quinn (Independent)

I welcome the Minister of State and endorse the point made by the Senator Leyden on the attendance of the Minister of State. The attendance of the Minister for Foreign Affairs and the Minister of State at the meeting of the Joint Committee on European Affairs is a very useful development. The report by the Minister of State on the meeting that took place on 28 and 29 October gives us an insight we would not normally have.

The European Council agreed to tighten the Stability and Growth Pact which promises to impose much harder sanctions on countries that fail to abide by the rules. In addition, the European Council followed the advice of the task force to establish a system aimed at reducing macroeconomic imbalances produced by a lack of convergence of economic policies within the eurozone. These decisions and recommendations were inspired largely by the view that the source of the debt crisis in the eurozone was the misbehaviour of national governments. However, this is not the full story. Paul de Grauwe, professor of economics at the Catholic university of Louvain in Belgium, argues that although EU governments bear responsibility for their debt problems, this is only half of the story because the financial crisis was triggered by unsustainable increases in private debt. Morgan Kelly's article in The Irish Times yesterday covered this point well. Professor de Grauwe says the narrative that national governments are to blame fails to take into account the fact that the financial crisis erupted because of unsustainable increases in private debt of both households and financial institutions which forced many governments to pick up the pieces. Blaming national governments for the macroeconomic divergences within the eurozone fails to take into account that the divergences have little to do with what governments did or failed to do. Ultimately, only monetary authorities can control bank credit levels. Governments can do relatively little about them. Thus, the responsibility of the European monetary authorities in the development of unsustainable private debt levels is stronger than that of national governments. Reforms of governance systems in the eurozone should, therefore, not only focus on the responsibilities of national governments which are serious but also on those of the European monetary authorities and, in particular, the ECB. This is a point often forgotten in the argument. We must remember that the European monetary authorities also failed and that people must take some responsibility for the levels of private debt racked up. We are learning about the mortgage crisis that will hit us. That is why I support a strengthening of EU monitoring of economic policies.

As to a potential change to the Lisbon treaty which is high on the agenda and for which a referendum may be needed in Ireland to give effect to these changes in the financial sector, there are indications that a number of governments are getting cold feet, a point on which the Minister of State touched. Let us look, for instance, at the fact that the Polish Prime Minister, Donald Tusk, said last Thursday that the political deal struck at last week's summit was not the final word on the matter. Bearing in mind that Poland is one of the biggest EU member states, the sixth largest by population, Mr. Tusk said:

A potential change to the Lisbon Treaty must be justified 100 per cent and must not serve the interests of just one, two or five EU nations, because such a change would simply not be accepted. A deal reached in Brussels isn't enough. The member states must then go on to accept it.

As regards the bilateral deal on an EU treaty change struck at the summit between Chancellor Angela Merkel and French President, Nicolas Sarkozy, ltalian Foreign Minister, Franco Frattini, said the other EU member states had been excluded from the real decision making. I would like to hear the views of the Minister of State on this point. He said there was little enthusiasm for it. Mr. Frattini said in an interview with the Financial Times, "Pre-cooked decisions put on the table to be taken or left by others are not acceptable for other countries like Italy and other big players." These statements suggest there is a backtracking on an EU treaty change by member states and give an indication as to the room for manoeuvre that remains.

The European Commission recently presented a number of options to fuel the Union's future budget, including an EU value-added tax, a tax on air transport or a share of new financial, corporate or energy taxes. As I stated last week, when a family or a business has a challenge because their expenditure is greater than their income, most of them say they must cut back on their expenditure. We do not automatically say, we have to get more income. It would be a lovely way to do it but for most of us, whether we are dealing with a family or running a business, when we find our expenditure is higher than our income, we cut back on our expenditure. The suggestion is that the European Commission is saying we must balance the budget and that we must consider more taxes such as a tax on air transport and new financial, corporate or energy taxes. It was reported last week that Chancellor Angela Merkel was "against the introduction of [such] a European tax". This is perhaps another positive development for Ireland, although I am not sure we can always rely on everything we hear. Sometimes we just hear what we want to hear.

Germany has been advocating a more permanent financial crisis mechanism which incorporates a sovereign debt restructuring procedure in order that the private sector also foots part of the bill for future bailouts. It was interesting to hear last Thursday that the European Central Bank president, Jean Claude Trichet, said that such a mechanism would serve to unsettle markets such as our own.

On a related note, Portugal is among the countries suffering a similar debt crisis to our own. It is now gaining help from the Chinese to tackle it. Hu Jintao, the President of China, said that China and Portugal had agreed to work towards doubling their bilateral trade within five years and balancing commercial flows which are currently highly favourable to China. Chinese and Portuguese officials were scheduled to sign a number of bilateral commercial deals. The Portuguese Government has welcomed a commitment by China to give "positive and favourable consideration" - an interesting choice of words - to purchasing Portuguese Government bonds. Carlos Costa Pina, Portugal's Secretary of State for Treasury and Finance, said:

Considering the fundamentals of the Portuguese economy, the yields on our Government bonds are much higher than they would be in normal market conditions. It's not surprising that Chinese investors want to buy our debt or increase their positions.

China has previously bought Spanish Government bonds and has made a similar offer to buy Greek Government debt when Athens resumes issuing bonds.

The deal between China and Portugal seems to be a very interesting development. One could ask whether this country should be courting the Chinese. The Minister of State, Deputy Roche, might give a view on that. Perhaps we should be considering all avenues to get out of the crisis. The question arises as to whether we should even be worried about China given that the most powerful country of all, the United States, is now built on Chinese money. Those questions are worth asking. I would like to hear if anyone has a view on what the answers should be.

There was an interesting article in The Wall Street Journal on the situation in this country. Mr. Oliver O'Connor wrote about Ireland's strengths. He concluded by writing:

This is a playable hand. The financial engineering required to restore the Irish budget to health is doable [a nice word], and is being done. Now, it's over to the political engineering, whose highest achievement would be to let the Irish people do what they do best: adjust and thrive.

They are healthy, strong words. Mr. John Bruton also got it right when he wrote yesterday: "The speculators who are betting that Ireland won't pay its sovereign debts on time, and who are thereby driving up the spread on Irish bonds, will be proven wrong and will lose money."

We had an interesting debate on consensus on the Order of Business. I referred to a quote from a British statesman of some years ago who said that the duty of the Opposition is to oppose. I have never quite understood that. It seems to me that the duty of the Opposition is to help develop a correct society and govern correctly. Let us see more of what Mr. John Bruton said and have a positive, can-do attitude. We should not look for personal bailouts, but in conjunction with the help of the European Union, we can come out of this on the other side which will make us much stronger as a country. I have no doubt we can achieve that.

It was interesting to hear what the Minister of State, Deputy Roche, said today. I am interested in the report of the Council meeting. Like Senator Leyden, I hope we will have more such debates in the future and be kept up to date on what takes place at Council meetings immediately following them and in such a manner that it enables all of us to play an active role. I am pleased the Minister of State, Deputy Roche, is playing such a role. He has always shown an active interest in Europe. Between the Minister of State and the Minister, Deputy Martin, we are close to what is happening there. We will keep our eyes on it. So much is happening that we are in danger of being distracted from our own worries rather than concentrating on what is best for us by watching what is happening in the rest of Europe.