Sean Barrett (Independent)

It is always a pleasure to listen to Senator Harte.

I wonder when Europe will have its plan B ready because it is difficult to see much future for Greece under the present arrangements. Perhaps it should never have been admitted to the euro and it should certainly have been allowed to get out because we deprived it of its ability to set its own interest rates and exchange rate. Prolonging the agony of Greece by holding it within the eurozone is a wrong policy. The eurozone has to come to terms with this. The countries which did not join the eurozone, the Scandinavians and the United Kingdom, are the ones which have retained these instruments of economic policy. The design flaws in the euro were that there was no exit mechanism and it is about time we came up with an exit mechanism rather than hold countries in the euro against their long-term interest.

It was assumed that lower interest rates and significant capital flows would solve problems but Ireland is the test case of this assumption. So much capital flowed from Germany into Irish banks that it destroyed asset prices in this country, destroyed the banking system and this eventually undermined the public finances. We were warned back in 2000 of the dangers for Ireland in joining the eurozone when the United Kingdom was remaining outside. We confused the benefits of Europe, the EU, as a free trade area which had operated for 50 years, with the common currency. Ireland is an illustration that this common currency failed because it promoted such unstable flows that it destroyed asset values in this country and eventually the public finances. I am not so sure that having more presidents in Europe is the way to solve that problem. The plan B in Europe will be two currencies, probably one based on Germany and the other based on the Mediterranean. Continuing the experiment when it is causing so much misery throughout the European Union, calls into question just how stubborn do people have to be in continuing with policies which cause so much misery for European citizens. I do not welcome the unprecedented interference in the internal affairs of Greece and Italy in the past number of weeks. These countries are democracies which should be entitled to have their own system of governments.

We ignored strong advice when we joined the euro. It is a relatively small proportion of our trade - about one third of the total. Joining without the United Kingdom was foolhardy. We did not have proper institutions to control the capital flows. As the Minister of State said, we had massive failures of governance in the way we ran banks and in the way the Department of Finance was run. I refer to the sheer lack of economic expertise in the Department of Finance as referred to in the Wright report. Only 7% of the staff had qualifications at masters level in economics.

We did not know what we were doing when we got involved in this and there has been an extremely difficult adjustment period coping with that mistake. Europe must seek not merely to patch the thing up yet again but fundamentally to rethink whether we can retain the benefits of the European Union as a free trader, with all the gains and trade the Minister of State mentioned, in a currency union that is not working. This may require treaty change which would be very difficult to get passed in this country. We rejected treaty changes twice before and as a result referendums were held twice. This did not show the EU being held in great public esteem. When something does not work eventually governments must get together and admit this is the case. The experiment of the euro is now firmly in that category.