Sean Barrett (Independent)

I warmly welcome the Minister of State for her commitment and enthusiasm on these issues and she is a most welcome visitor to the House. Towards the end of her contribution, the Minister of State referred to lightening the load on Ireland. In taking my cue from Senator Quinn, this might be something the Seanad will address, as it will be important for Members to assist the Government in every way they can to lighten this burden.

I believe the problem is the euro was an unsound concept from the outset. It is time to deal with this now at Community level. It is not working and most economists stated it would not work. The journalist Conor O'Clery secured an interview with Milton Friedman on 5 September 2001. He told me he did so simply by dialling the number in the telephone book listed under Friedman, M., from his New York office. At the time, Friedman predicted everything that has happened to us. He stated:

[T]he euro was adopted really for political purposes, not economic purposes, as a step towards the myth of the United States of Europe. In fact I believe its effect will be exactly the opposite.

He went on to predict the need for different policies such as tightening monetary policy in Ireland or a more flexible monetary policy in Italy "will produce political tensions that will make it more difficult to get political unity". This is what has happened, as Greece cannot thrive within the present rigid system. In a subsequent comment to Conor O'Clery, Friedman stated Ireland was stuck with the euro. He asked:

How would you break out, and start all over again and establish a new monetary system, the punt? You are not going to give it up. You have locked yourselves together and thrown away the key.

Moreover, Friedman, who won the Nobel Prize in economics, was not alone. I refer to the faults in this system to which Mr. Delors recently referred, such as its lack of an exit mechanism, its one-size-fits-all nature and its failure to protect small countries when they experience large capital inflows from large countries. This is what led to the Irish banking system and our public finances being destroyed.

I hope that Ireland will play its part constructively to remedy these faults. The Minister of State's script refers to the agreement at the weekend for a 0.5% nominal GDP structural deficit. I note the comments made by Karl Whelan and Colm McCarthy in this regard to the effect that it looks like a decision that was made by people who still were hanging around at 4 a.m. This would imply a debt-to-GDP ratio of 17% and Greece will be unable to achieve that. Moreover, Ireland has seen nothing like the level of austerity that would be required to get down to a deficit of 0.5% or to achieve a debt-to-GDP ratio of 17%.