Sean Barrett (Independent)

On the faults in the euro, I have considered a number of contemporary references from the period in which the currency was devised. I admire the wisdom displayed by those countries which remained outside the single currency. Those countries did not leave the European Union and they are doing well in all other respects. We should not become hung up on the single currency. Relations between the two parts of Ireland have never been better and this is despite the fact that different currencies are used in each.

We have become obsessed by the euro as a currency. Youth unemployment has risen to 49% in Spain and to 51% in Greece. In Ireland, some 75,000 people under the age of 25 are on the live register. Such unemployment has come about simply in order to maintain a currency which was flawed to begin with. One of the contemporary references to which I refer indicates that:

... it was politically inconceivable to launch the euro without Italy, the third largest economy in continental Europe, or Belgium, home of the European capital Brussels. Hence both countries became members despite having gross debt levels of almost twice the Maastricht Treaty reference value of 60 percent in 1997–98 [when they joined].

Using the extension proposals to include countries such as Greece did those states no favours. What occurred in the context of the euro went way beyond what was envisaged in the original literature relating to optimum currency areas and what was contained in proposals but forward by Mr. Delors and Mr. Werner.

This is a flawed project and we are doing massive damage to the economy by opting to take it to the next stage. Ireland did not have a fiscal problem prior to the banking crisis and what should have been done in the context of the euro was that a strong European Central Bank, empowered to take responsibility for the financial stability of the single capital market, should have been put in place. There is no need for a fiscal union and there is no support for such a construct. The flaw in the document we are debating is that it addresses as a fiscal problem what is really a monetary problem and ignores all the economic advice put forward during the period to which I refer. The lesson we must learn in retrospect is that the Department of Foreign Affairs and Trade is strongly pro-Europe and that it sometimes signs us to documents which the people then reject in referendums. The Department also occasionally signs us up to documents which have not been properly analysed.

The wisdom of our joining the euro in the absence of the United Kingdom doing so remains in question. There was a distinct lack of wisdom displayed in exposing a small economy such as Ireland's to massive capital influence from Germany and France because this gave rise to the tsunami effect which destroyed our banking system. It was the rescue of that system which destroyed the public finances. On strict public finance criteria, Ireland had a debt-to-GDP ratio of approximately 20%. That is now heading towards 120% because it cost us 40% of GDP to rescue the banks. As the late Brian Lenihan and the Governor of the Central Bank, Professor Honohan, informed the IMF, we tried to rescue a banking system which, at approximately five times the size of GDP, was too large.

When one moves from those basic design faults and the appalling effects they have had on a small economy such as ours - I refer here to the tsunami effect, the fact that fiscal transfers are not sufficient, the fact that we do not have a common labour market with the remainder of Europe and that our people are emigrating to Canada, Australia and so on rather than to Germany - one realises that it is time some small boy observed, in the context of the entire euro project, that the emperor does not really have any clothes. It, therefore, would be ill-advised to proceed for many years with further austerity and mass unemployment among young people.

Ireland typically adhered to the fiscal rules. I accept that some mistakes were made in the context of wasteful public expenditure. I am of the view that we could adhere to the rules once again. However, the compact is not the solution required in respect of a very badly designed currency which has acquired, in the thinking of some governments and politicians, a value which it should never have obtained in the first instance. As a free trade area and a common market, Europe has worked well and we are not leaving it. Persisting with the currency in the current circumstances and imposing further austerity on increasing numbers of the citizens of Europe is, however, not the solution.

Like Senator van Turnhout, I am grateful we are engaging in this discussion. One can be a sceptic about the euro currency without being a sceptic with regard to the wider European ideal. The problem with the fiscal rules is, as a number of speakers opposite have observed, that we are being obliged to comply with them as part of a rescue plan. Does this mean they should be written into the Constitution forever, without there being much possibility that the citizens can change them in the future? Based on the internal arithmetic of the compact, the fiscal rules imply a debt-to-GDP ratio of between 10% to 15%. This, in turn, implies massive austerity for decades to come. The question we must ask in this regard is "For what purpose?".