Michael D'Arcy (Fine Gael)

I welcome him to the Chamber. It is good to see that he is wearing clothes.

Three of the five countries that have required funding to date did not experience deficit-led difficulties but banking difficulties. The banking institutions within Europe managed to ensure the sovereigns took on the debts and were locked out of the market.

It is clear that we will contribute €1.27 billion of the €80 billion in cash that will be held on account for the ESM. Will our contribution form part of the general Government deficit or will it form part of a contingent liability external to the general Government deficit? A further sum of €9.87 billion could be called on. If it is, will it form part of the general Government deficit? We need to consider this question, given our deficit targets stemming from the referendum result.

According to certain commentators, if one tells the markets the size of a firewall, how much will be available, what the collateral will be and the amounts to be lent, the people working against Government agencies will know how much they will need to attack currencies, as occurred previously. Is the firewall large enough? The funding that will be required by Ireland, Spanish banks and, potentially, the Spanish sovereign is in question. People wonder whether a sum of €500 billion will be enough. If we tell the markets that this is the amount being put up, they can claim it is not enough. If the ESM was allocated a banking licence, it would have the firepower of the European Central Bank available to it. According to commentators, the bank's funding can be limitless, if it so chooses. Owing to the German psyche and political circumstances, however, there appears to be no willingness to take that route. If the fund needs to be increased, will the governors of the ESM have the authority to do so? Must it revert to the parliaments which passed this type of legislation? Will each country's parliament have a veto? What happens if a country says "No"? My reading of the legislation is that this process must be unanimous with Ministers, who are the governors. If it must be unanimous among governors, does it also need to be unanimous within all the member states?

There is a question regarding the inviolability of ESM staff with regard to prosecution. I understand this is the case with other lenders of last resort, specifically the IMF. Does this meet with other international norms or the provisions of other international treaties? There is a similar question regarding tax exemptions. Are the tax exemptions similar to those in place for other personnel?

There are a couple of quotes which are very relevant to where we are as a Continent. It has been said, specifically about Spanish banks, that a short-term fix could store up longer-term problems. Spanish banks took ECB money and may well use it to buy more government debt. That is what can be described as the loop of doom, with weak banks propped up by weak sovereigns and falling value. That must be broken. If we do not break that cycle, who knows where we will end up.

There may be geopolitical consequences in this process that we cannot yet predict. There was only one world war in the last century, as opposed to two, as World War I was paused for a little over 20 years because one of the nations became impoverished. Europe has been shown to be more savage than any other continent in fighting wars, and unless the ECB and government institutions sort out these issues once and for all, we do not know where this will end. I do not say that lightly.