Mr. Gay Mitchell, MEP:

It is a great honour for me to be invited to speak in the Upper House of our national Parliament and I appreciate the opportunity. In the European Parliament we are used to getting straight to the point because usually we do not get to speak for as long as 15 or 20 minutes, but I have some comments to make and I have condensed them. I hope to address the role of the European Union with particular reference to economic affairs, Third World issues and marking the 40th year of Ireland's membership.

In speaking of the role and history of the European Union I hope to show in my contribution that there is cause for optimism, not pessimism, that solidarity is essential and that inter-dependence is the key. I acknowledge that there are many people in Ireland who are being left behind and others who cannot make ends meet. This is something we must put at the centre of our concerns. We will get out of our present predicament but there will, naturally, be economic downturns in future. The difference next time will be that the European Union, including Ireland, will have put in and will continue to put in foundations that should have been put in place in the past. Future recovery, which, I believe, is well on the way will be more sustainable.

Therefore, recovery will last longer and future challenges will be capable of being met. Europe stared into the abyss of economic instability and has pulled back from the brink. We are managing the crisis but much work remains to be done to sustain the momentum and prevent slippage.

The reality of that progress is not immediately evident in an overview of the current state of the Irish economy. Ireland's debt to GDP ratio should be a maximum of 60% and it was, at one time, as low as 25%. It is now almost 112%, some of which is due to socialising bank losses and some to long-term spending commitments set against short-term cash inflows which dried up. The interest we pay on this debt is enormous but we were given some protection from the market rates by EU assistance and paid a considerably reduced rate of 3.3%. In addition, the European Central Bank supplied up to ¤160 billion in liquidity funds at an interest rate of 1% or less to keep our economy afloat. We in Ireland continued, in 2012, to spend ¤15 billion more than the Exchequer took in, thus adding to an already unsustainable debt. By moving to bring our annual budget into balance, we stop adding to debt and this, in turn, restores international confidence so that recovery will follow, our economy will grow and the debt to GDP issue can be solved by growth, as it was in the 1990s. Furthermore, to help get our budget into balance, Ireland must - and I believe will - get a rescheduling of the Anglo Irish Bank-Irish Nationwide promissory note. Clearly, we have much to do to make society a better and fairer place. While looking to greater solidarity within the EU, which is a two-way street, we also need greater solidarity at home. What is truly shocking is the fact that many people remained dependent on the Society of St. Vincent de Paul at the height of the Celtic tiger years.

As World War II came to an end, there was general revulsion at the damage that war had wrought on the continent of Europe and the way in which Europe's rivalries had embroiled the rest of the world with appalling results. A number of national statesmen realised that Europe could not be rebuilt the way it had been. Europe was losing its colonies and its world standing was reducing as the United States of America became ever more dominant in the world order. This was happening against the immediate backdrop of a threatening, armed and belligerent Soviet presence in half of the continent. The instigators of European integration all shared the same desire for the pacification of Europe, not through a system of power balances but by the reconciliation of European nations.

Today we are marking the 40th anniversary of Irish membership of the European Union. As those of us who were around then can recall, the debate about accession transfixed the country - I might mention in passing that I was only a baby on my mother's knee at the time. Why did Ireland join the European Economic Community, EEC, as it then was, in 1973? As with all such events, there are a number of complex reasons. Ireland was extremely dependent on agriculture, with more than 30% of its working population engaged in farming and many others depending on the food processing industry. Both agricultural and industrial exports were dependent on the British market and when the United Kingdom decided that it would seek to join the common market there was concern in Ireland that access to our principal market could be cut off. Equally, the Common Agricultural Policy, CAP, offered a structure to Irish farmers with guaranteed prices for farm produce and given the importance of agriculture and the numbers engaged in farming, this was an attractive option. There was a recognition among policy experts that Irish industry was not in a strong enough position to compete on the basis of free trade but since the Lemass-Whitaker reforms of the late 1950s there was also a sense that the ongoing protectionism which had characterised the early economic orthodoxy of the new State was not working and that Ireland needed to take the risk of entering into a free trade arrangement. At the same time, there was a sense among many that membership of the Common Market would enable Ireland to open out intellectually. The inevitable post-colonial dominance of London could be challenged and Ireland could be opened up to wider influences as it had not been since the 18th century.

In 1983 Greece became a member and in 1986 it was followed by Portugal and Spain. The most significant changes came at the very end of the decade. As the grip of the Soviet Union weakened across central Europe, it was clear that the final days of the Second World War had played themselves out. Enlargement of the European Union to include the countries of central Europe was a fulfilment of the objective of the founders of the European project. The new member states were, in particular, the countries which had been caught up in the wars which had raged through Europe over centuries. The fact that they could be integrated into a functioning, prosperous and democratic structure such as the European Union was a truly historic, if not miraculous, achievement. The Iron Curtain is no more and we have built stability on our continent through interdependence.

Based on the report of the committee chaired by the late Senator Jim Dooge, who also contributed so much to this House, and the European Commission's White Paper on Completing the Internal Market, the Single European Act was negotiated and agreed so as to reduce remaining protectionism. It is based on four freedoms, namely, the free movement of people, goods, services and capital, all of which are underpinned by a strong competition and consumer policy.

The introduction of the euro was the logical consequence of the development of the Single Market. No market of this nature could function without the elimination of the risks and costs involved in variable exchange rates. The need for stability of currencies is central to the success of a Single Market. The free movement of capital, people and goods is hampered if currencies can be devalued from one day to the next, leading to unfair advantage and trade distortions. The euro brings strengths and opportunities arising from the integration and scale of the European economy and maximises the advantages of a Single Market.

When the euro area was struck by its first serious financial crisis in 2008-09 it was hit twice, first by the level of huge pre-crisis public and private debt overhangs and, second, by an inadequate institutional design that prevented the kind of rapid and nimble responses required. More broadly, the crisis exposed the problems in the structure of the eurozone, which escaped notice in the good times. Measures had to be introduced to strengthen economic governance. It is in our response to the crises that we are building more sustainable progress for the future.

Soon there will be a new form of bank supervision in the EU, accompanied by bank recapitalisation measures. Ireland must - and will - benefit from bank recapitalisation. However, if debt as a percentage of GDP is the measure used to monitor all member states, we must have both debt and GDP measured in the same way in every member state. We cannot measure by litres in one member state and by metres in another, so to speak. All of these actions are helping to restore confidence and pave the way for recovery. There remain structural problems in southern Europe and these need to be addressed in a sympathetic way. Solidarity across the EU is key.

I will now turn my attention to the global situation. Most, though not all, people in economically and politically advanced countries can take for granted those material goods that were once the constant preoccupation and anxious concern of every man, woman and child, namely, adequate food, safe and comfortable shelter, sufficient clothing, basic medicine, productive work and opportunities for leisure. However, progress has created new problems such as the proliferation of nuclear weapons, economic crises, civil wars, ecological disasters and environmental threats. There are also many potential causes of international instability. What is to be the future of Russia, for example? Will it become a social market economy and democracy or an oligarchy? About one third of the EU's total gas, crude oil and coal imports come from Russia. Approximately 80% of all Russian oil exports go to the EU.

What will happen in China? Will a middle class grow? Will democracy take root? Will the economic miracle continue? What is the future of India and Pakistan? What is the future of the Middle East after the Arab spring? What will happen in Latin America? The EU is respected in these and other regions. It has a role to play in building international stability and interdependence. I believe interdependence is the strength and the objective of the entire European project.

Some 23,000 children die every day in the developing world. The good news is that there used to be 36,000 such deaths every day. The EU is investing as much as the rest of the world added together to tackle this obscenity. The European Union and its member states are the biggest contributors of aid to the developing world. They provide over 50% of official development assistance. While this is the right thing to do for selfish and selfless reasons, more must be done. By 2050, there will be 2 billion extra people on the face of the earth. Approximately 90% of them will have been born in what is now the developing world. Should we invest in such countries to help them develop? Should we make them our trading partners, or simply our partners? Should we leave a terrible inheritance of potential mayhem and global instability to our children? The EU, in partnership with developing countries, is striving to address these issues through its assembly with the African, Caribbean and Pacific Assembly and various agreements. Even if this is imperfect and insufficient, it is the just thing to do. There is progress to report. Many developing countries are charging ahead. People are being lifted out of poverty at the fastest rate ever recorded. Mercifully, the death toll inflicted by war and natural disasters has also decreased.

Europe needs to put more emphasis on justice. The social market economy is based on a number of elements. It is not geared towards performance only. It is based primarily on respect for human dignity, free from unwarranted control. Incentive systems that decouple risk and liability contradict the spirit of the social market economy. A market economy which serves exclusively the interests of capital cannot be called social. Global GDP increased by a factor of seven over the first 1,800 years of the common era but has increased by 70 times since then. This indicates that the social market economy can bring extraordinary benefits for the common good. This success has been possible because the free economic system has reformed constantly to meet the challenge of the day. It must reform again. I believe it is time to put "social" back into the social market economy.

In his most recent book, Finance and the Good Society, Robert J. Shiller, who is a professor of economics at Yale University, argues that "it appears that [stock market] price changes in the United States have been mostly due merely to changes in moods or attitudes or something else unrelated to the actual changes in real underlying value". He also points out that US companies fared much better in the Great Depression than is commonly suggested by embellished stories; for example, none of the 30 companies in the Dow Jones industrial average went bankrupt. In general, large US companies did well by lowering their dividend payments for a few years before resuming the trend. Professor Shiller claims that "most financial writers have apparently never heard of excess volatility" and suggests that they continue to write their stories about the day-to-day fluctuations in the stock market "as if the market were dominated by traders with razor-sharp minds and fast computers who have a deep understanding of the economy and grasp the import of every nuance in today's economic news". While he accepts that many traders "do indeed have sharp minds", he contends that "the game they are playing is not generally to involve themselves in macro-economic forecasting" but instead involves "playing a game against each other - a game of guessing each other's psychology". Professor Shiller also suggests that "the decline in the partnership structure on Wall Street may have contributed to the severe financial crisis that began in 2007, as it would appear to have reduced the incentives to manage long-term reputation and long-term risks in favor of a structure that encourages rapid growth of the firm". I should mention that Lehman Brothers was a partnership until 1984, Goldman Sachs was a partnership until 1999, Bear Stearns was a partnership until 1985 and Merrill Lynch was a partnership until 1971. According to Professor Shiller, the "ultimate collapse" of firms such as Bear Stearns, Lehman Brothers and others - and the economy as a whole - may be related to the changes wrought by the end of the partnership structure.

Putting our economies back in shape is not entirely the responsibility of politicians. Businesses and others must also step up to the plate. The markets invested against the euro expecting to make profits and they lost. They invested against individual member states and lost. Italy, for example, is now getting 15-year money at 4.8% from the markets. There are very few places for the markets to go. It is time they went back to investing in reality. The euro is here to stay. Member states will not be left abandoned. The ECB has the firepower to take on the currency gamblers. Most EU states need cashflow and confidence. It is essential that we bring our budget deficits under control, rather than continuing to add to our bloated national debts. This approach is bringing and will bring confidence. By contrast, in the 1930s it was every country for itself and beggaring one's neighbour was of no concern.

Despite the recent economic crisis, the EU has been a great success. Never in our history have many so countries had such a continuous time of peace. Never in our history has the average wealth of each European country been so high. Never in our history has Europe had such good relations - internally and with our neighbours and partners. The manner in which we act now will determine our stability and prosperity into the future. In the first half of the 20th century, approximately 60 million Europeans killed each other in two world wars that started on our continent. In the 21st century, Europe is at peace, the Berlin Wall has disappeared and ten former Soviet-dominated states have joined the EU.

Two political scientists, Professor Bruce Russett and Professor John Oneal, have examined statistical data on wars around the world from 1886 to 1992. This research, which was done for their book, Triangulating Peace: Democracy, Interdependence, and International Organizations, concluded that three variables help to explain how likely it is that a country will or will not go to war: economic interconnectedness, democratic traditions and membership of international organisations. All three factors help to prevent wars. When all three are present and at their most favourable, the probability of war is reduced by 71%. Professor Russett and Professor Oneal found that economic interconnectedness is the most important of the three factors. The fate of the former Yugoslavia shows what can happen when this interconnectedness breaks down. The EU, which is still a work in progress, has shown remarkable resilience in dealing with the economic crisis to date. We have some way to go, but we should acknowledge the progress that is being made. Together we can build what Professor Shiller calls "the good society". This requires intent and tenacity. It also requires institutional capacity. Of course markets are important, but traders do not have disinterested razor-sharp minds. Psychological games are best ignored.

When Ireland joined what is now the EU, our per capitaincome was a little over half of the average per capitaincome of the nine member states at the time. Based on 2011 figures, our per capitaincome - ¤35,455 - is three times that of Estonia, which is a fellow EU and euro member. When we joined the EU, there was a waiting list of up to five years for a telephone. Our biggest export was our people. At one point, our population dropped below 3 million. We now have a diversified economy in the information technology, financial services, agriculture and food, pharmaceuticals and manufacturing sectors. We have one EU Commissioner, just like Germany and Britain. The Secretary-General of the Commission is Irish, as was her predecessor. We are disproportionately represented in the European Parliament. We have one Minister at the Council of Ministers, like all other states.

This month, we commenced our seventh Presidency of the European Union. I believe we became sovereign the day we joined the Union. I sometimes think that if those people who were in the GPO in 1916 could have looked forward to Ireland running the European Union in the way we have in our sixth and now our seventh Presidencies, they would have been very proud. We should be very proud too. Joining the Union gave us a real say in the world and the possibility to shape an agreed, peaceful and prosperous future. Up to then, our interest rates and the value of our currency was decided by Britain. In the euro area, they are set by a Central Bank into which we have input. The EU is not perfect - it is, as I said, a work in progress - but it has served Ireland and Europe well. The EU won the Nobel peace prize in 2012, and we might well reflect on why that was. As we mark 40 years of Irish membership, we should reflect on the remarkable achievements that have blessed Europe and Ireland.

Yes, there is a need for solidarity in Europe, but it is also much needed at home. We do not just need solidarity among member states; we need solidarity among people. There is more than enough to go around in Ireland. It is time to stop cursing the darkness; each of us can light a candle. There is a job to be done in repairing our economy. However, let us not mistake economy for society. We can build what Schiller calls the good society. We have the tools; we can do this job in solidarity.