Thursday, 8 February 2024
Finance (State Guarantees, International Financial Institution Funds and Miscellaneous Provisions) Bill 2023: Committee and Remaining Stages
I will speak to the issue in this section. This section looks to how funds may be utilised as they are received by the State in repayment, as outlined. In this Bill, a large amount of money is rightly directed towards supporting investment in and the reconstruction and re-establishment of Ukraine.It is appropriate that we would look at that wider context of the support that Ireland contributes, both individually and with others in the European Union, towards others who have been impacted and devastated by the impact of war, and not just reconstruction but, indeed, essential and basic relief works that are necessitated due to the widespread destruction of property and health and education infrastructure. These are the kinds of areas we are seeking to support through the funds itemised in this Bill. We know that right now in Gaza, however, there is a huge impact with regard to those structures associated with civilian, educational and health infrastructure and the basic food infrastructure. This is simply infrastructure associated with basic access to clean water or food.
The agency that is there and in a position to actually support the 1.5 million people currently displaced is the United Nations Relief and Works Agency, UNRWA. It is appalling that at a time when 1.5 million people are in extreme danger and when, in fact, the International Court of Justice specifically and explicitly stated that the restriction on access to humanitarian aid at this time is contributing to that risk of genocide, we see the potential withdrawing of funding to exactly that kind of humanitarian and human rights support that is essential to infrastructure that is so needed. It is absolutely contrary to the spirit of the ICJ ruling. It is contrary to what we know is necessary. We are in real danger, and real deep moral danger in terms of the European Union, if we do not see the delivery of funds. We heard that funds of $88 million are due at the end of the month. If that does not go through, we have had signals from the United Nations Relief and Works Agency that it may not be able to continue delivering essential supports to the 1.5 million people currently desperately dependent on them.
The Minister of State will be aware that Spain has signalled that it will provide additional funding at this crucial moment. Belgium has similarly indicated that it will be making its payments. It is very unfortunate to see that Enabel, the Belgian Development Agency, recently had its headquarters bombed in Gaza. While it is absolutely appropriate and right that there is investigation and serious action in respect of the allegations against 12 personnel of the 13,000 who are working in the area, of course, we should be remembering, recognising and honouring the 152 United Nations Relief and Works Agency staff who have been killed in the course of doing their essential humanitarian work. This is the opportunity, when we are rightly making decisions around a commitment and pledge that we will support those devastated by war to rebuild, for the Government to signal that Ireland is also committed to supporting and, indeed, increasing and strengthening its support for the United Nations Relief and Works Agency in support of another set of people - men, woman and children - who are similarly devastated by acts of war.
As the Senator will know, Ireland has been a long-standing supporter of UNRWA, which provides essential services to the Palestinian refugee populations in the West Bank, Gaza, Lebanon and Jordan, which is some 5.9 million people. I visited UNRWA in Jordan only last year.
We fully support the decision of UNRWA Commissioner-General, Mr. Philippe Lazzarini, to immediately terminate the contracts of a small number of employees in Gaza suspected of involvement in the brutal terrorist attack on 7 October.These allegations must be investigated thoroughly.
Ireland provided €36 million of funding to support health, education, humanitarian relief and other basic relief services for Palestinians in 2023, including €18 million through UNRWA. We have no plans to suspend funding to UNRWA and have full confidence in the UNRWA leadership in upholding its zero-tolerance policy for anyone involved in violence or terror, and Ireland's support will continue.
Before I go back to Senator Higgins, I welcome a number of guests to the Gallery, namely, Fr. Patsy Carolan and two guests, who are here with Senator Joe O'Reilly; John Quinn and his guest, who are here with Deputy Smith; Catherine Fay, who is a guest of the Minister of State, Deputy Richmond; Mary and Eugene Slater, who are guests of the Minister, Deputy McConalogue; and a transition year student, Ben O'Neill, who is guest of the Minister of State, Deputy Chambers. They are all very welcome to Leinster House and Seanad Éireann. I hope they will have a nice day here.
I thank the Minister of State for his response. It is good that there has been responsible engagement on the part of the Government with UNRWA and that there are no plans to diminish the support. The amendment had sought to identify other sources of funding to supplement what Ireland is currently giving to UNRWA because, if it is the case-----
Of course. I thank the Minister of State. We can come back to this in another context. Nevertheless, it is important for Ireland to make plans to look at how we can not just continue our funding but increase it if international humanitarian responsibility requires that should a gap arise during these crucial months.
I move amendment No. 2:
In page 14, line 25, to delete “Dáil Éireann” and substitute “both Houses of the Oireachtas”.
Amendments Nos. 2 and 4 seek to address an issue with the Bill in that, as drafted, it would provide that the reporting on the functioning of these funds need be laid before only Dáil Éireann and not before both Houses of the Oireachtas. Why is Seanad Éireann excluded from having such reports laid before it? I do not believe that would be regular or appropriate. We have as much of a right to be informed as to the use of these funds as Members of the other House. These are not solely financial measures, given there are also qualitative aspects to the reporting for transparency. I hope it was an oversight and that perhaps the amendments will be accepted such that the reports will have to be laid before Seanad Éireann as well.
Amendments Nos. 3 and 5 will insert a new paragraph into subsection (3) that would require that the statement regarding the State contribution to the guarantee agreement would contain information on what moneys that were paid for by the State under the guarantee were used for. Again, I am not looking for an excess of detail on every pen bought and so forth but there is a responsibility on us as a State to ensure the moneys we pay and contribute will not be used for any purposes contrary to our legislative obligations as a State regarding the areas of investment. In particular, I am looking to two examples, namely, the Fossil Fuel Divestment Act 2018 and the Cluster Munitions and Anti-Personnel Mines Act 2008. I believe there is an error in the printing of the amendment, given it refers to 2018 rather than 2008. The amendment seeks to address the key concern that Ireland should not provide financial support to the weapons industry, in particular, or contravene our national law in respect of the cluster munitions legislation.I was lucky enough in a previous role working with Trócaire and the Cluster Munition Coalition to be there in Croke Park. It was one of Ireland's great achievements to host the negotiations to successfully ban cluster munitions as an appalling weapon with a hugely indiscriminate human life cost. It is an example of the positive role Ireland as a neutral nation was able to play in the promotion of peace, multilateralism and human rights.
The Cluster Munition Coalition offers the following overview of what these weapons do:
Cluster munitions are weapons that are fired from the ground by artillery, rockets, missiles and mortar projectiles, or dropped by aircraft. They open in the air to disperse multiple submunitions or bomblets over a wide area. Many submunitions fail to explode on initial impact, leaving remnants that indiscriminately injure and kill like landmines for years, until they are cleared and destroyed. Contamination from cluster munitions remnants denies access to agricultural land, creates barriers to socio-economic development, and hinders the delivery of humanitarian assistance and essential services.
Unfortunately, despite the 2008 high point when we had the ban, there is a rise of them internationally. They are being used again. Some 987 persons were wounded or killed in 2022, of whom 890 were in Ukraine and 95% were civilians. At the outset of its illegal invasion of Ukraine, Russia used stocks of old cluster munitions and newly developed munitions. In July last, the United States began transferring cluster munitions to Ukraine in a move criticised by many countries, including Ireland, which has been unwavering in its support for Ukraine's to self-determination. The cluster munitions from the United States, according to Human Rights Watch, have an unexploded ordinance failure rate of between 6% and 14%. At least 12 other European countries have weapons manufacturers that produce these weapons. This seems like detail but is very relevant and another matter we may be examining in the finance committee concerns some of the ammunition funding from Europe in recent times.
While needing and wanting to support Ukraine in every way we can, including investment and reconstruction, it is appropriate that Ireland would take steps and have measures and safety checks to ensure the funds we provide are not being invested in ammunition purchase or manufacture, certainly in respect of the cluster munitions legislation, which is explicitly clear that we cannot even give funding to a factory that produces cluster munitions.
I have somewhat excessive notes and will not go into them but we want to be assured that any investments and monies we provide do not contravene something Ireland got huge credit for internationally, namely, our leadership in fossil fuel divestment.
I gave two examples but the wider question concerns qualitative reporting and what information we can have. Much of the information outlined was simply around repayments, stating that the money went out and whether it came back. The question of what the money was used for, not in inappropriate detail but at least that it was not used in contravention of national legislation, is a reasonable one to include in reports.
The Minister for Finance does not propose to accept amendments Nos. 2 and 4 as the existing text mirrors, and is consistent with, the approach taken in legislation on the Statute Book, which contains similar reporting requirements for guarantees that the State has entered into, for example, the financial provisions Covid Act 2020 and the European Financial Stability Facility Act 2010, where the requirement in legislation is to report to Dáil Éireann.
The Minister for Finance does not propose to accept amendments Nos. 3 and 5, as the democratic accountability and oversight of macro-financial assistance, MFA, operations take place at a European Union level, where the European Commission is obliged to report to the European Parliament and Council. The Government is a member of the Council of the European Union while Irish MEPs represent the country in the parliament. In addition, the amendments do not appear to be entirely coherent with the legislation and the practical operation of EU MFA programmes.In this regard, I am advised that the Fossil Fuel Divestment Act 2018 and the Cluster Munitions and Anti-Personnel Mines Act 2008 place obligations on the NTMA concerning how it invests money on behalf of the State. However, these obligations would not appear to have relevance to this legislation or to EU MFA operations concerning Ukraine, which concern the provision of budgetary support to Ukraine to help it maintain a basic level of state services.
I am a little concerned by the reference to the NTMA. I hope this is not a signal that the State is moving away from seriousness in respect of its position regarding investment in cluster munitions. This would very much be a retrograde step, certainly given Ireland's leadership in this area. Our legislation is quite clear regarding this matter. It was framed initially in terms of the NTMA at the time, but the clear impetus and force of the convention, which, as I said, we negotiated in Croke Park and gave leadership on internationally, is against any investment in respect of these weapons. As I said, these are landmines dropped from the sky.
I would, therefore, like the Minister of State to clarify that it is not the case that he believes Ireland can or may invest in these weapons. I feel the second sentence from the Minister of State is more reassuring, as he expressed the view that this funding is going to be put towards the establishment of essential state services and so forth. Perhaps, though, the Minister of State might elaborate on this point in respect of the reporting to the EU. On the cluster munitions, to be very clear, this is not solely a financial or budgetary matter. It will be a matter of foreign affairs and defence policy, as well, which is, absolutely, a subsidiarity issue. It is an issue in terms of Ireland and our responsibility and not something that is decided at EU level for us. If he wishes, however, perhaps the Minister of State could assure me, first of all, regarding what mechanisms will be in play in terms of Ireland's engagement at EU Council level to ensure there will not be any straying from this area of essential services into areas that could go beyond the meaning of that rubric and into the realm of defence or military investment.
The Senator is indeed right to point to Ireland's leadership in relation to cluster munitions, and there certainly will be no change in policy from the Government in regard to this matter or concerning investment into those types of horrific munitions.
The memorandum of understanding entered into by the European Commission and the Ukrainian Government makes it very clear that the objective of the MFA is to support Ukraine's macro-financial stability given the acute financing needs triggered by the war circumstances. It seeks to support structural reforms aimed at improving overall macroeconomic management and strengthening economic governance and transparency and improving conditions for sustainable growth. In the MOU, Ukraine commits to ensuring that funds received will be spent in an efficient, transparent and, most importantly, an accountable manner, and to set up and operate a reporting system that will enable the availability of sound budgetary information to the Commission in an accessible, timely and comprehensive manner. For example, Article 5 of the MOU ensures that Ukrainian authorities must provide monthly reports on the revenues and expenditures of the state budget at the level of the major expenditure headings.
I thank the Minister of State. Again, it may be useful when the reports are placed before the Dáil, if not the Seanad, to indicate what kind of information will be available and will come through. This is something that is certainly important for Ireland to monitor. I accept the bona fides of the Minister of State in this regard, but we may return to the issue because I think greater scrutiny might be needed in terms of some of our other areas of investment in future.
I move amendment No. 3:
In page 14, between lines 35 and 36, to insert the following: “(ii) information regarding what monies paid by the State under the Guarantee Agreement were used for, including but not limited to evidence that the monies paid by the State were not used for purposes contrary to the State’s legislative obligations related to investment, including but not limited to obligations under the Fossil Fuel Act 2018 and the Cluster Munitions and Anti-Personnel Mines Act 2018; and”.
I move amendment No. 5:
In page 16, between lines 32 and 33, to insert the following:“(b)information regarding what payments made by the State to enable it to comply with its obligations under the MFA+ Contribution Agreement were utilised for,including but not limited to evidence that the monies paid by the State were not used for purposes contrary to the State’s legislative obligations related to investment, including but not limited to obligations under the Fossil Fuel Act 2018 and the Cluster Munitions and Anti-Personnel Mines Act 2018;”.
I want to clarify that it is the exact same point in regard to the MFA as the Minister of State outlined in his reply.
I move amendment No. 6:
In page 17, between lines 3 and 4, to insert the following:
“Report on conditionalities
22. The Minister shall, within 18 months of the passing of this Act, lay a report before both Houses of the Oireachtas outlining the manner in which Ireland has ensured that European Union funding to Ukraine does not come with conditionalities which would undermine long-term social cohesion such as enforced austerity, privatisation or broader structural adjustment programmes.”.
Amendment No. 6 seeks to insert a new section in the Bill which would require that:
The Minister shall, within 18 months of the passing of this Act, lay a report before both Houses of the Oireachtas outlining the manner in which Ireland has ensured that European Union funding to Ukraine does not come with conditionalities which would undermine long-term social cohesion [in Ukraine] such as enforced austerity, privatisation or broader structural adjustment programmes.
Amendment No. 7 seeks to insert a new section in the Bill, which would require that:
The Minister shall, within 18 months of the passing of this Act, lay a report before both Houses of the Oireachtas outlining any conditionalities or requirements placed on Ukraine as a requirement of access to funds specified under this Act and outlining such steps Ireland has taken in order to ensure such conditionalities do not include enforced austerity, privatisation or broader structural adjustment programmes which would undermine long-term social cohesion, environmental protection and human rights and create greater obstacles for Ukraine in the achievement of social, environmental and human rights standards required for European Union accession.
What these amendments seek to do is ensure that financial contributions are not tied to somewhat discredited policies in terms of austerity, which undermine social cohesion and would make it harder for Ukraine to accede to the European Union; something that is a stated shared goal.
We know that in many countries across the world, financial support and loans have too often been tied to structural adjustment programmes which serve to undermine public services, working standards, development, climate action, and human rights. That is the case in particular with requirements to reduce or minimise the public sector or to erode trade union and workers' rights.
The Action Aid 2021 report - The Public Versus Austerity - found that:
Despite IMF claims that wage bill containment is only ever temporary, all of the 15 countries studied were given a steer to cut and/or freeze the public sector wage bill for three or more years, and eight of them for up to six years.
It further found that in those 15 countries "the recommended IMF cuts add up to nearly US$ 10 billion – the equivalent of cutting over 3 million frontline public sector workers" and found:
There is no clear logic, rationale or evidence to justify when cuts are needed, or how much is enough. Zimbabwe, with a wage bill at 17.1% of GDP, was advised to cut, but so was Liberia which spends 10.1%, Ghana at 8.7%,...[or] Brazil at 4.6%, [and] Nepal at 3.7%".
The same recipe and what are very much ideological measures for structural adjustment were applied in different economic contexts. Imagine calling for the same cut in a country spending 3.7% on public sector wages as in a country paying almost 20%. It is because it is the same recipe book. We have two processes here. I say this because there have been concerns in relation to some of the other funds and loans that have been given to Ukraine. They are coming with conditionalities that make it harder for Ukraine to reach the level of social cohesion, to deliver public services, and to have those standards that are also going to be required for accession.
When we talk about accession, there is a whole set of conditionalities, including environmental and social conditionalities. These are the measures with regard to participation in the European Union, and I am worried that we may end up with a contradiction where the money is telling them to do one thing but the accession process is asking them to achieve things. We know from Ireland that if you have these very blunt austerity measures attached that you create problems down the line. It is one of the reasons we do not have enough doctors, teachers and so forth. There was a freeze for so long that we ended up losing our pipeline. That is an example of an economic measure that undermined our social cohesion and the social services we need. Similarly, I am concerned that we do not have control, not necessarily in the IMF but in terms of the EU funds, of these very substantial investment loans. Again the EU has its record too, for example, when Greece was forced to sell ports to China to privatise. When you think of it, it was strategic foolishness that in order to achieve short-term repayments, we were losing ports at the very edge of Europe.
There are some within the European Union who have learned the lessons of austerity. We saw during Covid that it was recognised that sometimes you need to invest in a wider way. I wonder how Ireland will monitor to ensure that we do not end up at counter purposes, whereby on one level we are looking to raise the standards in these social and environmental areas in Ukraine to support accession, and on the other level, the country may be put under huge pressure with regard to austerity or other conditionalities, specifically privatisation.
I will briefly come in to support Senator Higgins' amendments. The reason I do so is because it is increasingly clear to me that in fact, there will be an agenda of privatisation and of outsourcing coming from the European Union. It is very clear, unfortunately. God knows the Ukrainian people have suffered enough already. It is par for the form of the European Union to attach these types of conditionalities to the sort of funding we are talking about. Unless the Minister of State is in a position to guarantee that those sort of conditionalities are not going to be attached, I cannot think of a single reason he would not support this amendment. It is very sensible, and in fairness, it is an amendment that we can put in as a defence of the Ukrainian people for the coming time.
Similar to the previous group of amendments, the Minister for Finance is not proposing to accept these two amendments, as the democratic accountability in the oversight of the MFA operations takes place at a European Union level, where the European Commission is obliged to report to the European Parliament and the European Council.
With specific regard to the issue of conditionality, the relevant EU regulations on the MFA operations to Ukraine are already in force, and stipulate the conditionality that attaches to the MFA operations. Ukraine has already met the conditions for the MFA operations for 2022 and 2023, which this legislation concerns, and the funding has been fully disbursed. What this legislation allows for is Irish participation in the funding arrangements for this support to the Ukrainian people, something I would hope enjoys unanimous support in this House.
The support for funding for the Ukrainian people is not the question here, and that is not something that is being debated. The question is around genuinely supporting the Ukrainian people so that the funding can be used in the way that is most appropriate and that drives this. With regard to the reporting process - and I say this as a former member of the Future of Europe process - the fact and the legacy is that certain parts of the European Union and its structures are not always necessarily great at talking to other parts. While we may well have reporting with regard to these budgetary and financial measures by the Commission to the Parliament, there is a separate process around all countries acceding having to achieve the essential levels and standards of the EU Charter on Fundamental Rights. This was something that was very important to citizens in the Future of Europe process.There are separate processes that can run in parallel and sometimes, which we have seen, they work at odds. We saw it in a very blunt way in Europe whereby the European agenda for smart, sustainable and inclusive growth, which was the agenda that was meant to take us to 2020, was put to the side to instead focus on, and I think it was under Mr. Juncker, nine or 11 measures that were directly, and very narrowly, related to the fiscal returns. In fact, Europe lost a decade in its climate and digital transition because that smart, sustainable and inclusive growth vision was put to the side in favour of short-term financial returns and assessing whether the money come back that quarter and the next quarter.
It is not simply enough to say it is in Europe. We are Europe. We are part of Europe. This is part of Ireland being responsible. Being friends to Ukraine is to be friends who try to ensure that Ukraine has the wherewithal to develop in a way that is good for its people to ensure quality work and so forth. It is also being friends to Europe and the EU to ensure that we do not see mistakes that were made internally within Europe, imposed externally.
Again, I am not satisfied simply by saying this. I understand that the moneys have been disbursed but I am trying to ask Ireland to be a bit of a champion for deeper thinking and to join up these two processes - the accession process, which we all support and the process around finances - but ensure that they do not work at odds with each other but work in a way that complements each other. I ask for Ireland to be a voice in that process. That is why I included the phrase "steps Ireland has taken." I know that we do not have overall control but I want to know what steps Ireland might take around trying to join the dots.
This debate is timely because we have a group in from Ukraine who are guests of Senator Shane Cassells. Our visitors are staying currently in Athboy and we are discussing various matters to do with funding for Ukraine, etc. They are very welcome. They are also here with Ms Liz McCormack, who was the first ever female cathaoirleach of Meath County Council back in 2008. She is still very involved with her local community and helping out the Ukrainians who are staying in County Meath generally and particularly in Athboy. They are all very welcome to Ireland, Leinster House and Seanad Éireann. I hope they have a nice day here. Enjoy the rest of your day.
The conditionalities have been decided through EU regulations. The Commission is obliged to report to the European Parliament and the Council about those conditionalities and how Ukraine disburses and uses the funding. The funding has been disbursed so what we are deciding here is whether Ireland will participate in something that has effectively happened. It is important that Ireland is a participant in this. Ireland has always been to the forefront of ensuring, at European level, that socioeconomic and environmental concerns are taken into account at that decision-making level. Yes, of course we are part of the EU and our voice is heard but it must be heard through the mechanisms that are there to ensure the conditionalities are ones that Ireland would support, which we do.
I will support the Bill in terms of Ireland allocating the funding. I will press the amendment because even while the money is dispersed this is an area that I am not seeing being identified or raised enough at a European level. I would like Ireland to raise it a little more vocally.
I move amendment No. 7:
In page 17, between lines 3 and 4, to insert the following:
“Report on conditionalities 22. The Minister shall, within 18 months of the passing of this Act, lay a report before both Houses of the Oireachtas outlining any conditionalities or requirements placed on Ukraine as a requirement of access to funds specified under this Act and outlining such steps Ireland has taken in order to ensure such conditionalities do not include enforced austerity, privatisation or broader structural adjustment programmes which would undermine long-term social cohesion, environmental protection and human rights and create greater obstacles for Ukraine in the achievement of social, environmental and human rights standards required for European Union accession.”.