The people voted "Yes" in the referendum on the stability treaty. We would all agree that, as we knocked on doors and travelled the country, there was a genuine fear among the people regarding the future prospects for their children, the country and, more important, dealing with the wider eurozone crisis which is having a direct impact on prospects here. The Taoiseach was in contact with Chancellor Merkel last Friday and it appears that, for the first time, he raised with her the bank debt issue and, in particular, the promissory note issue. The feedback from the conversation does not seem to be positive, particularly from German officials who have been quoted as saying it would send a negative signal. In perhaps what was the understatement of the year one of them said, "We do not see need for movement at the moment." It is generally accepted that the eurozone is facing a make or break crisis. What is required is substantial change and decisive intervention, including a uniform bank debt resolution regime, a deposit guarantee scheme modelled on the American system and a central fund to aid the recapitalisation of risky but saveable European banks. Even agreeing to all of this in principle would bring immediate relief to the markets. However, every time a story points to progress, Germany quickly rubbishes any prospect of same. Germany is entitled to its views and assert its position, but its policy position is profoundly wrong and not serving the euro well. The time has come for the German authorities and the Chancellor to be told directly that either there will be a radical move on euro level involvement in sovereign bonds or the European Union will be dragged into much deeper and sustained economic decline. It is also time for other eurozone countries, including Ireland, to point out that the euro has benefited Germany enormously, particularly in terms of the surpluses it has enjoyed for a number of years and which it is so reluctant to share. The Irish people have tackled our deficit problems with great fortitude, sacrifice and urgency, but a significant proportion of our bank-related debt was incurred only because of wider European fears of contagion. That argument no longer holds water, and the claim that any deal in regard to Ireland's bank debt would set an unacceptable precedent is rubbish at this stage.
Leaders’ Questions
Does the Deputy have a question?
When the Taoiseach raised this issue with Chancellor Merkel, did he request specifically a write-down of Irish bank debt, particularly in regard to the promissory note, or a restructuring thereof? Will he indicate exactly what he requested of the Chancellor during that particular conversation and her response to him on the bank debt issue?
I thank the Deputy for his question. As a former Minister for Foreign Affairs, he will appreciate how these discussions and negotiations take place. I very much welcome the very strong, clear and decisive decision of the Irish people last week in respect of the referendum on the fiscal stability treaty. I thank Deputy Martin and his party and all of those across civil society who supported it. Were we meeting in this House today with a negative impact from the putting of that question to the people, we would be in a very different position.
I have always said that the banking situation was a separate question from that which the people were asked last week in the referendum on the fiscal stability treaty. After the decision in the referendum became clear, I spoke to Prime Minister Monti, the President of the European Parliament, Mr. Barroso, the President of the European Council, Mr. Van Rompuy, Chancellor Merkel, President Hollande and Prime Minister Rajoy, to whom I made it perfectly clear that this was the decision of the Irish people following a vigorous campaign in respect of the fiscal stability treaty, both for and against. I emphasised that the people were very clear in their view as to their positioning in so far as the euro was concerned, in terms of being a member of the eurozone and the European Union. I also made it clear to the leaders that it was perfectly obvious that a resolution needs to be brought about in respect of the banking situation. This is a tortuous and complex process and there are no simple, quick-fix solutions. I remind Deputy Martin that named officials quoted in newspapers are not politicians. I made the point last week, standing on the steps of Government Buildings with the Tánaiste, that this is a situation which requires consideration, assessment and decision by political leaders, not technocrats or officials, notwithstanding the important role they play. It is a question for politicians and political leaders to decide.
I happened to be one of the first to make the point, in Dublin Castle some weeks ago, regarding the possibility of licensing the European Stability Mechanism for direct injection into the banking situation. I am glad this position has gained credence with a number of countries and leaders. I am also happy to note that Europe is now having a proper debate, and the construction of a proper debate, on the question of a separation of the sovereign from bank debts. This is the start of a strategy which I hope will bring a political conclusion to the issue. As Deputy Martin is well aware, an assessment is going on in Spain in respect of the liabilities of Spanish banks. I note the comments yesterday by Spain's budget Minister, Mr. Montoro, in this regard. An election will be held in Greece on 17 June and the French national elections will take place this month. The ratification process in regard to the fiscal treaty is ongoing in several countries, as well as the process of the European Commission presenting its medium and longer-term proposals to deal both with the banking situation and longer-term issues.
In my talks with European leaders I clearly stated the reasons, from my perspective, that the Irish people gave a resounding and decisive answer to the question they were asked. I also pointed out that the question of the banking problem in the eurozone must now be dealt with, and dealt with politically. In that regard, I am writing to all of the leaders today and we will continue to negotiate as we have done, both with the troika and leading on to the question as to what can happen in respect of possible changes to the ESM. That is an issue I intend to pursue vigorously with leaders as appropriate.
I asked the Taoiseach a very simple question: what did Chancellor Merkel say to him? He raised these issues with her, but what did she say in response?
The Taoiseach mentioned officials and so on. The Canadian Prime Minister put it succinctly when he said we were four years into the crisis and still trying to get a sense of what the game plan was at European leaders' level. That is what external commentators are saying about the succession of European summits. Every summit in the past 15 months was said to be a breakthrough in dealing with the crisis only for hopes to be dashed within months. Now Spain is on the precipice. Its budget Minister has said the doors to the markets are no longer open to Spain.
The Taoiseach raised the issue of the ESM and said that in his view it should be used and have its mandate changed to facilitate the recapitalisation of and aid banks. We support that, but why are we debating the ESM legislation today without that mandate? The German Chancellor has opposed changing the mandate of the ESM to facilitate the recapitalisation of banks. Did she say this to the Taoiseach in her conversation with him this week? He said he had advocated this change to the mandate. Did he say this to the Chancellor and what did she say in response? What did she say to him about a decisive intervention to change what was happening at European level? We did not advocate a "Yes" vote on the debt issue. We clearly separated it, unlike some of the Taoiseach's Ministers who subsequent to the vote again raised it.
We need a deal on the bank debt issue to ensure sustainability into the future. That is the fundamental issue in regard to the Irish position. The European Union needs a different approach to the issue in terms of the sustainability of the euro. The House will debate and pass the ESM legislation today, yet the Taoiseach advocated that the mandate of the ESM needed to change. I have had no indication from him as to whether the Chancellor agrees with him. What did he say to her? What did she say to him about Irish bank debt?
Order, please. A final reply from the Taoiseach.
Are there secrets between the Germans and the Irish? I will put it this way to Deputy Micheál Martin who is well aware that this is not like a situation in which the British Prime Minister, for instance, may find himself where there is a Prime Minister, a Parliament and a bank. In this case there are 17 Prime Ministers, 17 Parliaments and one bank. As these Parliaments and Prime Ministers have different views, it is not a case of starting a process in which there is consensus across the board. In fact, at the European Council meeting at which the issue growth was discussed I also raised the question of the possibility of licensing the ESM in respect of a direct injection into banks and separating sovereign debt from bank debt. That view was shared by quite a number of other leaders. It is the right argument the European Union should now make. The point is that 17 Governments, 17 Parliaments and one bank have to-----
I will tell Deputy Micheál Martin what the Chancellor said. I did not give her an opportunity to say the Government of which the Deputy-----
Did she hang up?
Hear me out, a Leas-Cheann Comhairle.
Cad a dúirt sí?
I did not give the Chancellor the opportunity to say we had inherited an unprecedented mess left behind by the Government of which Deputy Micheál Martin was a member. The Chancellor commended the Irish people for the decision they had made and its clarity and decisiveness. She pointed out that we would have a euro summit meeting in June.
Another one.
Yes, one of many.
It is getting too late for this kind of crisis.
If the Deputy comes into this House-----
I want an answer.
-----with the understanding that a matter as complex as this will be sorted out with words over a telephone, he is certainly very far removed from the reality of what we face.
The Taoiseach raised that. He made a big deal about the telephone call.
Order, please.
The Greek people-----
His people leaked left, right and centre that he had been on to Chancellor Merkel straight way. He raised the view that we were all to expect something.
The Taoiseach is replying.
The Greek people-----
He is now saying it was just a simple phone call, yet he will not state what the Chancellor said to him on the fundamental issue of bank debt. He cannot answer and refuses to answer.
What did the Deputy do when in power?
Deputy Martin is out of order.
The Deputy asked a question and does not want to hear an answer. As he well knows, the Greek people are entitled to make their decision at their election.
Frankfurt's way or Labour's way; we are having more of it again.
Please, Deputy Martin.
The French people will make their decision at their election.
I want no more interruptions.
The assessment will bring to light the liability of the Spanish banks. One does not expect that any country in the eurozone will have a solution put together in advance of a decision-----
The German election is next year.
-----by the Greek and French people, the assessment of the Spanish banks and the difficulties in Italy, Malta and Cyprus in respect of their banks.
The time for sticking plaster solutions is over. Spain is on the precipice.
Order.
This will crystallise around the European Council meeting in June. If Deputy Martin believes that, because these matters are separate - I am very happy the Irish people made their decision very clearly and strongly - the banking crisis here will be sorted out in isolation, he is removed from-----
The Tánaiste said it.
Tell the Tánaiste that.
The question is-----
The Tánaiste said it. The Government side did the leaking. We all know how it works.
The question is that European leaders-----
The Taoiseach made the call.
"ET phone home."
The Tánaiste was saying it non-stop until the date of the referendum.
"ET phone home."
The European leaders must focus on their responsibilities as political leaders-----
Frankfurt's way or Labour's way.
----- to make political decisions about the eurozone crisis.
I agree.
As I stated, 17 Governments, 17 Parliaments and one bank-----
And one lady.
There is a range of views.
One lady.
Deputy Martin, believe you me, were we to have agreement this morning that this process would be tortuous and complex-----
It already has been - for four years.
Yes. At least leaders are now talking about the possibility-----
What did the Chancellor say to the Taoiseach?
-----of a direct injection of capital into the banking sector, which the Spanish Prime Minister himself has called for-----
Has she said anything?
-----in view of the assessment being carried out.
Has the Chancellor agreed that?
I call Deputy Adams. I want order.
The Chancellor conveyed her thanks to the Irish people for the decision they made. She said-----
What did the Chancellor say about bank debt? Could we get a reply, a specific answer?
The Chancellor commended the Irish on their decision. She made the point, on which we both agree, that the French and Greek elections, the Spanish assessment, the ratification process, the presentation by the Commission of the medium and longer-term-----
The French agree with this approach.
These are all the issues that will be decided on.
Everybody agrees with this approach except the German authorities.
It will be very clear by the end of this month what will happen.
I call Deputy Gerry Adams. I want order when he is speaking and while the Taoiseach is replying.
Glacann Sinn Féin leis an toradh agus gabhaimid comhghairdeas leis an Rialtas, agus le Fianna Fáil fosta. Tá sé greannmhar éisteacht le Fianna Fáil ag troid leis an Rialtas ar an ábhar sin.
I am sure the Taoiseach will join me in thanking all those citizens who voted in last week's referendum. I am sure he will be concerned about the large number of citizens who did not vote. Sinn Féin argued against the treaty and was encouraged by the strong "No" vote and the acknowledged the reluctance of a section of the "Yes" voters to accept the Government's austerity policies and to hand over fiscal powers to the European Union. In our view, the outcome represented more the fear of the people than the will of the people, but we respect the result and congratulate the Government and Fianna Fáil. It is funny to listen to Fianna Fáil having a sham fight with the Government, but we congratulate them all on the success of their campaign. The Taoiseach must now deliver on and fulfil his referendum commitments to remove the burden of the banking debt from Irish citizens and initiate genuine job stimulus projects. As the Taoiseach just acknowledged - it is like a Jim Reeves song - he raised these issues directly with the German Chancellor.
"Put your sweet lips a little closer to the phone."
Can I put the same question to the Taoiseach? Will the Taoiseach tell the Dáil what she said to him and will he tell us straight whether the German Government supports the need to remove the bank debt from Irish citizens? A straight "Yes" or "No" would do.
At least Deputy Adams is magnanimous enough to offer comhghairdeas to the people for their participation in the referendum and for the clarity of the decision that they made. I commend the Irish people. Despite the atrocious litany of hypocrisy and downright untruths that were propagated by the "No" side, they saw through all of that and made their decision about the fiscal stability treaty-----
Order.
-----based on-----
Order please. The Taoiseach to reply.
Deputy Mac Lochlainn got a result in Donegal which, I am quite sure, he was happy with from Sinn Féin's point of view.
It is a Pyrrhic victory and the Taoiseach should get on with it.
In any event, I informed not only the German Chancellor-----
It is nice to see them back.
-----but the Spanish Prime Minister, the President of France, the Italian Prime Minister, the President of the European Council and the President of the European Commission of the outcome of the referendum, of the extent of the interaction between civic society, those who supported the "Yes" campaign and the electorate, and the quality and clarity of their decision, but I also made it perfectly clear that Ireland sees the problem here of dealing with the bank debt and the bank crisis as one for politicians to make decisions on. We have had discussions about this for a long period. All of the prime ministers, and the president, to whom I spoke understand that this month of June will see the French elections and the Greek elections, and the result of the assessment of the Spanish banks and the extent of the liability there. The issues that will be put forward by the European Commission in respect of proposals for medium and longer term solutions here will be the focus of the attention of the decision to be made, arrived at or put on the table at the June meeting. All of that will happen over the next three and a half weeks.
There were firm commitments made by the Taoiseach and by the Government side to have a genuine jobs stimulus. The Taoiseach was converted to the notion of growth in the course of all of this, although there was not a mention of the word "growth" when he came back with the treaty. The Taoiseach also made a commitment in terms of removing the bank burden.
I wish the Taoiseach well with all of his telephone calls, but he did not tell us what those he telephoned stated to him. He did not even tell us what he stated to them. The problem is - this is the crux of it - the Taoiseach never raised these issues at summits or at meetings with other European leaders. He has told us that on many occasions in the Dáil. In fact, he boasted here that he would never have the word "defaulter" on our foreheads. He has never raised the issue of bank debt. The Taoiseach has now had a road to Frankfurt conversion, but there is a credibility issue in him persuading European leaders, who see the "Yes" vote as an endorsement of their policies. Who could blame them, seeing as the Taoiseach has continuously echoed their policies? The Taoiseach and Chancellor Merkel are on the same page on austerity and all of these other right-wing ideological positions. Leaving aside the Taoiseach's failure to tell us the outcome of his telephone conversations, he should tell us how he will get the burden of this bank debt relieved from taxpayers here and how he will initiate Government-led and EU-led jobs stimulus initiatives. He should forget about all of those to whom he spoke last week. That was grand. As I stated, my party wishes the Taoiseach well. The Taoiseach should tell us how he will do this.
There will be statements later on the European Council meeting. There will be plenty of opportunity in the House to discuss the response by Government of the bringing forward of a stimulus package in respect of growth and investment, and the Minister for Public Expenditure and Reform, Deputy Howlin, will present that in due course here. There is much consideration and much work going on. Deputy Adams will be aware that both Deputy Howlin and the Minister for Finance, Deputy Noonan, had intensive discussions with the EIB only a few weeks ago in respect of blockages in the system for PPPs and the opportunity for further investment from the EIB in sustainable infrastructure projects. The Minister will bring in his proposal in that regard shortly.
The question I discussed with Chancellor Merkel was that fiscal discipline and growth are not two polar ends; they are compatible. If one has good housekeeping rules, which is what the fiscal stability treaty is about, and one puts these together with a growth and investment and stimulus plan, it would bring the most beneficial results for people in terms of investment for job opportunities and work. This will be the focus for meetings in future arising from discussions at the last Council meeting.
Let no one run away with the idea that there is a simplistic solution to what is involved. Deputy Adams should note that even if one had agreement with the majority of leaders on a particular strategy, the changes and the valuations required, and the processes and the legal systems involved in various countries are tortuous and complex. As someone who has been through the peace process here and who understands the way very sensitive negotiations, to which he was a party for many years, proceed, he will appreciate that it is not always possible to give the final result of all the words and issues spoken.
Anyway, my message in writing and to the individual leaders is that this issue must be dealt with by political leaders who must make political decisions in respect of dealing with this crisis. It is the right argument and the right discussion to be involved in with regard to the separation of sovereign debt from bank debt.
I note Deputy Adams's comments about the burdens here. He could do his bit when he leaves the Chamber today by announcing that the his legal team will not accept any fees for the stunt he pulled down at the High Court as a matter of public interest.
I congratulate the Taoiseach, the Minister, Deputy Coveney, the Tánaiste and Fianna Fáil for what was a decisive victory in the referendum.
He should not forget to congratulate his constituents too.
It should be acknowledged by those of us on the other side.
The people have been asked to make some heavy sacrifices as a result of the referendum. The Taoiseach has asked the people to make them and he has successfully persuaded them to do so. This has been done for the cause of European stability. As others have suggested, it is not unreasonable to ask that Europe should respond to this and that it should give us fair treatment in return. Like all Members, I welcome the Taoiseach's forthrightness in ringing the German Chancellor and stating that, whether at a political level or otherwise, we want a bank deal on the agenda. We should see more of that and we should have seen more of it before now.
I welcome the decision of the Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, to state that any deal given to Spain as part of the coming bailout, which is inevitable, should not be on more favourable terms than those given to Ireland, and, if they are more favourable, then we should benefit from them retrospectively.
Hear, hear.
This is exactly the stance which I hope the Taoiseach and others will take to the summit in Europe and to the multiple telephone conversations in future. There is a danger, not as a result of this referendum, that the big countries in Europe will continue to get preferential treatment regardless of the result of this referendum. They may be right or wrong but the Government, Taoiseach and the Tánaiste have stated that this result gives them added clout - I gather the phrase used was "authority in Europe" - which they can bring to the table at the summit at the end of June.
Given that the summit will be about growth, will the Taoiseach spell out whether he will bring the issue of banking debt to the political leaders in attendance? The Tánaiste has stated the greatest boost that could be given to growth would be to secure some relief on the bank debt. Will the Taoiseach give an assurance he will have this issue placed on the agenda as part of the promised growth pact?
Deputy Ross should understand the Government and I do not seek any congratulations. As he is well aware, once the Bill was published, the referendum issue became the people's property and it was, therefore, the people's decision. It is the Irish people who the Deputy would be right to congratulate on the clarity and decisiveness of their decision. The Deputy put together a Private Members' Bill which was unconstitutional in the sense that it sought to defer a decision which had become the property of the people. The Bill could not apply because had it been followed through, it would have meant that it may not have been able to hold any future referendum.
I assure Deputy Ross that the issue of the bank crisis will be on the agenda. I assume it will be a central issue for the June meeting and it may become necessary to have some serious reflection on it before the end of June. I do not know when the report on the assessment of the Spanish banks' liability will become fully known but it is an issue about which I spoke to Prime Minister Rajoy. As the Deputy is aware, a deep and intensive analysis of the scale of that liability is taking place as we speak. It does not follow automatically that a decision to extend a particular facility to a country would apply across the board. However, there is certainly a strong case for political justice to be seen to be done in respect of facilities being given to one country or another. The Irish case is very well known to all of the leaders to whom I spoke, to the extent that I made it perfectly clear that the Irish people's view is that a deal on the bank crisis would have very beneficial effects for this country, both in terms of our capacity to meet our debt liabilities and our ability to become the first eurozone country to emerge from a programme, which would also be in Europe's interest. These issues all form part of the discussions.
While Ireland is not the biggest country or most powerful economy, Irish people have taken many difficult decisions and have had to put up with the consequences of these decisions in the country's longer-term interest of emerging from the programme. I assure Deputy Ross that, from a political perspective, the Government will not waste any opportunity to make the case, not only from our national perspective but also as a member of the eurozone, that politicians - political leaders - now need to make political decisions on the strategy for the road ahead. I temper that by stating we will not have a quick fix decision which will apply in this case because, as I indicated to Deputies Martin and Adams, all of these matters involve tortuous and complex discussions from legal, constitutional and financial perspectives across 17 different parliaments and with one bank involved. The issue is central to the agenda and will be central to the June meeting.
I thank the Taoiseach for his reply. I look forward not to a quick fix but an early result and early relief on the bank debt. I will flag an issue to the Taoiseach, having flagged it previously, because it is becoming much more dangerous. Reports are emerging from Germany and the Bundestag that the German Parliament will not be able to ratify the treaty without the support of the Opposition because a two thirds majority is required. Today's edition ofThe Irish Times reports that the German opposition is demanding as the price for its support the introduction of a financial transactions tax. If that is the price of their support, I see a real danger that the big countries, including France, as President Hollande is also in favour, will decide that a financial transaction tax will be part of the funding of the growth package. Can the Taoiseach assure the House that Ireland, due to the vulnerability of the IFSC, will block any attempt to impose such a tax?
I do not want to interfere in the process of the French national elections. I spoke to President Hollande about our situation and about the fact that he has his elections this month. I do not wish to interfere either in the process of ratification of another country. As the Deputy is aware, like minded parties in different countries will put forward different views. However, while there was much discussion at the last European Council meeting about growth and investment, it took place among the 27 member states, rather than the 25 member states that support the fiscal stability treaty. The growth, investment and stimulus agenda concerns all 27 member states and cannot just be applied to 25 states. Any decisions on changes to taxes in respect of EU treaties require unanimity, and there was violent opposition at a number of meetings to issues like financial transaction taxes.
I do not wish to speak for the opposition parties in Germany, nor do I wish to interfere in any way in that country's ratification process, and I made that perfectly clear to the Chancellor. The Spanish assessment, the Greek elections, the French elections and the presentation by the Commission of its medium and longer term proposals are all part of the intensive political discussions now taking place and which will continue for quite some time. I have already made it perfectly clear that Ireland does not support a financial transaction tax, unless it applied in a global sense and there was no competitive disadvantage applied to the IFSC in Dublin that would not apply in London. Deputy Ross is aware that 35,000 people work in the IFSC, which is a fundamental part of the economic infrastructure of our country.