Dáil Éireann debate -
Wednesday, 6 Jun 2012

Vol. 767 No. 1

^ European Communities (Amendment) Bill 2012: Second Stage (Resumed) ^

Question again proposed: "That the Bill be now read a Second Time."

Deputy Catherine Murphy

This week the House is dealing with two Bills on European issues and the forthcoming European Council meeting, all of which are related to the current crisis. I have lost count of the number of times the European Council has met to discuss solutions to the crisis without getting to the heart of the problem. Tonight the House is discussing the European Communities (Amendment) Bill, the purpose of which is to amend the founding treaty. A major debate on the European Stability Mechanism Bill has been ordered for tomorrow. All of these debates roll into one and it is difficult to contribute to one of them without straying into the issues addressed in the other business because the issues are interrelated. At the same time, we are failing to address the issue at the heart of the problem, namely, the private debt incurred by the State as a consequence of transforming bank debts into sovereign debts.

I understand the reason people outside the House are bewildered by all of this. Many of those who voted "Yes" in the referendum, including a large number who did so through gritted teeth, had great expectations that some positive signs would emerge from the European Union. We were informed that telephone calls had been made to European leaders, yet news programmes are reporting that, when asked about debt relief in respect of the banking bailout in response to the "Yes" vote, the President of the European Central Bank, Mr. Draghi, stated: "I do not think there was any ground or any statement of aquid pro quo.” In other words, the outcome of the referendum is not linked with the bank debt issue.

He went on to say that the spread on government bonds had fallen further in Ireland than in other countries, which showed that "a return to market access is not a far distant perspective". He said that Ireland had made substantial progress on fiscal restructuring and bank consolidation. Mr. Draghi stated that the board of the IMF would be presented with a report on Spain this Friday. The difference between us and Spain is that Spain is a big country. Spain is a problem and we are not a problem, so there will be no rush to solve something that is not seen as a problem. I think that was the point some of us were trying to make.

I do not understand this Government's negotiating strategy, and we are signing up to things and making amendments to European treaties in the absence of any understanding of what that strategy might be. I want to know what kind of European Union we are designing, because we are re-designing it at the moment. I thought we belonged to a European Union that had values such as democracy, solidarity and cohesion, but these have been absent. The German Chancellor proposed that countries in programmes would lose their entitlements to a veto and other things. Obviously that proposal did not happen, but it shows a mindset. In the absence of having something clearly spelled out about what exactly we are trying to create, how can we continue to plough ahead with amending treaties?

This will be brought to a head when it begins to affect Germany. I was reading an article inDer Spiegel from 6 May, called “The End of Germany’s Illusions”. This is the kind of thing that will bring people to their senses, because essentially there are creditor countries and there are debtor countries, and everything is being designed with the creditor countries in mind. We are in a weak position and I do not understand why we are not trying to build solidarity among other debtor countries, but that is not happening. The article in Der Spiegel opened with the following statement. It states:

Germany's booming economy and plummeting unemployment has long insulated the country from the euro crisis on Europe's periphery. Those times, however, are coming to an end. The German economy is now showing it is vulnerable after all, and Chancellor Merkel will now be forced to make sacrifices.

I do no wish any country in Europe to make sacrifices, but there has to be an element of reality. I have quoted a number of German people who are opposed to Chancellor Merkel. The article goes on to state:

For Germans, it was always a crisis that belonged to others - the Greeks, Portuguese, Spanish and Italians. That is, those who didn't have their finances in control and were expected to kindly atone for it by adopting the German model. Back home in Germany, by contrast, the economy was booming and people had work. In a sea of misery, Germany was an island of bliss.

It is interesting to read that, even if it is not a Christian Democrat Union viewpoint, as this newspaper would not tend to be. However, due to the two thirds majority required in the German Parliament, the CDU requires the Social Democratic Party to vote with them. The article goes on to recommend letting go of power. It states:

Thus it is in Germany's interest to solve the life-threatening problems within the currency union both swiftly and sustainably. But steps more radical than Germany has been willing to take will be necessary to achieve this - and that goes for both Chancellor Angela Merkel's government and the German people at large, who have vehemently rejected the prospect of their country having to give up any power or money to save the euro.

We can sit in here and talk in a vacuum, but things are moving very fast and attitudes are changing because they are being forced to change. We were told we saved these banks on foot of an ECB instruction. We saved them because we had to save the euro, and we were told that no European bank was going to fail. We have been compliant for the troika and we have been compliant with our fiscal adjustments, which I think will be soon unsustainable, but we also acted in the interests of keeping a sustainable euro, and we have not had any serious return on that.

The principle of the ESM is not a bad one. The idea of having a major amount of money that can be drawn down in a time of crisis and where each country contributes is a good idea in principle. However, the problem is that there is no democratic oversight and many of the rules and regulations for the ESM are unacceptable as far as I am concerned. This is obviously a fund for which there is a requirement to pay the money back. It is difficult to understand what fund will be used to save the Spanish banks if it is not the ESM. To be perfectly honest, people are making this up as they go along without any values that would give many of us a sense of inclusiveness. I would like to go back to a stage where we did share some of those values, which were very noble, in the full knowledge that there will be pain. I understand that we cannot avoid that pain, but in the debates this morning, this evening and tomorrow, which are all interrelated, we are not talking about the issues about which we should be talking. We are not solving the problems we should be solving, and we are discussing them in the absence of knowing what will be created. That is dangerous.

Deputy Paschal Donohoe

I would like to pick up on some of the points made by Deputy Murphy. She made a fair point when she asked what is the vision, or the end point, of the current crisis. If there is not clarity, two things result. First, people's confidence is undermined, here and now. Second, it becomes difficult to evaluate any proposal because we do not know where it will end. I agree with some of the points made by Deputy Murphy in this regard, although I disagree strongly with her in other areas. As I listened to her and other contributors, I was struck by how well they summed up the tensions faced by the European project. Those tensions are clear and emotional and, taken together, they pose a clear threat to the survival of the euro and of the political institutions beyond it.

I will point to two of those tensions. First, people who are in bailout programmes do not want to be in them but countries that are paying for them do not want to pay for them either. This clear conflict throws up a stark contrast when one meets people and politicians from many of the countries that are funding the programmes in which countries like ourselves are residing. People in those countries do not want to pay for programmes. They do not want to hand over money to other countries. At the same time, we do not want to be in a programme. We would rather get out of it. Second, there is a clear tension in the euro and the eurozone itself. Everyone who is inside the eurozone wants to stay in it, but not every country in the eurozone has the same idea of what it means to be a member of the eurozone and not all are willing to live up to the expectations of membership. Because those two tensions are in play, the euro is facing a real crisis of legitimacy. If those tensions are not resolved, the euro will not survive. That is one of the reasons I campaigned for the treaty. I see it as a prerequisite for the kind of change that needs to take place if the euro, as we know it, is to survive and prosper.

At the heart of what we are discussing is the fact that the euro, as it is constituted at present, is an unfinished currency. For so long, the European economy was awash with cheap, global credit and experienced the benefits of a booming global economy. Because of that, the fault lines in the euro were invisible, ignored or not acted upon. Of the two fault lines, which are still there and whose consequences we are grappling with, one is political and one is economic.

The political fault line is in the fact that some members of the eurozone were happy to accept the benefits of membership but did not accept that any costs or responsibilities would be associated with it. We saw this clearly in what happened to the Stability and Growth Pact. More seriously, the chimera of economic growth, fuelled by cheap credit, allowed companies, governments and unions to take their eye off the ball when it came to the things that really mattered. Productivity, competitiveness, good living standards and managing people well were all ignored, due to that.

The economic fault line with which we are now grappling is that we had a currency union without a banking union. The fateful mismatch between those two elements was the cause of much of the banking difficulty we are now experiencing. We still do not have a Europe-wide banking deposit guarantee scheme that is credible and clearly understood by everyone. We still do not have a Europe-wide banking regulator and we still do not have a Europe-wide banking resolution scheme that enables countries to deal with and manage what happens when a bank fails. The absence of those elements of a banking union, alongside the existence of a currency union, created a horrific mismatch within which all the difficulties we are now dealing with bloomed.

A common thread in both those failures was the fact that national Governments did not want to give up power in these areas. They did not want banking regulation to leave their jurisdictions. The same was true of fiscal policy. Governments set up rules that they themselves would obey. When those rules were breached, national political decisions outweighed the existing rules. All of those decisions were made for reasons of national economic sovereignty.

We now find that the danger to our own economic sovereignty is far worse than we could have imagined when those decisions were made. We must now be completely honest as to what the solution to these difficulties should be.

One of the core reasons for our current difficulty is that we did not have an architecture that completed the single currency zone. We did not have a banking union or the right rules and institutions for national budgets. We are kidding ourselves, potentially to great historic cost, if we imagine that anything less than fixing those deficiencies will substitute for dealing with this crisis. It would be a delusion, with consequences that we would rue for decades to come, not to face up to how we should deal with the two mismatches that occurred when the single currency zone was set up.

Now, unfortunately, is the time when we must face up to the consequences of that mismatch. Greece faces the prospect of a disorderly default on its budget, and I hope that country can avoid it. It would be a catastrophe for Greece, and for us. Some European political leaders who should know better are talking about the prospect of a country leaving the eurozone. We see what is happening in Spain, where the banking system is too big to fail but too expensive for Spain to save on its own. Because those mismatches were not dealt with when the eurozone was established, we are now dealing with those terrible consequences.

The Governor of the ECB, Mario Draghi, referred to this last week when he said the ECB on its own cannot fill a political vacuum. That vacuum must be filled. The two building blocks that need to be put in place are a banking union and a fiscal union. Each will be very difficult and will pose huge challenges to countries like ourselves. The lack of either, however, will prevent the putting in place of a comprehensive response and solution to a crisis that could wreck our Continent, politically and economically, for decades.

The banking union would have four components, which many people are now beginning to talk about openly. They are a banking recapitalisation fund, a fund for deposit insurance, a central regulator and a clear and established process for handling bank failure. This may sound bland to us in Ireland, where we have seen how national regulators were unable to do their job of regulating our banking sector. Many people in Ireland would welcome such a vista and those kinds of ideas. In other countries, however, they will be powerfully and strongly resisted by governments and by elements of the banking sectors.

There were sound reasons these things were not wanted in the past, but there is a compelling reason now as to why they are vital, namely, that such a system gives us the best possible chance of surviving a bank run. If one thing is capable of deepening the crisis we are in to levels that are unimaginable, it is the acceleration of a banking run where capital moves out of peripheral economies - I dislike using this terminology - to core economies, and credit and capital continue to flow out of weaker banks to stronger banks. This country experienced elements of that in 2008 and 2009. I struggle to see how any government or European-wide plan would get out of such a cycle once it was unleashed across the entire European economy. I am encouraged by the fact the European Commission and the European Parliament are now talking about these ideas. They were talking about a likely implementation date of 2015. We might not have a euro as we know it now to defend by 2015.

The second element which must accompany the process is a fiscal union. That is essential for the development of some form of European-wide mutual debt plan or eurobonds. I must be careful in what I am talking about because fiscal union and all the issues that could be involved in such could be used as shorthand for people deciding how schools are built in some countries and how much money is spent in hospitals. I do not speak about any of those matters. I speak about a bare but clear form of fiscal union that would generate and allow some sovereign debt from participating countries to be backed up by all countries. A plan has already been developed for that. I refer to the "red debt-blue debt" model which was developed by the Bruegel institute. It has been endorsed by the German Council of Economic Experts and last week was endorsed byThe Economist as a clear way of moving forward on a challenge such as we face. It involves participating countries deciding to jointly guarantee new sovereign debt issues of up to 60% of the national income of a country, after which the country would borrow on its own. It is not at all the kind of system that some advocate where a group of countries would be responsible for the entire national debt of all countries. What I speak about is a bare but solid plan where some countries would underpin the ability of other countries to issue debt in return for all of us being able to move out of the terrible crisis we are in.

All of that would be uncomfortable, even the bare plan I have sketched, as it would involve the further dilution of the economic sovereignty we enjoy. In this country's case that could well mean future referenda. Any of the points I have made, such as a new role for the European Central Bank, the creation of eurobonds and a new single banking regulator, would probably require treaty change which in our case would, thankfully, require a referendum. As we contemplate the closure of one referendum campaign, the idea of future ones would make many, not least me, shiver at the prospect. Deputy Catherine Murphy referred to a lack of vision for the future but I have outlined an alternative strategy that I believe would work. It is a feasible future that has difficult consequences for the present and would entail us facing up to difficult choices. If we do not have such discussions now, we will not have the kind of shared prosperous future that for so long we assumed would be the case.

I wish to spell out equally what the proposal is not about. This is not federalism. I do not accept the economic crisis we are in requires a leap to some kind of political federalism where others get to determine Irish neutrality or our policy on non-economic matters. This is not even a proposal for economic federalism. What I do not propose is that any participating country would underwrite the full debt of another country. I speak about a clear model in which sovereignty in some areas would continue to be shared. To borrow a phrase from another part of our heritage and of our present, this is economic unionism, not economic federalism. It is a case of looking at two challenges we must confront and saying the burden and the benefits are so big in each of those areas that we must share them in a way we have not done to date.

I must also be clear in the proposal I make that this is not going to close our budget deficit. It will not mean that the difficulties we have in the gap between our spending and taxation will shrink. It will not mean that the other equal national crisis – the jobs crisis – will be improved by what I propose. I simply suggest that if we do not complete the building blocks of the euro and we do not have a political discussion now on how that will be done, the point will come at which it will be either too late to do them or the vision of other people on how they should be done will be forced upon us. We should avoid either scenario at nearly any cost. The unionism to which I refer is now articulated and debated by many. I hope this kind of thinking is the genesis of some of the things people are now talking about in public, for example, the European Commission last week. I believe this country should play a crucial role in the Presidency and prior to it in talking about such matters with people within the Continent of Europe. If there is one thing small states such as this country have been good at in the past and can be good at again in the future, it is thinking strategically, coming up with new ideas and building consensus on them. We must do that, not just for the sake of people outside of Europe but for our own people, because there must be an end point involving a fair resolution.

I wish to sum up by referring to what an American economics professor, Mr. Andrew Moravcsik, has written in a recent article inForeign Affairs. He said:

The burden must be shifted from Europe's public sectors and deficit countries to its private sectors and surplus countries. If this does not occur the survival of the euro will be called into question and Europe will face a long-term economic catastrophe that could drain its wealth and power for the rest of this decade and beyond.

I am not sure whether as he advocates that shifting is either possible or even merited but sharing is essential. We are now at the truly dreadful crisis point that some predicted but which I hoped would not come, whereby if we do not fill in the gaps in the designs we put in place decades ago, it will result in their ruin, not just of national economies but of the political vision and values of solidarity and coming together that have been at the heart of the extraordinary progress the Continent has made in the past 60 years.

An Leas-Cheann Comhairle

I now call Deputy Joe Higgins. I advise him that I will call on the Minister of State to reply at 9.45 p.m.

Deputy Joe Higgins

Okay. I wish first to denounce the handling of these crucial European Union issues in Dáil Éireann. The way the Government has approached the debate is scandalously inadequate. The European Communities (Amendment) Bill 2012 has had approximately four hours of discussion today and, incredibly, the European Stability Mechanism Bill has been allocated approximately four and a half hours tomorrow. This is incredible, given the serious import of these issues. The establishment of the European Stability Mechanism, ESM, and what it means for the citizens of member states are questions that should be addressed in significant detail. It is incredible, reckless and negligent of the Government to railroad the ESM through Dáil Éireann in the form of these two Bills in seven or eight hours. Had we had a debate on these issues during the course of the recent referendum campaign on the fiscal austerity treaty, it would have been a preparation ahead of finalising the debate in Dáil Éireann. Unfortunately, that was denied us as well because the Government refused to engage on the substance of the fiscal austerity treaty. Instead, it browbeat us with the threat of no funding being available to the State in the event of emergency funding being required unless we passed the austerity treaty. Although the gun to the head was couched in terms of access to the ESM, we did not get a chance to discuss the whys and wherefores of the workings of the ESM itself. Instead of the type of elucidation that could have occurred in the recent debate, the majority of ordinary people in this State have been let down badly by the Government.

The European Communities (Amendment) Bill 2012 provides for the implementation in domestic law of protocols relating to extra MEPs, but the provision with which we are most concerned is the European Council decision amending Article 136 of the Treaty on the Functioning of the European Union, including the creation of the ESM for the eurozone. The United Left Alliance, ULA, opposes the current way in which the ESM is structured and will be used. Since the Bill facilitates the establishment of the ESM, we oppose the Bill as well. We do not oppose the idea of a solidarity fund were it for the benefit of the ordinary people of Europe, but the ESM is not that fund. Rather, it is a fund to bail out and underpin the financial market system so that the latter can continue to exploit the majority of people and be an economic dictatorship over society, wielding inordinate power through unelected and faceless institutions and forces that are unaccountable to most ordinary people within the EU.

Be it in the US or Europe, everything that has been done by the political establishment since the financial crisis struck four or five years ago has been in the interests of the sharks who dominate the financial market system - the banks, hedge funds and various speculators. The European political and economic establishment has reinforced the situation, with the troika arriving on our shores to ensure that the significant burden of bad gambling debts that were incurred by European speculators was placed on the shoulders of the Irish people. Therefore, the establishment of the ESM as an emergency fund, potentially with a budget of €700 billion, is simply what happened to our people writ large across the participating states.

This Bill proposes the facilitation of the inclusion in domestic law of the amendment to Article 136 to allow the ESM to be established. The amendment is being made to square the mechanism's establishment with Article 125 of the same treaty, which strictly forbids bailouts and member states financing one another. Article 125 was no barrier to the European establishment when it wished to move rapidly to salvage its system through the creation of the European Financial Stability Facility, EFSF, which will continue in existence until the middle of next year.

It is clear that the amendment of Article 136 to allow for the ESM is an amendment of a fundamental treaty of the EU and requires unanimity among member states. Therefore, the ABC of it means that each state has a veto on the matter. Unfortunately, this point was not allowed to be clarified during the referendum debate because doing so would not have suited the Government's purpose. Clarification would have emphasised the truth that the Government had a veto over the changing of Article 136, but the Government wanted to use the blackmail clause, that is, the requirement that the austerity treaty be ratified and passed to allow access to the ESM. It was gravely dishonest to the Irish people to deny the fact that, in the event of a "No" vote, what was supposedly their Government could have told the EU that the latter would need to remove the blackmail clause if it wanted to proceed without its ESM plans being halted. The Government denied that this was possible and, in so doing, did a considerable democratic disservice to our people. The conduct of the austerity treaty campaign was scandalous in general, with the Government feeding fear at every turn. Hence, this rushed two-day discussion in Dáil Éireann minus a proper airing of the issue.

The Government is rushing the legislation through and, as usual, is being dragged along in the slipstream of the political and economic establishment of the EU and the largest political group in the European Parliament, namely, the European People's Party, EPP, to which Fine Gael is affiliated. Its economic policy is very right wing and neo-liberal and, accordingly, has a malign influence in the European Union, particularly through the agency of the German Chancellor, Angela Merkel, as the main policy dictating the economic measures in this State and across Europe. The European Stability Mechanism, ESM, is a fund not to benefit the ordinary people of Europe or to assist small enterprises which could employ millions across Europe. It is about salvaging the markets and banking system as we know them. This is a continuation of the process of the previous 20 years of what is called the financialisation of world capitalism where finance capital has come to have an inordinate predominance over manufacturing capital and other aspects to create the type of casino capitalism that has brought us the disaster into which the world is still plunged.

This has meant a savage austerity is now inflicted on working class people and the poor in many European countries. The Greek working class is being crucified in the name of bailing out the financial system, as indeed are our people. I heard a Member speaking earlier, along with much comment in the media, of the need to move to fiscal union to save the euro and the present system. Fiscal union on the basis of capitalism in the European Union is a pipe dream. It will never happen because the national interest of the big businesses and financial institutions in each member state will come between that. Europe is 150 or 200 years too late to establish some sort of a federal system as in the United States of America.

There is the socialist alternative. Several striking articles inThe Wall Street Journal and the Financial Times in March referred to the incredible amounts of uninvested profits that are being hoarded by European corporations. The ratio of investment to gross domestic product in Europe is at a 60 year low. Why? It is because companies sit on €2 trillion in uninvested profits across the eurozone and £750 billion in the United Kingdom. This is an incredible failure of the system. Massive funds sitting in banks, speculating etc. while 25 million people are unemployed in the European Union. The alternative to that is not the bailout of the financial market system as envisaged in the ESM. The socialist alternative is that this wealth should be taxed massively or taken into public ownership, like the major financial institutions, and run democratically in the interests of the greater good. This alternative is the only system that will get us out of this appalling vista of austerity which brings about more crisis and suffering. A socialist planned economy under a workers’ democracy could bring a genuine international perspective and a genuine sharing based on solidarity with the peoples of Europe. On the basis of the present system, that is absolutely ruled out. In no way does this Bill reflect the interests of ordinary people in this country or in Europe. Accordingly, we are opposing it.

Minister of State at the Department of Jobs, Enterprise and Innovation (Deputy John Perry)

I warmly welcome today's extensive Second Stage reading of the European Communities (Amendment) Bill 2012. Throughout this afternoon and evening, the House has heard from a range of voices from all sides which is very welcome. The debate will serve us well as the Bill goes forward next week to Committee Stage.

Before we draw the debate to a close, I want to recall the essence of this legislation. At its core the European Communities (Amendment) Bill 2012 provides a means of incorporating several developments at European Union level into the domestic law of the State. As well as being legally necessary in each instance, I welcome also the opportunity afforded by the consideration of EU-related legislation in the Houses of the Oireachtas. Such legislation affords the Oireachtas an important opportunity to further engagement with and debate on EU-related issues of importance to Ireland. In a sense, this legislation is bringing home key EU developments to our national Parliament and our law. This necessary process serves as a concrete link between what goes on in Europe and what happens here at home, as well as how those developments are translated into the State's domestic law.

The timing of today's debate is most welcome. Over the past month, we have had a vigorous and energetic debate in this House and across the country leading up to last Thursday's referendum vote. While the specifics of the stability treaty were under scrutiny during the referendum campaign, and rightly so, our engagement with our neighbours and partners in Europe, particularly with those with whom we share a common currency, formed an important context for that debate. I am greatly heartened that the citizens of Ireland responded in such a resounding manner last week. I am gratified the people saw the stability treaty for what it is, namely, an important element of the solution to addressing the economic and financial crisis which has gripped Europe and beyond for several years now.

The stability treaty and its provisions are not the whole story but it is an important element of the solution. The stability agenda must now be complemented by a growth agenda, which delivers sustainable growth and jobs for the European economy and for the people of Europe, especially our younger people. From dealing with small and medium-sized enterprises, I know that 200,000 small companies employ 1.8 million people. It is about jobs and confidence. Deputy Higgins would be well-served if he engaged with some of these companies. All the key employers were enthusiastic about supporting last week's referendum. Small businesses are the backbone of the economy.

Deputy Joe Higgins

We are still waiting for the Lisbon treaty jobs.

Deputy John Perry

The growth agenda has been pressed by the Government since coming to office last year. I welcome this critical issue which has now gathered considerable traction among EU leaders and we will be working hard to ensure that these efforts show dividends in Ireland and across Europe.

The people's vote last week strengthens the Government's hand as we now pursue the growth agenda, including at the European Council summit meeting towards the end of this month. A key element in restoring stability to our common currency area has been the steps to put in place robust and convincing financial firewalls, firstly in the form of a temporary mechanism, the European financial stability facility, EFSF, and now with a permanent mechanism, the ESM. Of course, the Bill before the House has a direct link with the stability treaty through the provision concerning the amendment of Article 136 of the Treaty on the Functioning of the European Union which will provide a legal underpinning for the ESM which is to enter into force next month. It is for that reason that the Bill was published on 8 May in tandem with the European Stability Mechanism Bill 2012 which I understand will be considered by the House tomorrow. The Government wanted to ensure the people had the full picture available to them when they came to vote.

I will recap on the contents of the Bill. It provides for the amendment of the European Communities Act 1972 to provide that the protocol amending the protocol on transitional provisions annexed to the Treaty on European Union, the Treaty on the Functioning of the European Union and the Treaty establishing the European Atomic Energy Community and that the European Council decision amending Article 136 of the Treaty on the Functioning of the European Union with regard to a stability mechanism for member states the currency of which is the euro shall form part of the domestic law of the State. I will briefly recall what is involved in both instruments before concluding by recapping on the amendments the Government will bring forward on Committee Stage next week.

The protocol on transitional measures on the composition of the European Parliament puts in place temporary arrangements for the level of representation in the European Parliament during the current Parliament's term running from 2009 to 2014. The measure ensures 12 member states are fully and appropriately represented in the European Parliament. Since it was elected in 2009, before the Lisbon treaty had entered into force, EU leaders agreed that it would be only fair that those countries that would benefit from 18 additional seats in the Parliament under the provisions of the Lisbon treaty should have access to that representation during the current term. Ireland's allocation of MEPs was not impacted on by this protocol which entered into force on 1 December 2011, following ratification by all 27 member states. It should be noted that the effect of the protocol is entirely temporary and that the size of the next European Parliament to be elected in 2014 will be as provided for in the Lisbon treaty.

As I mentioned, the purpose of the European Council decision to amend Article 136 of the Treaty on the Functioning of the European Union was to provide a legal underpinning for the ESM, which is to enter into force next month. The Government firmly believes membership of and access to the ESM are fundamentally in the interests of the country. As was clearly set out during the referendum campaign, the ESM will serve as a kind of insurance policy; we hope we do not have to use it, but in agreeing to ratify the stability treaty we have secured access to it. It, therefore, makes a great deal of sense that we should provide an appropriate legal underpinning for the ESM treaty through this amendment to Article 136 of the Treaty on the Functioning of the European Union.

I will recall for the benefit of the House the Government's intention to introduce two amendments to the European Communities (Amendment) Bill. These amendments which will be introduced next week on Committee Stage will provide for the Croatian accession treaty and the Irish legal guarantees protocol to form part of the domestic law of the State through amendments to the European Communities Act 1972. The amendment to provide for the accession of Croatia will, if adopted, allow us to proceed to ratify the Croatian accession treaty. It was encouraging to hear such strong support for the accession of Croatia expressed during today's debate across the House. Croatia's accession process is not yet complete. Monitoring by the European Commission of a number of outstanding commitments which Croatia must fulfil before it accedes will continue. Before July 2013, the proposed date of accession, reforms must continue, new laws will need to be adopted and others implemented. The Commission will closely monitor Croatia's fulfilment of all its commitments across many aspects of theacquis but under particular scrutiny are Croatia’s commitments in the areas of the judiciary and fundamental rights and competition policy. Monitoring reports will be submitted to the Council working groups on a regular basis, with the last of these due during Ireland’s Presidency of the European Union. On 29 May the General Affairs Council considered the first of the Commission’s reports. The Council noted that Croatia’s preparations for EU membership were on track and that Croatia had reached a considerable degree of alignment with the acquis. At that Council meeting the Commission indicated it would continue to work with Croatia to address the limited number of outstanding issues. I am confident that Croatia will continue to show the perseverance, hard work and determination that have got it this far in the process. As it holds the Presidency of the Council of the European Union during the first half of next year, I expect to see Ireland preside over the final discussions on Croatia’s fulfilment of its commitments and pave the way for its accession. I also look forward to welcoming Croatia as a full partner in the European Union and believe its presence among us will be to our mutual benefit.

The second amendment which the Government will move to the Bill next week concerns the protocol on the concerns of the people on the Lisbon treaty. Whereas the substance of the protocol dates to June 2009 when the European Council took a decision to address Irish concerns about the treaty, the protocol was only signed in Brussels on 16 May. EU leaders agreed in 2009 that the provisions of their decision would be set out in a protocol to be attached to the EU treaties at the time of the conclusion of the next accession treaty. Thus, with progress on the Croatian accession treaty came progress on our protocol. The target date for entry into force of our protocol is the middle of 2013, at which time it is hoped Croatia will become a full member state. The promise made to the people will be fully honoured.

I appreciate the engagement of Members throughout the debate and look forward to consideration of the Bill on Committee Stage next week. I commend the Bill to the House.

Question put: That the Bill be now read a Second Time.

The Dáil divided: Tá, 99; Níl, 12.

Tá

• Adams, Gerry.
• Bannon, James.
• Barry, Tom.
• Breen, Pat.
• Browne, John.
• Bruton, Richard.
• Butler, Ray.
• Buttimer, Jerry.
• Byrne, Catherine.
• Byrne, Eric.
• Calleary, Dara.
• Carey, Joe.
• Colreavy, Michael.
• Conaghan, Michael.
• Conlan, Seán.
• Connaughton, Paul J..
• Coonan, Noel.
• Coveney, Simon.
• Crowe, Seán.
• Daly, Jim.
• Deasy, John.
• Deenihan, Jimmy.
• Deering, Pat.
• Doherty, Pearse.
• Doherty, Regina.
• Donnelly, Stephen S..
• Donohoe, Paschal.
• Dowds, Robert.
• Durkan, Bernard J..
• English, Damien.
• Farrell, Alan.
• Feighan, Frank.
• Ferris, Martin.
• Fitzpatrick, Peter.
• Flanagan, Charles.
• Flanagan, Terence.
• Fleming, Sean.
• Griffin, Brendan.
• Harrington, Noel.
• Harris, Simon.
• Hayes, Brian.
• Hayes, Tom.
• Healy-Rae, Michael.
• Heydon, Martin.
• Hogan, Phil.
• Humphreys, Kevin.
• Keating, Derek.
• Keaveney, Colm.
• Kehoe, Paul.
• Kenny, Seán.
• Kyne, Seán.
• Lawlor, Anthony.
• Lowry, Michael.
• Lynch, Ciarán.
• Lyons, John.
• Mac Lochlainn, Pádraig.
• Maloney, Eamonn.
• Mathews, Peter.
• McCarthy, Michael.
• McDonald, Mary Lou.
• McEntee, Shane.
• McGrath, Mattie.
• McGrath, Michael.
• McHugh, Joe.
• McLellan, Sandra.
• McLoughlin, Tony.
• McNamara, Michael.
• Mitchell, Olivia.
• Mitchell O’Connor, Mary.
• Mulherin, Michelle.
• Murphy, Dara.
• Murphy, Eoghan.
• Nash, Gerald.
• Naughten, Denis.
• Neville, Dan.
• Nolan, Derek.
• Noonan, Michael.
• Nulty, Patrick.
• Ó Cuív, Éamon.
• Ó Fearghaíl, Seán.
• O’Brien, Jonathan.
• O’Donnell, Kieran.
• O’Donovan, Patrick.
• O’Dowd, Fergus.
• O’Mahony, John.
• O’Reilly, Joe.
• O’Sullivan, Jan.
• Perry, John.
• Phelan, Ann.
• Ryan, Brendan.
• Spring, Arthur.
• Stagg, Emmet.
• Stanley, Brian.
• Stanton, David.
• Tuffy, Joanna.
• Twomey, Liam.
• Wall, Jack.
• Walsh, Brian.
• White, Alex.

Níl

• Boyd Barrett, Richard.
• Collins, Joan.
• Daly, Clare.
• Flanagan, Luke ‘Ming’.
• Healy, Seamus.
• Higgins, Joe.
• McGrath, Finian.
• Murphy, Catherine.
• O’Sullivan, Maureen.
• Pringle, Thomas.
• Ross, Shane.
• Wallace, Mick.

Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Catherine Murphy and Joe Higgins.

Question declared carried.