Dáil Éireann debate -
Wednesday, 12 Dec 2012

Vol. 786 No. 2

Pre-European Council Meeting: Statements

The Taoiseach

The December meeting of the European Council will take place in Brussels on Thursday and Friday of this week. While economic policy will once again dominate the European Council's agenda, at this meeting we will be looking forward to how best we can strengthen economic and monetary union and in the process provide for a stable underpinning for the common currency into the future. Also under the economic policy heading, leaders will consider the annual growth survey which marks the beginning of the third European semester process which will form an important part of Ireland's work during its Presidency of the European Council in the opening six months of next year.

The meeting will provide an opportunity for Heads of State and Government to adopt a set of conclusions which will lay the groundwork for a substantive debate on the European Union's Common Security and Defence Policy, CSDP, which will take place in December 2013. These preparations will facilitate a more meaningful discussion among leaders this time next year.

The European Council is also likely to adopt a set of conclusions on EU enlargement policy which will set out the work to be undertaken in the coming year, including during our Presidency. This issue was the subject of detailed and lengthy discussions at the General Affairs Council in Brussels yesterday, at which Ireland was represented by the Tánaiste.

In light of the deliberations of foreign Ministers, including the Tánaiste, at the Foreign Affairs Council in Brussels on Monday of this week, it is anticipated that leaders will also adopt conclusions on a number of current foreign policy issues.

I should recall for the House that this meeting of the European Council will not follow up on the discussions that leaders had last month on the Union's budget over the period 2014 to 2020, the so-called multi-annual financial framework. President Van Rompuy and President Barroso are continuing their work to identify means of bridging outstanding differences among member states, and we will return to this issue in the new year.

Over recent years, as the Union has taken a range of steps necessary to overcome the economic and financial crisis and bring stability to our shared currency, it has become apparent that the euro needs to be recast on the foundations of a strengthened economic and monetary union, EMU. These last years have made it crystal clear that the stability and well-being of the euro area and the entire European Union are inextricably linked to the stability and well-being of our currency. The weakness, instability and uncertainty surrounding our common currency has most evidently affected member states in a markedly adverse manner. It is manifestly the case that a stable euro is in the vital national interests of Ireland. Our economic and financial well-being into the future is tightly bound up with the health and stability of the currency that we share with our euro area partners. A healthy and stable euro is good for Ireland, good for the euro area and good for the EU.

The House will recall that European Council President Van Rompuy was asked by leaders at the European Council in June to develop his thinking on the future of the EMU in close co-operation with the Presidents of the Commission, the European Central Bank and the Eurogroup, and to return to us with a "time-bound roadmap for the achievement of a genuine Economic and Monetary Union". President Van Rompuy returned to the October European Council with an interim report which certainly pointed us in the right direction - that is, towards making a reality of the undertaking made by leaders in June to break the link between the sovereign and banks through the establishment of a single supervisory mechanism, SSM, for euro area banks and the banking union more broadly and towards implementation of the various steps we have already taken with regard to economic governance, including the six-pack, the two-pack and indeed the stability treaty. On the latter, I am happy to report to the House that Ireland will complete the process of ratifying the stability treaty later this week with the deposit of our instrument of ratification with the General Secretariat of the Council in Brussels. This last step had awaited the passage of the Fiscal Responsibility Act 2012, which was signed into law at the end of last month. Ireland will thus be among the initial group of 12 euro area member states whose ratification of the stability treaty will trigger its entry into force in due course.

President Van Rompuy's interim report also flagged the ideas of a possible fiscal capacity for the euro area and possible contracts between member states and the EU institutions, perhaps covering the country-specific recommendations generated as part of the European semester process. We now have a suite of documents on this critical issue on the table to orient and inform our discussions in Brussels later this week. First, we have President Van Rompuy's report, which he has prepared in close collaboration with Presidents Barroso, Juncker and Draghi, entitled "Towards a Genuine Economic and Monetary Union". Second, we have the Commission's document, "Blueprint for a Deep and Genuine Economic and Monetary Union - Launching a European Debate", which sets the scene for a longer-term discussion. Third, we have a set of draft European Council conclusions which propose a roadmap for the period up to and beyond 2014. Each of these three documents has a role to play in this important debate and for that I commend their respective authors on their preparation.

In the draft conclusions, President Van Rompuy sets out a proposed roadmap spanning three stages, the first of which is for implementation immediately, while the third is envisaged to be rolled out following the European Parliament elections in 2014 and when a new Commission has been appointed. The first stage, which is intended to run over what remains of this year and next, has a clear focus on implementing what has been already agreed, particularly in the area of banking union. In this regard, I note that the ECOFIN Council is meeting again in Brussels this evening in an effort to finalise agreement on the SSM. Such an agreement would take us closer to delivery of our commitment to having the legislative framework in place, and I wish the council success. The issue is important in itself, including from a national perspective, but it is also an important demonstration of our capacity to deliver what we have agreed. Implementation is very much the focus of the first stage in President Van Rompuy's roadmap, and he has my strong support in this.

The second stage proposed in the draft conclusions would run from 2013 to 2014. It would build on the existing Commission proposals on resolution and deposit guarantees and see the Commission submitting a proposal for a single resolution mechanism authority with an appropriate backstop for those member states participating. Again, we are strongly in favour of this step, which forms a key element of the overall banking union. In this stage, which is intended to be taken forward in 2013 and 2014, President Van Rompuy is suggesting that member states enter into what he is calling "arrangements of a contractual nature" to improve implementation of reform. In common with a great number of our EU partners, we have sought greater clarity on this proposal. We want to know how such arrangements might work, on what basis they would work and who would oversee them. There is a need for greater explanation and elaboration before we can be sure that such arrangements have a role to play. I look forward to discussing this with colleagues when we meet.

Stage three, which would run from 2014, when there will be a new Parliament and Commission in place, foresees further deepening of economic integration in the euro area and the possible establishment of a fiscal capacity which could be used to smooth out shocks and encourage further reforms. As we tease out how such a fiscal capacity might operate, and indeed how it might interact with arrangements of a contractual nature, we will be seeking to ensure that the roadmap as a whole and over time delivers a balanced, consistent and appropriately sequenced range of measures which will really strengthen the EMU and deliver the desired long-term stability to our common currency.

As we deliberate on how to strengthen the EMU, the other ingredient is, of course, how we ensure that our people understand what it is we are seeking to do and why. We must ensure there is an appreciation that no one is proposing that we strengthen the EMU for its own sake. As far the Government and I are concerned, this exercise is without doubt a means to an end, that end being the long-term stability of our currency, our economy and, ultimately, our Union. Improving democratic legitimacy and accountability as we take forward the strengthening of EMU is a prerequisite. Ultimately, how far we go in this regard will naturally depend on how far we intend to take EMU. One complements and accompanies the other. As we move through the stages, as proposed by President Van Rompuy, we need to ensure that accountability structures keep up with developments. These cannot and must not be considered by anyone to be optional extras. They must be integral to the process of strengthening EMU. We in Ireland know this better than anyone. Should some of the measures envisaged for stage three require treaty change, we will need to be able to explain clearly to our people what is proposed and why it would be in the long term interests of this State and the Union as a whole. Strengthened accountability structures concerning decisions to be taken at the European level would be a vital and wholly essential component. Without doubt there will be a role for the European Parliament, but there must also be a strengthened role for national parliaments including, of course, this House. On this, as on other issues, we will need to strike an appropriate balance.

I expect that we will welcome the annual growth survey that was produced by the Commission on 28 November and launches the 2013 European semester for economic policy co-ordination. As Europe slowly emerges from the deepest economic and financial crisis in its history, the Commission is advocating a reinvigorated emphasis on the five priorities identified in last year's survey - namely, pursuing differentiated, growth-friendly fiscal consolidation; restoring normal lending to the economy; promoting growth and competitiveness for today and tomorrow; tackling unemployment and the social consequences of the crisis; and modernising public administration. This emphasis is also reflected in the compact for growth and jobs agreed in June, and I expect that it will be strongly supported.

The annual growth survey feeds into national economic and budgetary decisions that member states will set out in April next in stability and convergence programmes under the Stability and Growth Pact and national reform programmes under the Europe 2020 strategy.

These, in turn, form the basis for the Commission's proposals for country specific recommendations in May.

Effective management of the third European semester process will be an important focus of next year's Irish Presidency. The October European Council invited the incoming Presidency to submit a roadmap for the organisation of this work in 2013. This was presented by the Tánaiste to yesterday's meeting of the General Affairs Council in Brussels and will inform this week's discussions. It sets out in practical terms a response to the key recommendations made in the recent synthesis report from the Cypriot Presidency on lessons learned from the 2012 European semester. The key objective will be to ensure all relevant Council formations work in a co-ordinated and consistent manner towards a thorough preparation for the March and June European Councils. This will include a strong focus on appropriate streamlining of committee work, building also from the Commission's proposals for more regular and ongoing dialogue with member states. This should support a deeper political discussion within the Council based on a shared assessment of common challenges and more constructive engagement on the development and implementation of jointly agreed priorities. Our hope is that country specific issues can be settled to the greatest extent possible through stronger bilateral dialogue and, where appropriate, more effective multilateral surveillance within the relevant committees.

We welcome the European Parliament's efforts to enhance parliamentary involvement. Parliamentary week in January will see debates with members of relevant committees from national parliaments. I understand the Ceann Comhairle has accepted an invitation to participate as Speaker of the Presidency Parliament. I warmly welcome such an engagement, whether it involves the Ceann Comhairle or the Leas-Cheann Comhairle. Further ways to reinforce parliamentary involvement are also being explored.

The European Council is expected to adopt conclusions on the European Union's Common Security and Defence Policy, CSDP. The conclusions will cover the CSDP on missions, capabilities and preparations for a discussion on defence issues at the European Council in December 2013. Leaders are expected to task the High Representative and relevant EU bodies to develop further proposals and actions aimed at strengthening the CSDP and improving the availability of military capabilities and to report on these initiatives by September 2013. The issues to be covered in the report will include increasing the effectiveness, visibility and impact of the CSDP; enhancing the development of defence capabilities; and strengthening Europe's defence industry. This item will be essentially of a preparatory nature at this week's meeting.

The European Council will endorse the conclusions on enlargement agreed at the General Affairs Council yesterday. Given that the conclusions have now been agreed, lengthy discussion is not expected at the European Council. No specific decisions were made that would require agreement at European Council level. However, the conclusions will shape the agenda in the six months of Ireland's Presidency and it is likely that we will have to consider such issues as granting candidate status to Albania and opening negotiations with Serbia and, possibly, Macedonia during that time. In particular, it is the intention that the Council will review progress on the Belgrade-Pristina dialogue in the spring with a view to considering whether to open accession negotiations with Serbia and negotiations on a stabilisation and association agreement between the European Union and Kosovo. We also expect to consider a report from the Commission on Albania's progress in meeting various reforms with a view to deciding on whether to grant candidate status. The Council will examine progress made by the Former Yugoslav Republic of Macedonia on the possibility of opening accession negotiations, provided there is a resolution of the name issue. We welcomed the reference in the conclusions to regaining the momentum in the accession negotiations with Turkey, on which we hope to make progress in the next six months. We also intend to advance the accession negotiations with Iceland and Montenegro. Ireland will oversee consideration of the final monitoring report on Croatia's preparations for accession and we look forward to welcoming Croatia as the 28th member of the European Union on 1 July.

It is expected that the European Council will adopt short conclusions on foreign policy issues. These will draw on the conclusions which emerged from the Foreign Affairs Council earlier this week, at which the Tánaiste represented Ireland. Discussions at the Foreign Affairs Council focused principally on developments in the Middle East and Syria.

Deputy Micheál Martin

This week the European Council is meeting at a time when the economic situation in Europe is taking a significant turn for the worse. The growth projections for all major economies and the eurozone as a whole have just been cut. Within the eurozone unemployment has increased by over 170,000 since leaders last met and now reached the unprecedented figure of 18.7 million people out of work. A familiar pattern of rising bond yields and threatened credit ratings has begun to return. Yet again, however, the agenda adopted by Europe's leaders is nowhere near ambitious or urgent enough to tackle the crisis. The summit will be entirely taken up with matters which should have been dealt with long ago. Banking union, an essential foundation for recovery, has been delayed. The draft conclusions for the summit state leaders understand the urgent need for radical reform of Economic and Monetary Union and that they might get around to doing something in two year's time.

In terms of Ireland's needs, there is a lot of misleading ministerial bluster. As usual the Government is providing little or no information, but the evidence suggests it is no longer even seeking the scale of adjustment to the promissory notes which Ireland deserves. In advance of every summit President Van Rompuy publishes a short letter to leaders which contains a bland summary, mainly intended for the media. It has been the habit of the Taoiseach to limit what he says to the House in these debates to what has already been published in these summaries. This debate is unusual in that we have more information to work with because the detailed draft conclusions were leaked last week.

The core of the summit will be the issue of addressing the flaws in Economic and Monetary Union. I will address the wider part of this agenda later, but for the moment I will concentrate on the most urgent parts of it, namely, banking union and Ireland's bank related debts. The need for a strong banking union within the eurozone is obvious to everyone. No part of the existing system is as broken as financial regulation. There is no middle way between national and eurozone regulation. Trying to construct a middle way is what caused so much of the trouble in recent years. In June agreement was reached in principle to create a banking union and the eurozone leaders announced that proposals would be fully agreed by the end of the year. The core of the proposal, the single supervisory mechanism, was agreed to as the necessary first step before any money for bank recapitalisation from the ESM could be allowed to be paid.

Many meetings have been held since, but nothing has been agreed. Every significant target has slipped. Finance Ministers have repeatedly made matters worse by staking out positions which seek to undo the substance of a banking union. Germany's position is that it is in favour of a banking union as long as it does not cover most of its banks and has no shared system for winding up banks or guaranteeing deposits. The non-eurozone countries, particularly Sweden and the United Kingdom, have raised reasonable points about having a say in all decisions which affect their banks. Ireland's only reported impact on negotiations has been to insist that nothing should be agreed which might need to be voted on by the people. According to the draft communiqué, legislation concerning bank resolution and deposit guarantees are not to be agreed to until next March at the earliest and no date has been given for when the single supervisory mechanism will take effect. This is a signal that Europe's leaders are rolling back on what they described in June as their determination to do everything possible as quickly as possible. There is serious uncertainty about whether real reforms will be adopted. Whatever emerges will, of course, be hailed by leaders as visionary. In reality, however, people no longer listen to their rhetoric because experience has taught them to wait to discover the substance.

The case for a lifting of the burden of much of Ireland's bank related debt is rarely aired in public by the Taoiseach beyond generalities. An exception to this rule was made by him in October, when he said: "Ireland was the first and only country which had a European position imposed upon it in the sense that there wasn't the opportunity, if the government so wished, to do it their way by burning bondholders." That is a powerful argument, because it is true. However, the Government has used it very rarely. It has preferred to keep up with empty political talking points. It prefers to keep up the claim of a bad deal, because saying it was the acceptance of an imposed position with no alternative available does not get the backbenchers excited.

The main tactic the Taoiseach has adopted at Council meetings so far has been to hope that something turns up. The ongoing Greek crisis has meant that on two occasions, significant interest rate cuts have been made available to all countries. In June, pressures applied by Spain won agreement to the principle of European financing of bank-related debt and a resolution regime which allows the burning of bondholders. The fact Ireland was not expecting or pushing for anything then was shown by the fact that the Tánaiste flew home early and had to do his interviews claiming credit for the deal in Dublin. As matters stand today, the public has no idea of what is being sought by the Government. The goalposts have been moved so often that there is now no doubt that the priority is to ensure the Government can claim whatever emerges as a victory. This is probably the major reason behind the failure to set out a definition of debt sustainability. We have just had a budget announced, but not one member of Government has been willing to say what he or she believes is a sustainable level for our debt.

The promissory notes were structured in such a way that the interest returns to the State through our Central Bank. At the moment, it is the principle that matters and this is a burden too heavy for us to bear. Due to the way the notes were structured, a subsequent negotiation was always required. However that appears to have started seriously only in recent months. Last year's proposed technical paper - does the Taoiseach remember that, I think he got a year out of it? - never appeared and the Minister, Deputy Noonan, moved on to talking about selling bank shares to the ESM before he abandoned that as well.

Without a major deal, which we believe is justifiable, next year a further €3.1 billion will be converted from promissory notes into normal interest-bearing Government bonds. This will continue for ten years, by which time there will be nothing left but the full incorporation of all bank related debt into our sovereign debt at market rates. This matters more today than it did a week ago, because we now have evidence that the Government is missing its budgetary targets. Its decisions have pushed down confidence, growth, revenue and employment. Its Ministers have failed to deliver on spending commitments, with the Department controlling the largest discretionary budget in chaos and controlled by a man whose colleagues brief against him daily. Without a significant deal on the promissory notes, the suppressed revenue and overspending revealed last week will require increased adjustments. Given how these issues have been handled so far, they will further depress the economy and increase unfairness.

The Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, is a man who has a career-long commitment to trying to shake foundations with his words, irrespective of the facts lying behind these words. He was at this again on Sunday, with his claims that the Government "has no intention of paying the promissory note", saying "we didn't pay it this year". Extraordinarily, the Tánaiste repeated most of these words yesterday in Brussels, although I am aware the Taoiseach took a different tack. Not only did the Government pay the promissory note this year, but the ECB issued a press release praising it for paying it in full and on time. What the Government did was convert the note into a 12-month bond, bought by the Bank of Ireland, with the Government paying the Bank of Ireland millions in profits. Because of the subterfuge used by the Government in trying to manipulate media coverage, it took a while for this to be spotted. If this is what Labour Party Ministers define as not paying it, they are fooling no one.

Given how Labour's way was abandoned even before the Government was formed, the idea that the Tánaiste and his predecessor as leader are getting tough has been dismissed. At best, it is believed they are trying to talk up their role in a deal they feel may be on the way. Because the Government has refused to publish any technical papers about what it is seeking, finance experts have been left to patch together ideas. Professor Karl Whelan of Trinity College, who has been consistently ahead of Ministers in understanding the operation of the promissory notes, has estimated that over half of the burden of redeeming the notes and converting them into standard sovereign debt could be lifted in certain circumstances.

Given the role that Ireland played in being willing to act in the interests of the wider eurozone, we deserve a concrete lessening of the burden of the debts we took at a critical moment. Without this, our fiscal consolidation may be deeply undermined. I believe there will be a deal on the promissory note and that if it is based on principles which have been agreed by Europe's leaders under pressure from other countries, it will make a significant difference to our budget.

It is time for the Taoiseach and the Government to put aside the public relations posturing and to be open with the people. They should publish the documentation they have submitted to the ECB and tell us what they believe is a sustainable level of debt and what they believe Ireland is entitled to out of fairness. If the policy continues to be to say as little as possible and to claim everything as a victory, there will be very negative reactions, and not just from the Irish people.

The Presidents of both the Commission and the Council have produced documents concerning the reform of economic and monetary union, and President Van Rompuy's more limited vision is the one which is now on the table. It is not good enough and the timetable is ridiculous. Even the man who first proposed EMU, Jacques Delors, has talked about the fundamental flaws in the euro which helped cause this crisis. Most of these flaws require changes to the European treaties. Yet, according to the draft conclusions for this week's summit, no such changes will be prepared for at least two years. The communique states that a "common stabilisation function", which is new jargon for actions capable of helping countries in economic difficulties, will not be discussed until after the next European Commission takes office in late 2014.

How can this be a credible response to a crisis which has seen unemployment grow to nearly 19 million people? How can it give confidence to investors who fear that governments do not have the commitment to get Europe back to real growth? It is long past time for the Taoiseach to set out the reforms Ireland wants to see implemented. The policy of supporting anything, as long as there is no referendum must end.

The summit will also issue conclusions relating to the development of the Common Security and Defence Policy, CSDP. The draft states that the pooling and sharing of military capabilities should be pushed forward and it is quite assertive in developing this dimension of the Union's work. While there is nothing to indicate this, I assume the Taoiseach has already said that we do not want to pool or share many of the defence capabilities of other states. I hope the Taoiseach will clarify this in his response. Nothing will be decided until next December, but we should set out now that we do not thing that the development of the CSDP is a priority and that the case for significant development has not been made. Recent changes to the treaties should be given time to bed down. Let us see how the European Union works in this area and, in particular, let us see if it can develop itself successfully as a support to the United Nations.

With regard to foreign policy, the summit should set out a strong and united EU position in opposition to the outrageous behaviour of the Netanyahu government in pushing ahead with escalated settlement building. This is a highly provocative move, without any regard to UN resolutions, the European Union, the US position or international law, which sets back any prospect for meaningful talks towards a durable peace process and settlement.

An Leas-Cheann Comhairle

I call Deputy Gerry Adams, who is sharing time with Deputy Seán Crowe.

Deputy Gerry Adams

The Tánaiste and the Taoiseach seem to have a difference of opinion on comments made by the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, that the Government will not pay the €3.1 billion promissory note due on 31 March. The Government seems to have developed a habit of sending the wrong or mixed messages to its masters in the European Union.

Sinn Féin should not need to tell the Government that this money cannot and should not be paid. The citizens of this State cannot afford it. The Government needs to be as tough on this issue as it is when it is cutting the respite care grant, child benefit and the back to school clothing and footwear allowance and when it is taxing maternity benefit. The Taoiseach should be as tough in this case as he was earlier when he said the Government is not for turning when it comes to deal with the carer's respite allowance.

When the Taoiseach told citizens during last year's general election campaign that he would stand up for Ireland's interests, he meant this part of Ireland. As I have said previously, geography is not the Taoiseach's strongest point. The Tánaiste told us last year that it would be Labour's way or Frankfurt's way, but instead the Government has gone Fianna Fáil's way. The policy of giving blank cheques to the banks has been continued. The Taoiseach told the Dáil in June of this year that a deal had been done and that the legacy debt issue was sorted. Six months later, we are no further forward. The Taoiseach did not even raise the bank debt issue when he met Chancellor Merkel in November. He did not raise it at the last EU summit. As far as I can see from the statement the Taoiseach has made today, the bank debt issue is not on the clár for this summit. When will the issue be raised? Will the Taoiseach give a commitment to raise it this week?

It seems that the ability of the State to exit the troika programme in 2013 and return to the markets in 2014 will depend in large part on whether a creditable deal on banking debt can be secured. The debt as it currently stands is not sustainable. The Government should not be asking citizens to pay it because it is not their debt. Approximately a quarter of all money raised in taxes next year will be used to pay interest on this debt. The Taoiseach knows this. The debt accrued by private bankers is being paid by carers. Payments such as child benefit and the back to school uniform grant are being reduced so that it can be paid. A tax is being placed on the family home in order to pay it. The Taoiseach needs to give citizens some certainty about his strategy and the timetable he is working towards.

The Taoiseach mentioned the road map that the President of the European Council, Herman Van Rompuy, the President of the European Commission, the President of the European Central Bank and the President of the Eurogroup were asked to draft at last June's summit of EU leaders. At that time, we were told that a specific and timebound roadmap would be in place by December. It is supposed to pave the way for the reduction of national fiscal and economic sovereignty in the interests of deeper economic and monetary union. I remind the Taoiseach that Sinn Féin is opposed to this. The Government needs to give citizens its detailed view in support of it.

Last month, the EU leaders failed to agree a new seven-year budget. The Government will have to take up this challenge in the new year when it assumes the Presidency of the EU. The German Chancellor indicated earlier this week that she is sceptical about the potential for progress. She appears to want to reduce expectations. The Tánaiste indicated yesterday that he expects new powers allowing the ECB to supervise banks to be agreed by EU leaders at the forthcoming summit. Does the Taoiseach share that expectation, in light of the attitude of the German Chancellor and her finance minister, who has warned against the EU moving too quickly and voiced objections to the ECB taking supervisory responsibility for all 6,000 eurozone banks? Does the Government believe the legacy bank debt and promissory note issues, in respect of which it has made many false promises, will be settled before March? What is its strategy? Does it expect agreement to be reached on the use of the European Stability Mechanism to deal with legacy debt? Will we eventually get the long-heralded technical paper on the promissory note?

As I said in my opening remarks, Sinn Féin has been saying from the outset that this debt should not be paid. One of the first things the Government did when it came into office was pay a €3.1 billion promissory note instalment. I reiterate that this is not the people's debt - it is the private debt of bankers and speculators which has been lumbered on the backs of citizens. Last week's budget underlined the price that citizens, particularly the most vulnerable and disadvantaged people in our society, are having to pay so that the private debt of bankers and speculators can be repaid.

The issue of Palestine needs to be raised at the forthcoming summit. The conflict in Gaza was intensifying at the time of the last EU summit. Like all Members of the House, I welcomed the recent ceasefire in the region. The UN General Assembly recently voted in favour of granting non-member observer status to the Palestinian state. The Government supported that and I supported and welcomed the Government's position. I congratulate the Palestinian Authority on its securing of such a resounding diplomatic victory. However, the inflammatory response of the Israeli Government, in embarking on further settlement expansion, will undermine the prospects for peace. While I welcome the criticism by EU foreign ministers of Israel's actions, we need to go beyond rhetoric on this issue. The increase in settlement construction, like the construction of the separation wall and the siege of the Gaza Strip, is in violation of international law. In spite of this, the EU is continuing to give Israel preferential treatment in European markets and is refusing to ban the importation of products from the illegal Israeli settlements. I ask the Taoiseach to raise this issue at the forthcoming EU Council meeting. The EU and Ireland should take a leadership role in this regard. We should use what influence we can to bring about a proper settlement and a proper peace process in that region.

I would like to conclude by asking the Taoiseach to raise the de Silva report on the Pat Finucane case, which was published today, formally and informally at the forthcoming summit. I have asked the Taoiseach on a number of occasions to ensure the State's diplomatic and consular services and its influence with other states at every international forum, including the EU, are used to ensure the Finucane family gets the justice it is demanding.

Deputy Seán Crowe

Once again we meet in this Chamber before a European Council summit. I wish the Taoiseach and his officials every success in the difficult negotiations that lie ahead. I think that sentiment will be shared by all parties, groups and individuals in this House. I ask the Taoiseach to stand up for Ireland and its people, many of whom are being crippled by austerity and are hanging off a financial cliff by their fingernails. Irish citizens want him to fight more aggressively for a deal that will separate sovereign debt from the private debt that is being loaded on the shoulders of hard-pressed taxpayers. The actions of the Greek Government, in securing a new partial deal on its debt, have shown there is real scope for countries to secure a write-down on debt. It is clear from the Greek case that a Government that negotiates strongly can receive a deal on its debt. Like the previous speakers, I would like to know the Government's negotiating strategy. What outcome does it expect from these negotiations? What is the specific timeframe under which it is operating? Does the Taoiseach agree that it would be much better to secure a deal before Ireland assumes the EU Presidency? I accept that is unlikely to happen.

This Government was elected on the back of promises that were made to an electorate that expected and demanded a new approach. We have seen very little that is new in this Government's approach or its policies. Its negotiating strategy seems to be going nowhere. This Government has not brought about any significant change in the well-being of the Irish economy. It has consistently failed to deliver a deal to remove the burden of private banking debt from the shoulders of taxpayers. That burden is not what the people of Ireland want. That is not the mandate for which the Government was elected. Ireland's private and public debt is unsustainable - it is that simple. Irish taxpayers are rightly incensed and outraged at being asked to fund payouts for unsecured bondholders.

Will the Taoiseach be adopting a new approach? Will he be arguing for debt write-off and a substantial stimulus package to create jobs and growth?

People across Europe are concerned about the increased federalism of Europe. They feel their countries are rapidly losing sovereignty, with the EU becoming more autocratic and dictatorial and less democratic. Many Government MEPs voted in favour of a motion which called for a leap towards a federal union in Strasbourg last week. Does the Government share these views and will this significant departure be discussed at the Council meeting?

Yesterday, I heard from European Movement Ireland, which gave an accountability report for 2011 tracking Ireland's engagement with the EU. Ministers' attendance is up, as one would expect given that the root of many of our problems lies with the EU and its policies. The report is critical, however, of Irish MEPs' engagement and particularly their input at the pre-legislative phase. It suggests that they appear to arrive at the debate when it is already half over, or not at all. Their weak engagement seems to mirror that of the Government in Europe, engaging with the EU on key issues too late, or not at all.

Lack of accountability is becoming a real problem for citizens across the Union. I recently met some British MPs who said the Prime Minister, Mr. Cameron, will make a keynote statement in January. Many believe this will be a game changer for Britain and will signal its withdrawal from the EU. Is the Taoiseach aware of this pending statement? Has he considered the potentially serious implications this will have for Ireland and particularly the potential difficulties this will cause in Border regions? There is a strong view not only across the British Labour Party but also among Conservative Party members that this will happen sooner rather than later. It will have serious implications for Irish people on both sides of the Border and will also have an effect on Ireland's relations with the EU.

I am disappointed the EU has given the green light to a free trade agreement with Colombia. All major trade unions in Latin America, most of the human rights and environmental organisations and many parliamentarians have come out against this free trade agreement. We know Colombia is the most dangerous place on earth to be a trade unionist. Yet the Colombian authorities have offered nothing but weak promises on the issue of workers and human rights. Those forces in Colombia which are committed to democratic and peaceful change need support from the outside world. This agreement is seen by many, particularly during these sensitive times when negotiations are ongoing between the Colombian Government and one of the rebel groups, as rubber-stamping human rights abuses, and it will have a negative impact on the push for civic society to be involved in negotiations and to bring about positive change in regard to land reform and so on.

With regard to the Palestinian situation, will the Taoiseach raise the issue of the Israeli decision to create new settlement colonies in the West Bank? Some 3,000 new illegal settlement homes are due to be built in the highly contentious E1 zone of the West Bank. Existing Israeli settlements currently form a near-complete ring around East Jerusalem. E1 is the last gap in the ring. If Netanyahu builds on E1, it will seal off East Jerusalem and split the West Bank in half. This means any future Palestinian state would lose its ancient capital, which puts a two-state solution in real jeopardy. While the EU will probably use strong rhetoric and criticise Israel, will the Taoiseach argue in favour of the EU's introducing concrete punitive measures such as banning goods from illegal Israeli settlement colonies in the West Bank? I believe such a ban would help stop the spread of illegal settlements, as the EU is already a major trading partner of Israel. It would also send out a very strong signal that Ireland and Europe will not stand by while Israel continually breaks international law and commits human rights abuses in the occupied territories.

Deputy Stephen S. Donnelly

I wish to share time with Deputies Clare Daly, Mick Wallace and Mattie McGrath.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Deputy Stephen S. Donnelly

Yesterday, I spent an hour on the radio debating with the German ambassador. Among other things, we debated Ireland's banking collapse and the subsequent €64 billion of debt. The ambassador is clearly a man of integrity and he is very well informed on financial and geopolitical issues. What he had to say on the banking debt was very interesting. In essence, he said the banking debt was our problem, that we had created it and that it was up to us to solve it. He said it was our choice to guarantee the banks and he also said there was no international pressure being put on Ireland to carry through payments of bondholders, payment of promissory notes and so forth.

What he said was reminiscent of what I have heard in other parts. A few months ago, members of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform met members of the Bundestag finance committee, and what they said was very similar. They said we caused this and we need to fix it, so we must take the hard medicine and be very cognisant of the support we are receiving from the German people. If the Tánaiste talks to our MEPs, as I am sure he does regularly, he will be aware they tell similar stories of the European political establishment - people feel this was our fault, that we need to get ourselves out of it and that Europe is supporting us. Further, they will tell us we are on the road to recovery. The message is that we caused the problem, it was an expensive problem, we need to fix it and they are supporting us, but things are turning good for us so we should just get on with it.

I make the point to the Tánaiste that not only are these views incorrect, they are very dangerous for the Government's efforts in trying to negotiate a substantial write-down on the €64 billion. Obviously, some of the banking collapse was caused in Ireland. Fianna Fáil did allow loose regulation and did guarantee the banks, supported by Fine Gael. However, there is no doubt international pressure is being put on the Government to continue paying unguaranteed bondholders and the promissory notes.

Of course, the banking collapse was not just our problem; it was Europe's problem and, in truth, it is Europe that has gained. We have not gained. Most of the banks are gone - they are dead, or should be dead. It was Europe that gained, particularly in terms of financial stability. Unfortunately, contrary to the figures thrown around at budget time, I do not believe we are on the road to recovery. Unemployment is not falling, or not really, emigration is rising, there are 35,000 fewer people at work now than there were one year ago and economic growth is tenuous. Indeed, if we were to take a close look at where that tenuous growth is coming from, a good portion of it is actually down to accounting measures rather than a real increase in productivity in the export sector. Sadly, we are not 85% of the way through the correction - that is based on one accounting figure for the promissory notes. We are actually less than halfway through. I take no pleasure in saying this. Unfortunately, I do not believe we are yet on the road to recovery. We need this deal and we need a balance between fiscal consolidation and investment to achieve that.

Why is this happening? I would say it is partly down to a diplomatic failing on behalf of the Government and, maybe, of all of us. The Government has focused on rebuilding Ireland's reputation, and for very good reason. However, I believe the balance is now incorrect and that the Government may have sacrificed much-needed honesty about what happened and what is happening here, and the pain the Irish people are taking for goodwill, important though that goodwill may be. My message before the European Council meeting is this. I believe it is time to redress that balance. It is time to have a robust and honest conversation with our European partners, including the ECB and the Commission, about what happened here, about who paid for what and who has gained, and about the fact we are really not being supported by Europe.

Our so-called rescue package, as the ambassador put it, was, in fact, a rescue package for the European financial institutions. I accept that the Tánaiste's position is difficult, but I ask him to take a much more robust position on these issues. I do not say this lightly and wish him good luck in his endeavours.

Deputy Clare Daly

As the Tánaiste prepares for his next European outing, it would be remiss not to mention his participation in the utterly ludicrous and outrageous presentation of the Nobel peace prize to the European Union. This participation represented a shocking failure on the part of the Government, a missed opportunity to boycott the event and take a stance against the galling hypocrisy that saw a militarised European Union, which has participants in Iraq and Afghanistan and which numbers among its ranks some of the largest arms manufacturers in the world, granted such recognition. It is a sick joke.

The Taoiseach's presentation included only a few lines on the important foreign policy issues that will be addressed at the Council meeting. It is very important that the Government departs from its complicity in the lack of action we are seeing in some of these areas. In particular, the Israeli offensive against Gaza and the continuing extension of settlements on the West Bank are an outrage. Simply stating one's opposition to such activity is not good enough, particularly when the European Union does the opposite of what it says by maintaining its position as Israel's largest trading partner. It is a case of conflicting signals, with the Union giving Israel a little tap on the shoulder, while at the same time embracing it with open arms. The Israelis responded to the United Nations decision to afford Palestine enhanced observer status with a two finger gesture in the form of its extension of the settlement programme. In the face of such determination one can talk about it or one can do something about it. As Ireland prepares for the Presidency of the European Union, the time is right to take action. Words are no longer enough. The Irish Congress of Trade Unions and others have called for a ban on goods from the settlements. At the very least, the implementation of EU regulations on consumer branding and so on should proceed without delay. Unfortunately, I do not have enormous confidence that the Government will steer action in this regard, particularly in the light of the Tánaiste's antics in the European Parliament yesterday.

Deputy Seán Crowe referred to the conclusion of the free trade agreement with Colombia and Peru. This, more than anything, is an indictment of the Government and its actions in Europe. There has been a great deal of comment in the media recently on the betrayal of its voters by the Labour Party in respect of the domestic policies it has pursued in government. The party should have no less cause for shame when it considers that every single trade union federation, non-governmental organisation and human rights body lobbied against ratification of an agreement with Colombia in the light of that country's systematic abuse of human and workers' rights. On the other hand, the lobbying by business interests seems to have been much more successful, those interests having been supported and vindicated by the agreement. It is an absolute disgrace and the Tánaiste, in particular, given his record in opposition, should be ashamed.

We should not be surprised that such agreements are countenanced because that is the mark of the European Union in both its foreign and domestic policies. Other Deputies referred to the worsening economic crisis and growing instability across member states. That is a consequence of the continuation of austerity which has had a calamitous impact on people throughout Europe. Unless those policies are addressed and until there is an end to the foisting of private debt onto the shoulders of the public, we will not have a better Europe but rather a recipe for ongoing instability and crisis.

Deputy Mick Wallace

It is my expectation that some form of debt relief will be put in place. When matters go to the brink, the European Union tends to do what needs to be done. An agreed scheme of debt mutualisation is essential for all economically troubled countries in Europe. For now, however, the Government must make clear to its counterparts in Europe that the social fabric of this country is under threat and that we are on the edge of an abyss as more and more people are driven into poverty. When the relief is eventually provided, some of the long-term damage may be irreparable. This country needs help now - waiting until after elections in other countries will inflict further wounds on those least able to deal with the pain. Austerity and the associated cutbacks in State expenditure are having a counterproductive effect. Moreover, the full calamitous impact of the cutbacks is still to be seen. The long-term outlook is very worrying in many ways.

Yesterday we learned that the troika was pushing for reform of repossession law in this country which, it claimed, was crucial to Ireland's economic recovery. A more general policy of repossession by financial institutions will not do much for social recovery. A report in the Financial Times today includes a comment by Noeline Blackwell of the Free Legal Advice Centres:

This is a social problem for the state because there is no social housing coming on stream and the mortgage to rent scheme is simply not happening. Lenders will also face problems trying to sell properties in a market that is scraping along the floor.

The notion that we should give the banks greater capacity to throw people out of their homes is a very frightening one and I hope the Government will not go down that track.

Following the decision to award the Nobel peace prize to the European Union, I ask the Tánaiste to remind his European colleagues of Alfred Nobel's stipulation in his will that the award should go to those who do most to achieve military disarmament. The reality is that Europe exports one third of the world's arms. The intra-Community transfer, ICT, directive, which amounts to a deregulation of the rules governing the export of arms, is cause for serious concern. I accept completely that the notion of France and Germany ever again going to war against each other is no longer credible. The idea of a united Europe was and is an excellent one. However, it is sad to see these countries so dependent on the arms industry for profits. They have been promoting it to such an extent that Greece which spent €7 billion importing arms last year was not allowed to cancel its arms purchase contracts, even though its citizens were hungry.

Deputy Mattie McGrath

I welcome the opportunity to contribute to this discussion. I bear no ill will towards the Taoiseach, the Tánaiste or the Minister of State, Deputy Lucinda Creighton, and wish them well in their engagements in the European Union. However, the public has grown weary of the process of Ministers wasting jet fuel travelling elsewhere in Europe. The Government should have put a double carbon tax on that fuel expenditure because it is a waste of time and money. I remember the Tánaiste's righteous indignation when he stood on the other side of the House and used phrases such as "economic treason", yet he has the audacity to accept Ireland's share of the glory when the European Union is awarded the Nobel peace prize.

I am not concerned with discussing any country other than our own. In the fullness of time, when the history of this period is written, I expect that we might well deserve a Nobel prize. It will not, however, be for making peace but for picking up the shattered pieces of the Irish race. If the Government persists in the policies it is pursuing - the same policies pursued by its predecessors, among whom I was numbered before I stood up and railed against them - that is how the Tánaiste will be remembered. It would be a sad legacy for a man who began his career in student union politics before coming through various left-wing parties. How can he allow his party to become the mudguard for a capitalist party such as Fine Gael and be dictated to on issues which should be matters of strong principle for it, particularly in the budget?

The Taoiseach refuses to engage with Mrs. Merkel and company and tell them the real story of Ireland in 2011 and 2012. That must be done now and the troika should be told the same. It was incredible to wake up this morning and hear that, at the behest of the troika, or some greater power within it, the Government would change Irish law, perhaps as soon as next March, to allow the banks to carry out much greater numbers of savage repossessions. I urge the Tánaiste to recall Michael Davitt of the Land League and those who worked with him. He should also remember James Connolly whose life was commemorated in Clonmel last week. I was glad to welcome the Tánaiste to the town on that occasion. He must look into his conscience and consider whether he was elected to behave in this way, whether these are the policies he would seek to expound. He will surely agree that a mockery is being made of our democracy. I am very concerned because I do not understand how he has gone so wrong.

I watched the present Government when it was in opposition and most of the time I admired it. Whatever it is that happens when Deputies take those seats, we will have to reshuffle the House and put the seats on this side, or whatever, in order to change the contamination that has got into our being as a political race. We are subservient and no longer proud of ourselves and we do not stand up for our people, which is what we were elected to do. We should fight back and demand rights and respect rather than give the Taoiseach pats on the back and have awards and different images on front pages of magazines. I will not stray and use the wrong word. I wish him well, as I do the Tánaiste. However, the people are not able, willing or ready to suffer any more at the behest of the harsh austerity being imposed by the troika, whose representatives I have met on three occasions. The Government has done a good job in hoodwinking and fooling them and telling them untruths, a word I hate to use. I asked the troika people to send their own scouts into towns, villages and cities and workplaces to see what is going on and find out for themselves that what they are being told is a pack of gobbledegook. The reality of what is happening in Ireland must be brought home to the people in Europe.

The Government has the opportunity, in the EU Presidency it will assume shortly, to take this up, engage meaningfully and do the job it is paid to do, namely, to represent the Irish people as their solemn elected Government rather than to kowtow and lie down under the bully boys of Europe. We are entitled to a reasonable standard of living and time to pay back our debts - which we never fail to do. We are entitled to have a bit of dignity.

Minister for Foreign Affairs and Trade (Deputy Eamon Gilmore)

I listened to what Deputy Stephen Donnelly said about the debate he had on radio with the German ambassador. He told us much of what the ambassador and other people he has been speaking to have been saying but unfortunately he did not tell us what he said in return, although I imagine we can find that out. l hope he drew the attention of the ambassador and others with whom he spoke to the agreement that was made in June in respect of a banking union and the separation of bank debt from sovereign debt and, in particular, to the commitment made by European leaders at that meeting that the Irish financial situation would be examined with a view to improving its sustainability. I hope that he and other Members of the House who engage, whether with ambassadors, Members of the European Parliament or people they come across in their own Europe-based political parties and groupings, mention the fact that a clear agreement was made in June that the Irish situation would be examined, a banking union would be set up and there would be a separation of bank and sovereign debt. That is critically important for this country.

As many Members of this House have rightly pointed out in the course of this debate, the separation of bank debt from the State is critically important in order to lift the burden of that debt from the backs and shoulders of the Irish taxpayer. It is the objective of this Government to achieve that. The Irish people have borne a very big burden for what happened in both our own and the European economy. Decisions were made in October about the establishment of the single supervisory mechanism which is key to the putting in place of the banking union. It is important that those decisions are implemented. Today, for example, the finance Ministers at the ECOFIN Council will be discussing that very matter and I hope and expect this issue will be before European leaders when they meet at the meeting of the European Council. I hope the discussion that will take place around economic and monetary union and the strengthening thereof will be very much about issues which, ultimately, are about lifting the burden that has been placed on the taxpayer and ensuring there is a shared approach to the banking and financial crises across Europe. I hope that the burden the Irish people and their State have had to bear is something that will be approached in a shared way for the future.

I am disappointed at the degree of cynicism that has been expressed in the Chamber about the Nobel Peace Prize. There has been much discussion about Europe in terms of its economic issues, the banking and financial crises and the difficulties of the euro. It is worth reflecting on the origins of the European Union. The Continent was ravaged by war in the 20th century - two of the biggest wars the world has ever seen, in which the main protagonists were European states. Those protagonists are now part and parcel of a European union. It is not only the great world wars that took place - one must also think of the dark night of fascism that hung over Spain, Portugal and Greece. This was lifted and those countries brought into the European Union family. There was the huge change that took place after the collapse of the Berlin Wall. There was the contribution the EU made to the bringing of peace, in particular to the Balkans. There is the work the Union is doing now in trying to bring peace to areas where conflicts are still murmuring away, such as those in the Caucasus. There is the work the EU is doing in areas such as Syria, and also in Africa, using the so-called "soft" power of the Union, as well as development aid and the strengthening of issues such as policing, civil society and so on.

In itself, the European Union is probably the best example of how Europe moved from resolving its differences by having wars to resolving them around the conference table. It continues to make that contribution, bringing peace to other parts of the world. It is not a subject for cynicism, rather it is something of which we, as European people, ought to be proud. We should contribute more to it.