Pre-European Council Meeting: Statements

The European Council will have its first meeting of 2013 in Brussels on Thursday and Friday of this week. The main issue for discussion is agreement on the Union's future budget, which is called the multiannual financial framework, MFF. That work will start tomorrow and I expect discussions to continue late into the night. As Members will recall, negotiations on the MFF have been under way since the European Commission put forward its proposals in June 2011. They have been, and remain, both highly technically complex and highly political as by assigning resources, we are effectively prioritising our common actions, making hard choices and difficult decisions on the European Union's actions right up to 2020.

The amounts of money involved may sound very large and the Commission originally proposed expenditure of approximately €1,000 billion over seven years. In reality, however, for a European Union of 560 million citizens, this represents just 1% of European Union gross national income, GNI. If one puts it another way, it represents just 2% of total public expenditure in the European Union. At a time when we look to the Union to assume many more tasks, this seems modest. However, the negotiations this week will not merely focus on spending.

We will shortly mark two years since the Government took office. This anniversary will see another outpouring of the self-congratulation which has become the hallmark of this Administration. The clear and growing disillusionment of members of the public with the Government is directly linked to its non-stop claims of action and leadership which do not have the slightest connection to reality. It is obvious to anyone who cares to examine the evidence that the Government does not have a strategy on Europe, other than a hope that something will turn up. It has shown an inexplicable reluctance to set out Ireland's case with clarity and urgency, has not undertaken any credible diplomatic initiative and has refused to provide the public with even basic information. It has put domestic party politics ahead of using the strongest arguments available to Ireland. It has also made, in full, the first repayment of the promissory note, while claiming it did not do so and has used most of its energy trying to claim credit for deals won by others and automatically extended to other countries.

As we rapidly approach the Government's self-declared deadline for the promissory notes, a pattern of dissembling complacency has been replaced by full-scale panic. All of the evidence available is that the Government's approach is doing active damage to Ireland's interests. Annoyance is growing at its inconsistent line, regular over-spinning of both minor and non-existent developments and use of contradictory arguments. For example, the Taoiseach states Ireland is already back in the bond market, while the Tánaiste states we are shut out of the market and facing a catastrophe unless the European Central Bank scraps most of the promissory note payments. The latter tells Europe that the Government could fall apart without a deal while the former informs the House the Government is rock solid and will be in place for a full five years, irrespective of what happens. Some Ministers have indicated that a deal will be used to stop the implementation of planned cuts, while others rushed out to claim all planned cuts and targets will remain fully in place. On occasion, at the same time albeit on different media outlets, one Minister will say negotiations are hitting obstacles, while another will claim everything is going grand.

The hard reality is that the Government has not supplied the Dáil or Irish people with a single piece of proper or factual information about anything to do with the current negotiations. Having spent a year and a half relegating the promissory notes to something to be handled by officials at a technical level, we have suddenly seen a burst of statements and activity. In what one journalist described as unprecedented in her many years of covering Presidencies, the Taoiseach and Tánaiste have suddenly started discussing promissory notes at European Council events which have nothing to do with the issue. She further stated that the reaction against the Government's behaviour has been very negative and it has not done anything to help Ireland's cause. Why the Tánaiste believed the EU-South America summit would take up Ireland's cause has yet to be explained.

This new burst of activity is purely about a Government trying to be seen to be doing something rather than actually getting something done. As both the European Council and Commission have stated repeatedly, while they wish Ireland well, they do not have anything to do with the final decision which is a matter for Ireland and the European Central Bank. It would have been a significant help to Ireland if the Council or Commission had stated formally that they do not consider that helping Ireland is prohibited under the ECB's statutes or the European treaties. Such a step would helped last year when the ECB President, Mario Draghi, was launching his radical moves to save the euro. However, this major moment of opportunity was missed.

Everything that is known about the negotiations has been supplied by journalists and ECB spokespersons. Two weeks ago, the Government claimed everything was going fine, even though it was fully aware that things were far from being fine. In the days subsequent to the Government's claim, a media report revealed that the ECB council has reacted negatively. Although first denied by the Government, the report was later confirmed by the Minister for Transport, Tourism and Sport, Deputy Varadkar, in one of his truth-telling episodes that do so much to annoy his senior colleagues.

A growing number of newspaper and broadcast journalists have exposed major differences between the Government's public statements and what is actually taking place. Each time the Government dismisses the work of these journalists, it subsequently emerges that the information they revealed was correct. The first such case occurred following the Taoiseach's first summit meeting when he claimed he rejected a demand that other leaders have said was never made. For almost a year, we were informed a breakthrough had been achieved because a joint technical paper was being drawn up, only to discover that no such technical paper existed.

There are mountains of technical papers.

The Taoiseach may recall that I looked for the paper for months but it never appeared. We now learn it did not exist, although the Taoiseach got a good year out of it in the House.

As was written yesterday, Ministers have cried wolf on Europe too many times and no one any longer believes their public statements. As the Taoiseach is aware, he and his colleagues produced a budget and White Paper which laid out, on the basis of existing commitments, that Ireland would achieve full market re-entry, growth and debt sustainability. Today, he informed the House that this was untrue and these objectives could not be achieved without a deal with the European Central Bank. Less than two months after the budget, he tells us that the fundamental economic basis on which it was presented and pushed through the House was false. He has a duty to inform the House and Irish people what is the bottom line for the current negotiations and what is required to avoid the catastrophe the Tánaiste has predicted.

I reiterate that every Member of the House wants the Government to get as much as possible out of the negotiations. Outside a handful of Ministers, however, no one believes the negotiations have been handled competently or with the urgency they deserve. Some are advocating policies which sound like those advocated by the Tánaiste, Deputy Gilmore, before the previous general election. Their proposals are as credible as the Tánaiste's were at that time.

Members of the Opposition have limited opportunities to have even a peripheral impact on negotiations such as these. As the Taoiseach is aware, however, I and my party have used the opportunities available to us to impress upon other countries and the European institutions that there is a broad national consensus in favour of the idea of lifting the impact of bank related debt on Irish people. While the Taoiseach waited a year and a half to make the case that Ireland's debt was incurred substantially as a result of European Central Bank pressure, we have made this case repeatedly.

I am loth to interrupt, but we will be tight for time at the end of this debate. The Deputy should keep in mind that he has gone over time.

I am almost concluded. I get no sense from the Taoiseach's speech or from Ireland's Presidency that any effort has been made to articulate a broader revision about a budget that still only accounts for approximately 1% of the overall European budget despite this being a time of crisis. The budget will have direct repercussions on the size of the Common Agricultural Policy, CAP, and the scale of the cheques that farmers will receive and will undermine the good work done in the past five to six years in terms of agriculture and food development.

Following Prime Minister Cameron's recent speech, the background to every summit will be the fact that a member state has, for the first time, started a discussion about leaving the Union. Ireland does not want the UK to leave the Union, but we need to end our silence on the Tory agenda. The speech was dressed up with positive words, but if one looks beyond them, one finds a bleak vision for the Union. The list of powers that he cited for repatriation comes down to a demand that the EU cease to exist and become simply a free trade area. However, even this would be almost impossible to achieve, as the regulations that give the Single Market its impact would be impossible under the Tory agenda. If even a fraction of what is being demanded was conceded, the terms of Ireland's membership of the Union would be changed, requiring a referendum that would have no chance of passing.

As European issues have mounted, the Government's refusal to set out its policy is stark.

I call on Deputies Gerry Adams and Seán Crowe on behalf of Sinn Féin. They have 15 minutes which I understand they are sharing.

Yes. I thank the Taoiseach for the European Union Presidency tie, which arrived in my pigeon hole.

I have one and I can get one for the Deputy if he wants one.

No, I got one. I am thanking the Taoiseach for it. Tá mé fíor bhuíoch don Taoiseach. I would like to think we would get much more than that.

Everyone else got one. Did Deputy Martin get a tie?

Did Deputy Crowe get a tie?

I would love one.

I will ensure that the Leader of the Opposition, Deputy Martin, gets one too.

Will it be in the Mayo colours or the Cork colours?

The Dublin colours.

The Taoiseach has just outlined that the summit will be dominated by negotiations on the EU seven-year budget. However, first I wish to deal with the ongoing negotiations on the promissory note. Two weeks ago it was reported that the ECB refused to endorse an Irish proposal on the promissory note. I understand from media reports that a new proposal will be brought by the Governor of the Central Bank, Professor Honohan, to the ECB this week. The critical issue in all of this is not whether a deal is done but precisely what kind of deal is agreed. Sinn Féin's position is clear. We want the Government to secure a deal and we wish it well in that regard, but it must be a deal that removes the toxic banking debt from the shoulders of Irish citizens.

From the outset the Government has approached this issue in the wrong way. Rather than stating, as the Taoiseach did in the Dáil, that we would not have the word "defaulter" written on our foreheads, he should have said that it is not our debt. He should have sought a write-down but he did not even ask for one and he has still not asked. He should have told our European partners that this debt is not sustainable and the Irish people simply cannot pay it. He still has the opportunity to do it.

Sinn Féin does not accept that debt restructuring, as proposed by Fianna Fáil, or paying the debt over a longer timeframe is a credible deal for taxpayers. The notes should not be paid. The people of the State, on a per capita basis, have already contributed more to the banking crisis and the stabilising of the entire European banking system than any other EU state. It is time we got assistance from our EU partners. The citizens of the State have just had their sixth austerity budget, bringing the total in taxes and cuts to €28 billion to date. By December 2013 we are due to have made €31 billion in tax adjustments and cuts to our economy. The sum of €31 billion is what the Government and Fianna Fáil want us to pay into what remains of the bad banks, namely Anglo Irish Bank and Irish Nationwide, now the Irish Bank Resolution Corporation, IBRC. Every billion paid to the IBRC is a cut to the health budget, an increase in PRSI, a new property tax, more overcrowding in classrooms, more workers out of jobs, more families struggling to make ends meet, more Garda stations being closed and more nurses emigrating.

The third instalment of €3.1 billion worth of promissory notes is due to be paid to the Irish Bank Resolution Corporation on 31 March. Any deal on the bank debt must bring relief for citizens. A deal must mean a reduction in the cuts and taxes to be faced in the next budget. Could the Taoiseach tell us what impact he expects a debt deal to have on next year’s budgetary situation? Will a deal on debt result in a windfall for the State and will the Taoiseach assure us that any benefit from it will be used to reduce the burden of austerity on citizens? Could he also inform the House whether last year’s payment of the promissory note is part of the current negotiations? Last year’s payment was covered by the issue of a bond to Bank Of Ireland which is due to be redeemed in May at a cost of €3.1 billion plus €90 million in interest to Bank of Ireland. Where will the money come from?

I wish to deal briefly with the negotiations on the EU budget. The Government holds the Presidency of the Council of the European Union. In every negotiation the Government must argue for a budget that is fit-for-purpose and that brings an end to austerity. The budget must also tackle the enormous issue of unemployment in the State and across the EU. There is much talk and rhetoric from the EU about jobs stimulus and measures to drive the jobs and growth agenda. At the same time many in the EU are looking to cut, or at the very least not to increase, the budget, One cannot do both. In the negotiations the Government must be on the side of investing in jobs and growth. An Teachta Crowe will deal with this issue in more detail, in particular on the scandalous issue of youth unemployment.

The Presidency should also be used to protect our vital national interests. That includes securing a well-funded and fair Common Agricultural Policy which prioritises the needs of working farmers. I also hope the Presidency can secure a PEACE IV programme in order that the good work of the PEACE programmes to date is not squandered. Last week Mr. Martin McGuinness and Mr. Peter Robinson were in Brussels pressing the case for additional PEACE funding to continue. Will the Government support those efforts?

Finally, I raise the issue of Ireland’s European Parliament representation. The European Parliament is currently considering a proposal which would reduce the number of MEPs in the State from 12 to 11. The proposal before the Parliament would leave most of the bigger states with their full complement of MEPs while medium to small-sized states, including this one, could lose seats. Sinn Féin argued in successive referendum campaigns that there is a drift towards greater centralisation of decision-making at EU level and a reduction in the influence of smaller states such as this one.

Ms Martina Anderson, MEP, has tabled an amendment to this proposal within the Parliament to attempt to preserve the State's current complement of seats. The Government has been silent on the issue and seems almost unconcerned at the prospect of a further diminution of our say in Europe. Will the Taoiseach inform us of the Government's position on the issue? Does he support the reduction in seats or does he plan to lobby to maintain our current complement?

It is essentially an issue for the European Parliament.

An Teachta Adams referred to the ongoing EU budget negotiations. I wish the Government well in the delicate negotiations. I wish to refer specifically to youth unemployment and the proposed youth guarantee. More than 5.5 million young people across the EU are not able to find work currently. Across the European Union, 22% of people between the ages of 15 and 24 are jobless, a figure that swells to as much as 50% in Greece and Spain. Long-term youth unemployment reveals an even starker reality: more than 30% of young people have been unemployed for more than 12 consecutive months.

The CSO released figures last week which show that the number of young people on the live register in the State has risen from December to January by 1,420. A staggering 68, 944 young people are now signing on. The figure does not include the many thousands who have emigrated in recent months. Many young people now see emigration as the only option open to them. There is a responsibility on us all to respond, but even more so on the Government to ensure that deliberate and determined interventions are put in place to give young people choices and, more importantly, hope.

I mentioned in the context of the European Investment Bank the importance of establishing a youth employment fund. It appears that the position of the European Commission is that no extra money will be made available for youth unemployment or a youth guarantee. In addition to talking about the issue, it is clear that there is a need for action. More funding must be provided to tackle the issue. The International Labour Organization called for the establishment of a €21 billion action fund. I call on the Tánaiste to make clear the Government’s support for such a measure in the negotiations. The State must also provide funding to combat youth unemployment.

The next time slot will be shared by Deputies Mick Wallace, Richard Boyd Barrett, Shane Ross and Mattie McGrath. I call Deputy Wallace.

Tony Healy of the Nevin Economic Research Institute in an interview on RTE radio this morning described our situation "as the largest and most expensive public bailout of private banks in recent European history; it is really impacting on people very severely and I think there is a lot of concern abroad about the capacity of Ireland to repay these debts". He went on to say: "We are in the bailout not because we burnt the bondholders but because we did not burn the bondholders...and now the situation confronting us is that we are due to pay €3 billion at the end of March, we are owing another €3 billion on 1 June when the Bank of Ireland's bond for last year's payment is due, and we are due [to pay] a third €3 billion in March 2014 - that is €9 billion" in just over a year as well as the money to follow. He argued that "it is very unlikely that the ECB would withdraw liquidity from the Irish system; it certainly would throw the whole system into chaos". He also said that "the risk of targeted interest rate increases on the banks is possible but I think you have to weigh up that risk against a risk of" paying out all this money.

It reminds us of what happened after the First World War when the Germans were too heavily penalised and the reparations which initially amounted to the equivalent of 96,000 tonnes of gold were later reduced to just over 40,000 tonnes but it created such problems for German society and undermined the fabric of it so much that it facilitated the rise of Hitler. I would like the Tánaiste to bring the point to Europe that the fabric of our society is being undermined by the debts we are expected to pay and the level of unfairness involved. It will cause further problems down the road for Irish society and it has done nothing to deal with the level of inequality that exists here which is also becoming a huge problem. Most economists would agree that inequality is a huge risk to financial stability. The Europeans should take this on board a bit more.

The Europeans have set targets on the assumption that economies would recover despite the tightening of fiscal policy but in a balance sheet recession when the private sector is cutting spending to reduce its over-indebtedness, that assumption is wrong. Put simply, we cannot all deleverage at once. To save more, one spends less and if the eurozone, including this Government, does that, the economy has to shrink.

Debt and jobs are the Moses and prophets for this country and for Europe. Everything else is secondary relative to those two issues. Unlike Deputy Martin - who just took a political pot shot for the sake of it in terms of the Tánaiste raising the issue of the promissory notes and debt in Latin America - I have no problem with the Tánaiste raising the promissory notes in Latin America, at EU Council meetings and on any and every platform he can. He absolutely should do so, both for the people of this country and for the people of Europe as a whole. However, when he raises it, is it just theatrics or are we serious? Is there serious intent behind it? Is there a red line being put up where we say that we are not crossing this line if the EU does not give us a deal that makes a difference to the debt and to jobs? The two are directly connected because every euro we have to pay out to bondholders and banks is a euro that we cannot invest in jobs. The equation is simple and it is not just simple in this country but in Europe also. If the priority is bailing out banks, then we do not have the money for jobs and investment collapses. If we do not have investment, there will be no jobs. On current projections, even in the best-case scenario - I have repeated this on numerous occasions and I hope at some point members of the media will focus on it - unemployment will only be down to 13.5% in 2015. Is that the vista that we have to look forward to? If that is our strategy and if that is our best outcome, it is nothing. It offers no hope to the people who are desperate for jobs and for our economy as a whole because if we do not get people back to work, our economy is banjaxed and will continue to be banjaxed.

What, apart from appeals, are we saying to the European authorities to back up those appeals? Is there any red line? Is the Government saying to the authorities that they must give us a serious and meaningful deal, not one that is just stringing it out but a deal that will make a serious difference to the budget arithmetic next year and our ability to have funds to invest in jobs and economic growth?

I am very disappointed in the Taoiseach's speech because it fails to address the one issue which is on everybody's lips and on everybody's mind, that is, the Anglo Irish Bank promissory notes and the legacy debt. I was even more disappointed when I read the following sentence: "We need to ensure that national interests do not outweigh broader EU interests". If one is President of the European Union, there is very little point in not using that to one's advantage. There seems to be a great temptation on the part of the Irish Government to use this as a photo opportunity and the evidence for that is in the media every day. This is our great opportunity, at a time of crisis, not to talk about the MFF being top of the agenda, achieving this and that for Europe, as contained in the speech, but to wear the green jersey and to play for Ireland. It is time, as Deputy Boyd Barrett said, to say that at the top of the agenda will be the Anglo Irish Bank promissory notes, to put that in the European pipe and let them smoke it.

It is time that we used the position we are in to our advantage. Imagine the French, with their great tradition of selfish, chauvinistic nationalism, being in the pickle we are in now and not using the Presidency of the European Union to their own advantage. If it means being obstructive of EU business, let us be obstructive because we are in a crisis situation. We need to go to the European Council meetings and insist that at the top of the agenda are the two matters that are vital to Ireland, which are squeezing the blood and oxygen out of the country. They are the Anglo Irish Bank promissory notes, on which we demand a write-off, and the EU legacy debt, where we are being betrayed by the day. Long-fingering Ireland has gone on for long enough. Here we are, in this key position, towing the French and German line, day after day.

I make a plea to the Tánaiste not to go to South America to issue threats of a general election. He should issue such threats in Europe and should do so publicly, if that is what he believes. That is the only language which will be understood in this critical situation in which we find ourselves. I beg the Tánaiste to take these current negotiations to every single forum and not to be on the back foot. He must take the Anglo debt issue to Europe and make it Europe's problem, not ours.

I am delighted to have the opportunity to speak on this important issue.

In the context of what previous speakers have said, I have some advice for the Tánaiste, for what it is worth. The Tánaiste went Chile to utter his chilling words about what might happen at home. We heard lots of chilling words from him when he was in Opposition. Indeed, they were very chilling, some of them were very nasty and were downright insulting to the then Taoiseach, but that is for another day. I wish to be conciliatory in what I say to the Tánaiste. I accept that the Taoiseach and the Tánaiste have a responsibility to Europe because Ireland has the Presidency, which I welcome, but we should use it to our advantage.

We must remember that they are all coming into our parlour. We are not meeting them in Chile, Germany or France. They will be in our parlour, in the nice comfortable surroundings of Dublin Castle, a venue that has panache and may give the impression of a wealthy country. That is the time to raise it, nicely and calmly. It is the place to draw attention to what the Tánaiste said in Chile and to point out that he got a mandate from the electorate to raise the issues of the promissory note and bank debt. This is crisis point and the time for talking is over. The time for insults and for denigrating our situation in Ireland is gone. I listened to an eminent German economist last night and could not believe how frank and honest he was. I do not know his pedigree but I thought he was going to say something along the lines of "let them eat cake".

Is that the same Deputy Mattie McGrath who voted for the bank guarantee?

Yes. It was the biggest mistake I made.

I am glad he has admitted it.

I acknowledge that readily.

No one in this House should be in any doubt about the Government's determination to secure a satisfactory outcome on the issue of the promissory note or about the efforts Ministers have made and will continue to make at every available opportunity until we get that satisfaction.

Labour's way or Frankfurt's way.

The Tánaiste without interruption.

I thank everyone who has contributed to the debate. As the Taoiseach said, this week's meeting of the European Council is an important one, for the European Union and for Ireland.

Finding an agreement on the MFF will represent a welcome shot in the arm for the European Union and its member states. On Monday, I chaired the General Affairs Council and we were briefed by President Van Rompuy on the MFF. From what was said at that meeting, the task facing President Van Rompuy, who is charged with steering the discussions this week, will not be an easy one. While good progress was made in November, it is clear that difficult issues remain to be resolved. The President is faced with a position where some countries are seeking further cuts in order to secure agreement while arguments for increased spending in particular areas are being advanced by other member states. Sometimes, indeed, the arguments for cuts and increased spending are being made by the same country. It will require all member states approaching the table with minds open to compromise if agreement is to be found.

Of course, agreement at the European Council is a first step to putting the framework in place. The treaties require that the consent of the European Parliament must also be secured. On Monday, therefore, I also met the MFF team from the European Parliament as preparation for the work we will have to do, as holders of the Presidency, after the agreement. It was clear to me that their support cannot be taken for granted. Particular issues have been highlighted as being of particular concern to the Parliament, including flexibility, its own resources and a mid-term review, and the Parliament will weigh any outcome carefully before reaching a decision.

In opening the debate today, the Taoiseach highlighted the important discussion the European Council will have on trade. I share the assessment that an ambitious trade agenda is an essential element of any plan for generating growth and creating jobs in Europe. The achievement of an EU-US trade agreement is a great prize. A high level working group has been engaged in finding ways to tap into this huge potential and we are awaiting its report. It is widely expected that it will come out with a strong positive message recommending the opening of negotiations towards a free trade agreement. We have said that if this is the case, we will make every effort towards agreement in the Council on a mandate during the term of our Presidency. This is an area where Irish and European interests are absolutely aligned.

This week's European Council will also provide an occasion to consider two important foreign policy issues, the Arab Spring and the situation in Mali. The European Council will review Europe's relations with its southern neighbours two years after the first democratic uprisings in Tunisia and Egypt in early 2011. Such a review is timely, given the momentous changes that have transformed the Arab world over the past 24 months. The EU strongly supports the process of democratic transition that is underway. We will continue to do so, while respecting clearly that it is ultimately for the countries concerned to best determine their own pace of political and economic reform. The European Council is likely to invite High Representative Catherine Ashton and the Foreign Affairs Council to review the effectiveness of the EU's current policies and instruments in assisting the political and economic transition of the region and to report back by next June.

On Syria, draft conclusions have been prepared calling for an immediate end to the violence and reiterating support for the efforts of the UN and Arab League joint special representative, Lakhdar Brahimi, to achieve a political solution. The European Council is also likely to reaffirm the EU's commitment to continue providing aid to address the appalling humanitarian situation in Syria and its neighbouring countries. The total EU contribution in humanitarian aid since the start of 2012 now amounts to over €830 million. Last week, the Minister of State, Deputy Joe Costello, announced a further Irish contribution of €4.7 million, bringing our total humanitarian assistance to Syria, over the past year, to €7.1 million.

I welcome the fact that the leaders will adopt conclusions on Mali, which is of pressing concern. This week's European Council will review the latest developments on the ground and on the political track. We welcome the adoption by the Mali Government of a roadmap towards political reform and elections, and this has been approved by the Mali Parliament. We also welcome the accelerated deployment of the UN authorised African peacekeeping force, AFISMA. While the situation remains volatile, the EU is playing a significant role in support of Mali and its neighbours through political and diplomatic engagement, the deployment of the European Union training mission, humanitarian assistance, and financial and logistical support for the Mali authorities and the regional military force. We are, of course, concerned by reports of human rights violations and are continuing to monitor all developments closely.

It is evident that this week's European Council meeting has an extremely full agenda ahead of it, with the aim of concluding the MFF negotiations as well as considering an important range of other issues which will impact on us economically or politically to one degree or another.

The House can be assured that Irish interests will be advocated and defended at every opportunity in the formal agenda of the European Council. With regard to the national interests which the Government is pursuing on behalf of the country I assure Members that we lose no opportunity to make our case forcefully and, I hope, effectively.