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.

It concerns how the EU assembles the money that it needs, how we can improve the quality of the spending and how rebates may be handled for individual member states. This must all be agreed by unanimity. We are a Union of 27, soon to be 28 member states, with each member state having its own appreciation of the Union's wider interest, as well as of the national interest. This week we will need to find the right balance between national interests and the approaches we support together as common policies in instruments such as the CAP. We need to ensure that national interests do not outweigh broader EU interests.

That is the first hurdle and the treaty requires also that any agreement must have the consent of the European Parliament. In today's more complex institutional environment in the European Union, this cannot be taken for granted and nor should it be. We need to respect the interest of the European Parliament in this process, and I have made this clear both to President Van Rompuy and European Parliament President Schulz, as well as EU Commission President Barroso. Ahead of the meeting of the European Council, I met with President Van Rompuy, who will steer our discussions, as well as Presidents Barroso and Schulz, in Brussels on Monday to consider the process that lies ahead. It is clear that tough negotiations will be needed if agreement is to be found.

Some headway was made at the European Council in November but considerable differences remain. From my contacts with colleagues, I believe there is a shared appreciation that we need to close the deal this week. We need to show our citizens in the Union and the wider world that we are capable of taking decisions even on the most difficult of subjects. In general, the signals from capitals have been encouraging. It would appear that leaders will be heading to Brussels this week with a view to finding an acceptable compromise. That would be good news for the European Union and for Ireland.

Our discussions will pick up from where we left matters in November, when President Van Rompuy tabled a proposal for a budget of approximately €972 billion for the seven year period, representing a significant cut from the budget proposed by the Commission. In setting out his assessment of how matters stand, President Van Rompuy has been clear that he believes further cuts will be necessary to bring everyone on board. A main part of our discussion will, therefore, focus on how big these cuts should be and where they should be applied. In addition, the European Council will also have to reach agreement on the revenue side, an area that we did not get into in detail in November, and this involves the very difficult and sensitive question of rebates.

I have set out the Government's approach to the negotiations on a number of previous occasions. We want a properly funded and properly functioning EU. The EU's budget must have the right mix of priorities, a fair allocation of resources and, most importantly in our current circumstances, a focus on jobs and growth. The EU must, in short, have a budget that is fit for purpose.

Our overriding financial priority has been to protect the allocation for the Common Agricultural Policy and to maximise Irish access to it. The CAP accounts for approximately 85% of our total EU receipts and it is central to our interaction with the EU. The Union's budget needs a CAP allocation that will support a vigorous, consumer-focused agricultural production base in Europe. The CAP is a vital tool for economic growth through its support for agriculture, the agrifood and related industries and the rural economy. We have made this clear to our partners in Europe.

Our engagement with the MFF is of course not limited to the CAP. We have argued strongly for an MFF with adequate resources for other growth-enhancing measures, including research, education, European connectivity and support for the small and medium enterprise sector. We want the budget to support the Europe 2020 strategy for jobs and growth and be seen to support it. It must have adequate funding for investment in economic growth and the creation of employment and it must have a particular focus on youth unemployment. All member states, including those with more developed regions, must be able to access EU programmes and funds. The Union's Cohesion policy must address the challenges that face us today, with the most serious of these being unemployment. The Union must also have sufficient funds to act outside its borders, most importantly in the area of development and humanitarian aid.

The gaps between the positions taken by member states have narrowed but they remain. They broadly reflect, in large part, the relative position of member states, whether they are net contributors or net recipients. In seeking to broker a deal, President Van Rompuy - who has my full support - will be conscious that the outcome must be one of which each member state can take ownership. This will not come about if the outcome is presented as one in which there are "winners" and "losers". We each have to be able to present what is agreed as a fair deal for all concerned.

As the member state currently holding the Presidency of the Council, Ireland will have a particular role to play if agreement is achieved this week. Members are aware that it is only on conclusion of the European Council figure that the mandate is given to the Presidency to negotiate with the Parliament. That will fall to Ireland on this occasion. Tomorrow morning, ahead of the meeting, I will meet again with President Van Rompuy and President Barroso to discuss the work that lies ahead for these discussions and beyond. Following an agreement it will be our responsibility to gain the formal consent of the Parliament.

As the House will recall from the visit of President Schulz to the Dáil, the European Parliament is fully engaged with the process and is very clear on the outcomes it expects. Ireland has repeatedly stressed the importance of any European Council deal on the MFF being one acceptable to the Parliament, which is a requirement of the Lisbon treaty from a number of years ago. The Irish Presidency will also have responsibility for chairing discussions on many sectoral regulations underpinning the MFF, including reform of the CAP, and for negotiations and passage in discussions with the Council and the Parliament. I expect the negotiations on Thursday to be long and difficult but I am confident a deal can be reached if there is goodwill on all sides to achieve a result.

On Friday, the European Council will discuss the other items on its agenda, which are trade and external relations. The latter will include consideration of the Arab Spring and the evolving very difficult issue with Mali. I very much welcome the discussion on trade and as Presidency we have indicated that an ambitious agenda on this front is an essential element of any drive for growth and job creation. President Barroso will brief the meeting on trade-related issues, on which the Commission plays a strong leadership role. This discussion will come at a time of unprecedented expansion of the EU's trade policy agenda.

Trade has never been more important for the EU economy and our discussions this week are most timely. Approximately 30 million jobs in the EU depend on sales to the rest of the world, an increase of 10 million jobs since 1995; this is equivalent to the total workforce working for the manufacturing industry in the EU. Over the next two years, 90% of world growth will be generated outside the EU. It is estimated that an ambitious trade agenda could lead to an overall increase of 2% in growth and the creation of over 2 million new jobs across the EU in the medium term. This would be most welcome, especially at a time when there are 26 million unemployed across the EU. An active trade policy is therefore a key condition of success both to economic recovery and to job creation. This fact is recognised by all leaders.

To benefit fully from the potential trade has to offer, the EU must also invest in increasing its internal competitiveness, making better use of untapped potential of the Single Market, opening up trade in services, strengthening the industrial basis in Europe and enhancing Europe's place in global supply chains. These drivers of growth are mutually reinforcing. I expect the European Council will prioritise those trade measures that will provide most benefit in terms of growth and jobs to the EU, and we must seize the opportunity of higher levels of growth abroad, both in emerging economies and in peer economies. Immediate priority will be given to developing our bilateral trade agenda in the absence of momentum towards a more comprehensive multilateral approach.

With regard to emerging economies, we should continue to strive to bring these economies to our level of openness. This will bring benefits to developed and developing countries alike. In this respect, the EU is actively pursuing its trade relationship with Russia, China, India, MERCUSOR and ASEAN countries, as well as with emerging markets closer to home. In the short term however, the biggest potential for growth lies in forwarding our new generation free trade agreements with peer economies. Advancing the agreements will bring challenges for the EU and for our negotiating partners alike, such as Japan, Canada and the US, but it will ultimately bring longer term benefits for growth and jobs.

In this regard, the EU-US high level working group on jobs and growth has been actively engaged in finding ways to tap into the significant potential of this bilateral trade and investment relationship. The working group will present its final report in the near future. We have stated that if it makes a positive recommendation, as is widely anticipated, we will do all that we can to advance matters during our term in the Presidency. If possible, we would like to see agreement by the Council on an EU negotiating mandate during the Irish Presidency. I have raised this matter with President Barroso, President Van Rompuy, Mr. Martin Schulz, MEP, and President Obama when I spoke to him by telephone after his re-election.

Foreign policy issues will be addressed by leaders during the working session on Friday morning. We 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 appropriate given the momentous changes that have swept across the Arab world in the past 24 months.

The other foreign policy item on the agenda this week will be the crisis in Mali, a key foreign policy priority for the European Union which continues to be of serious concern. It is welcome that leaders will address this pressing and critical issue. President Hollande, who visited Mali last week, may brief partners on the latest developments on the ground in Mali where French forces are active. The Tánaiste and Minister for Foreign Affairs and Trade, Deputy Eamon Gilmore, will elaborate further on both of these foreign policy issues in his contribution.

I look forward to playing a full, active and constructive part in the discussions in a national capacity as leader of the Government and as Presidency in this week's deliberations on each of the items on the agenda. As I stated, this meeting is important for Ireland and the European Union. Concluding negotiations on the multi-annual financial framework will mark a significant achievement for the European Union and one which will contribute positively to our Presidency objectives of stability, growth and jobs. I will report back to the House on my return from the Council.

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.

The Taoiseach is wrong to state that Ireland wants to swap an expensive overdraft for a cheap long-term loan. What Ireland has in the notes is a low cost short-term loan. As the Government finally seems to understand, the interest on the notes is nominally high, yet all but a small amount returns to the Exchequer. The net interest position of the promissory notes is low.

We need a deal because we do not want to swap low cost short-term loans for much higher cost medium-term debt. The best deal would involve a combination of an effective write-off and a long-term low interest series of bonds for the remainder. At a minimum, we need a deal that places the debt on a much longer term and at the lowest possible rate.

The notes were to have been an exceptional measure, taken at a moment of extreme instability. Ireland did not wish to incur the full debt. The notes were created at a unique moment that does not set a precedent. Underlying circumstances have changed fundamentally. The basic framework for dealing with bank debt is different.

First, rescue funds have been put in place that will give a guarantee to the effect that governments will not be left alone when tackling bank debt crises. Second, the ECB has introduced a wide range of new policies underpinning the liquidity and solvency of the banking system, which means that fears of contagion from individual failing banks have been removed. Third, and vital for Ireland's banks, Europe has moved from obsessively seeking to avoid burning bank bondholders to seeking to require their burning before state investment is allowed. In a succession of countries, the cost of saving banks has been cut by bailing in bondholders. It is no longer possible for a country to find itself in Ireland's situation, in that we needed to tackle the collapsing banking system without access to new supports and was obliged to honour all of its debts.

Ireland's case for relief from the full impact of these debts is strong. We were denied choices now opened to others. We took action in solidarity with a wider European system that was terrified of contagion. It would be economically and politically damaging to Ireland and Europe were the latter to fail to respond to these facts.

There are a number of technical barriers to Ireland achieving its ideal deal, that is, the writing off of a significant portion of debt. However, only one significant decision is required to deliver us the minimum that we need. As was again confirmed in this morning's newspapers, an ECB council that is increasingly irritated by the Government's grandstanding is holding the line that a write-off would effectively involve the monetary financing of a government, which is undeniably prohibited under the Union's laws. This ban is deeply damaging and represents the difference between the eurozone and other more indebted currency areas that have stronger growth rates, lower borrowing costs and lower levels of unemployment.

However, this is not an insurmountable barrier to helping Ireland. Giving Ireland the deal it needs would be a clear continuation of efforts to stabilise the financial system and protect the common currency. All actions to achieve these objectives are fully within the competence of the ECB. If the ECB's measures to reduce the cost of sovereign borrowing are legally acceptable, only by a bizarre twist of logic could restructuring our debts be illegal. Helping Ireland does not threaten the ECB's inflation targets, create a damaging precedent or lead to a backlash from member states.

Instead of giving us more banal generalities about what the Taoiseach is doing while presiding over a chaotic and damaging series of outbursts from various Ministers, he must clearly outline what we want and what we will do if we do not get it. Apparently, the Tánaiste has told the rest of Europe and all of South America that we are facing a catastrophe and the dissolution of the Government. The Taoiseach smiles at this comment. During Leaders' Questions in the past two days, he avoided the issue, but this is what the Tánaiste stated. More importantly, this is what his people are telling the media. Since last week, a clear difference in opinion has emerged in the Labour Party as regards its view of this issue. One could argue that doing so puts party before every other interest, but the word "catastrophic" was used. The dissolution of the Government in the event of a failure to get a deal has been crazily articulated by a Tánaiste. I do not know whether the Taoiseach has discussed the matter with him. The Taoiseach should ask the Tánaiste what he means and tell the House whether he really means it, whether it is spin or whether it is the truth. Is this an issue over which the Labour Party is contemplating walking out of government?

It is not good enough for the Tánaiste to make this comment or to claim that he made it to Chancellor Angela Merkel at an EU-South American summit and that he has authorised people to brief on his behalf about the dissolution of the Government being on the cards if a deal is not achieved. The Tánaiste also needs to spell out what he meant by "catastrophic". To be fair, the Minister for Finance, Deputy Noonan, stated yesterday that he was surprised by all of the panic and by people's wish to bring the issue to a head now. He can only have been referring to the Tánaiste, Labour spokespersons and people from the Labour Party who were briefing. There is a significant chasm between the Minister's approach to this issue and the Tánaiste's. The latter is on the road to megaphone diplomacy and grandstanding, perhaps for party political interests. We do not know. The man charged with overseeing the negotiations, the Minister for Finance, is singing a different tune and, in his own inimitable style, rebuking the Tánaiste and his colleagues for their behaviour and actions on this front.

As the Head of Government, the Taoiseach owes it to the Dáil to clarify the situation instead of making large, "rock solid" statements. Someone needs to spell out what the Tánaiste means by his comments and the authorised briefings.

A panicked response to poor polls and backbench unrest is doing damage to Ireland's cause and must stop. Regardless of what occurs by 31 March, the Taoiseach knows that he will claim it as a victory won through a brilliant strategy. If there was less grandstanding and a bit more honesty between now and then, it would do Ireland's cause much more good.

It looks as though a budget will be agreed at this summit following the work of President Van Rompuy. It is a bad budget deal for Europe because it stops the EU from playing a serious role in helping to restore growth and job creation, particularly in the hardest hit regions. It is a budget framed with a narrow view of Europe, one that makes many demands of the Union but refuses to give it the resources to meet those demands.

The Taoiseach stated that the summit's focus will be on cuts. President Van Rompuy has already cut back the budget from the Commission's target and, to bring everyone on board, claims that it must be cut again. This is occurring in the middle of the worst recession that Europe has faced since the late 1920s. There is a genuine case as well as capacity for a pan-European stimulus for the European economy. As the Taoiseach stated, 90% of world growth in the next two years will happen outside of Europe. There is no sense of urgency in the EU's external agenda. The budget is a pitiful failure as a proper response to the crisis in which Europe and its citizens, particularly those who are unemployed, have found themselves. I get no sense from the Taoiseach's speech or from Ireland's-----

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.

What does Ireland want the Union to become? How does it see it developing? Agreeing to everything except changes that require a referendum is not a policy. We need a comprehensive vision for Europe from our perspective and how we see it evolving in the years ahead. I thank the Acting Chairman for his forbearance.

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 National Youth Council called for an investment fund of €300 million, an investment initiative to provide for young people who are long-term unemployed, particularly those coming from areas of high deprivation.

The youth jobs guarantee aims to ensue that member states guarantee every young person under the age of 25 a job, training or education placement within a set number of months of becoming unemployed. Sinn Féin recently met representatives of the National Youth Council of Ireland. While welcoming support for a youth jobs guarantee, it again raised a number of concerns about it. The evaluation of the youth guarantee schemes implemented in Sweden and Finland indicate that they have reduced youth unemployment and inactivity. However, they were found to be more effective for young people who were new to the labour market than to those who were long-term unemployed. Yesterday one of the committees met Swedish representatives and we talked about the issue of youth unemployment. We get a sense from many groups which come before committees that there is no sense of difficulties faced by many countries across Europe and there does not seem to be any urgency to address them. I assume that reflects back on many of the countries involved in these negotiations. There is a need to up the ante on this issue. Will the issue of youth unemployment be discussed at the European Council?

A meeting of the Employment, Social Policy, Health and Consumer Affairs Council is to be held in Dublin this Thursday and Friday. Is the Government aware of these concerns ahead of that meeting? Will the Government include additional measures to support young people who are long-term unemployed to avoid the weaknesses identified in the schemes implemented in Sweden and Finland? Additionally, young workers can often only access precarious, temporary jobs or traineeships which offer little prospect of career progression. We know of the difficulty many young people who get temporary jobs face in terms of the rigmarole of trying to secure jobseeker's benefit or other benefits. Changes in this area need to be made not only in this State but in other EU member states.

Will the Government ensure that any youth jobs guarantee will be resourced to ensure that there is sufficient high quality education, training and job experience places and the staff to provide intensive job counselling and guidance? Will the Government lobby during EU budget negotiations to ensure it is resourced sufficiently and adequately to address the huge task involved?

In regard to EU aid, Britain, Germany, Holland and Sweden are reportedly proposing a major cut in aid in the EU budget. This is on top of President Van Rompuy's proposal in November of an 11% cut in EDF funding, compared with the figures put forward by the Commission. Other budget lines face cuts of 7.5% on average. European NGOs fear even steeper cuts and believe that the EU could end up spending less in 2020 than it did in 2007 on its partners in sub-Saharan Africa, the Caribbean and the Pacific. Aid cuts would most likely ensure that European countries will fall short of achieving their internationally agreed targets for halving the number of people in absolute poverty under the millennium development goals for 2015. Will the Government fight against the proposed disproportional cuts to the EU aid budget which will have a negative impact on some of the poorest people in the world? Does the Government agree that to keep cutting the EU aid budget will hurt the EU's foreign affairs and trade interests in the long run?

The Taoiseach mentioned the situation in Mali. We have seen EU member states intervene in Mali recently. The European Union has also firmed up plans to set up a 450-strong military mission to train the Malian army. Has the Minister for Defence, Deputy Shatter, brought a request to Cabinet on this matter and has a decision been made? The Tánaiste might inform us on that. While there are plans to send African Union troops there as soon as possible and there has been little resistance so far, caution should be urged and there is need to highlight the potential problematic and disastrous affect intervention in the region may have in the long run.

Instability in the Sahel region can be directly linked to the intervention in Libya. After the overthrow of Gadaffi, displaced tribes returned to their historic homelands and are demanding separatist rights for their states in that area. That has not gone away with European intervention and it will not go away with African Union intervention. I urge the EU to look beyond its immediate action of sending a military training force to Mali later this month, and wonder will the EU show the same interest and urgency for the future development of Sahel for the benefit of the ordinary people who live there.

While the EU and Economic Community of West African States are pushing ahead with their plans to send more troops to the region and to hold elections by 31 July, what plans are there to listen to what the people in northern Mali want? What plans does the EU have to address the rampant corruption of the central government? What plans are in place to stop another coup? This does not appear to be what is being discussed. There is only talk of radical Islamist forces and the threat to Europe. Will the Tánaiste raise the real needs of the ordinary people who live in Mali when discussing the issue with his colleagues?

There was no mention of the problem in Syria and there has been the recent intervention of Israeli forces in relation to that conflict. The situation there seems to be getting worse rather than better.

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.

There are 6 million people unemployed in Spain and in the south of that country, 66% of those aged between 24 and 30 are unemployed. There are huge problems coming down the tracks there. It is clear that austerity has been self-defeating for Spain.

There must be a U-turn in EU thinking because the current thinking is undermining democracy. Democracy is being frowned upon now and there is an idea out there that in this complex economic situation, the majority of people are not qualified to decide what is best. The belief seems to be that people are unaware of the catastrophic consequences that might ensue if their demands were met but the truth of the matter is that the crisis offers proof that the experts themselves do not know what they are doing. In western Europe we are witnessing a growing inability of the ruling elite - the treatment of Greece being a prime example - to solve the crisis and unfortunately the blind appear to be leading the blind.

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".

He was asking, bluntly, what kind of people we are to pay this debt and how much more do we have to pay. Are we to adore the lords from Europe? It is time to put the foot down. If the Taoiseach is not capable of doing it I beg the Tánaiste to do it. He showed that steeliness when he was in opposition. His own colleagues are asking, and saying to me in private, where is the Tánaiste we knew. What happened to him? My own former party had a similar experience with the former Taoiseach, Brian Cowen. We could see steeliness and robustness and we were very disappointed with his performance in government.

The electorate is disheartened and disenchanted. They want hope. It may be, before it is too late, that the Tánaiste can give them some ray of hope that he respects the mandate they gave him. Will he honour that mandate and do what he promised, which is to speak up for Ireland and get some recognition of the people's misery and penury and the futility of going forward with further austerity? Must they be made to take up the debts of gangsters, chancers and rogue bankers? That is nothing short of what they were. The Tánaiste knows that. He treated them with indignation when he was on this side of the House. Why the change? Are the civil servants completely and utterly in charge of the Government? I am delighted the Minister for Public Expenditure and Reform has come to the House for the end of this debate. Have civil servants taken the Government in, hook, line and sinker, and are they writing their speeches, training them how to talk and giving them the politicalspeak when they go out in public? The Ministers must assert themselves, look into their hearts and speak for the people of Ireland.

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.