Dáil Éireann debate -
Wednesday, 27 Mar 2013

Vol. 798 No. 1

European Council: Statements

The Taoiseach

I am pleased to brief the House on the outcome of the spring meeting of the European Council which took place in Brussels on 14 and 15 March. This month's summit took place in an atmosphere of relative calm but its deliberations were no less important for that. As is traditional at the spring European Council, our focus was strongly on economic policy with a particular focus on how we can ensure a return to sustainable growth and job creation.

Ahead of the meeting I informed the House that implementation would be a key message and that turned out to be the case. Leaders agreed that implementation of the broad array of measures already agreed, whether in the areas of the Single Market, the compact for growth and jobs, the recently agreed youth guarantee or the two-pack or the banking union package, would have to be our collective priority. I briefed colleagues on the work of the Irish EU Presidency which is advancing across a range of policy areas to boost jobs and growth.

We have already had some notable successes, including agreements on the two-pack of economic governance measures, the capitalisation of banks, the youth guarantee, which will help our young people get off to a good start, and the reaching of an agreed Council position on the reform of the Common Agricultural Policy. I told the meeting that we would continue with our shoulder to the wheel to the last minute of our period in office because there is no time to be lost.

Progress continues. Since the summit we have reached provisional agreement with the European Parliament on the critical single supervisory mechanism for European banks. This is a keystone in the banking union package and it represents a major and concrete step in making the June 2012 decision to break the debilitating link between banks and sovereignty a reality. I encouraged my colleagues to approach the files on which we are continuing to work across the various formations of the Council with the maximum degree of flexibility and compromise. These include important files in the Single Market on professional qualifications, public procurement and accounting as well as the outstanding elements of banking union. The Single Market is one of the Union's most valuable assets in the search for growth and we must make the most of it.

As is customary, the meeting began with a presentation from European Parliament President, Martin Schulz. He focused on the Parliament's views on the multiannual financial framework, MFF, on which it had cast a resolution critical of the agreement reached at the European Council in February the day before the meeting. That decision gave a mandate to the Parliament negotiating team to seek increased flexibility within the MFF, a review clause and an agreement on own resources. It also stated that the Parliament would not open negotiations on the MFF until the Commission brought forward a draft amending budget to cover unpaid payment claims for 2012. While the MFF was not on the agenda for the meeting I took the opportunity to set out for President Schulz and for colleagues our determination as holders of the Presidency to get full negotiations with the Parliament under way as soon as possible and I stated that I would work in good faith with him to secure agreement.

Following the exchange with President Schulz we moved on to discuss economic and social policy. A key focus in this regard was providing clear direction for national and EU economic policies against the backdrop of unacceptably high unemployment levels; some 26 million are without jobs throughout the Union. While drawing encouragement from the steps taken thus far to stabilise a decidedly difficult set of circumstances, we acknowledged clearly the need to redouble efforts towards growth and job creation. President van Rompuy highlighted four particular strands that capture well the emphasis of what was agreed. The first is the need to restore financial stability and maintain it. This is critical for confidence of consumers and investors alike and it means pressing ahead with work on banking union in particular. The second is the need to ensure that public finances are structurally sound. This entails a path for fiscal consolidation that is both growth-friendly and differentiated, according to national circumstances. The third is the need to bring new urgency to the fight against unemployment, especially of young people. All our efforts are aimed at this overarching goal. Financial stability and economic recovery are the foundations on which the job creation necessary to respond to the unemployment crisis will be built. The fourth is the need to support long-term growth. This implies continuing to pursue the difficult process of structural reforms, restoring competitiveness and unlocking a new wave of business investments that will underpin a sustainable recovery.

Naturally, these strands are strongly interdependent and we need to press ahead coherently on all four. Member states will prepare their national reform and jobs plans in April, the reviews of which will inform clear country-specific orientations to be agreed in June. Along with the development of these country-specific orientations, a full review of the compact for growth and jobs has been lined up for our June meeting, one year on from its adoption.

The spring European Council noted that the €10 billion increase in the European Investment Bank's paid-in capital agreed last year will help to co-finance up to €180 billion worth of projects in the coming three years. We agreed that the June summit will place a particular emphasis on measures aimed at creating jobs and boosting the financing of the economy for fast-acting growth measures.

The Commission, together with the EIB, will report to leaders on targeted priorities, in particular with regard to infrastructure, energy and resource efficiency, the digital economy, research and innovation and small and medium sized enterprises. I will meet the President of the EIB, Werner Hoyer, again in Dublin next month to discuss these matters, as will the Minister for Finance, Deputy Noonan, and the Minister for Public Expenditure and Reform, Deputy Howlin. In line with what the Government has said since coming to office, I am satisfied that this meeting of the European Council recognised the urgent need to address unemployment, especially among the young. It is the most important challenge we face. This corresponds with our priorities as Presidency; our drive for stability, jobs and growth are not abstract ambitions. Rather, they are the means to achieve and secure a jobs-rich recovery. Again, implementation must be the key.

Ahead of the meeting, President Van Rompuy wrote in stark terms to members of the European Council setting out his strong disappointment at the unacceptable delays in delivering progress on key Single Market files. This was something we also discussed. As I have stated, delivery is a key priority for us as Presidency. We need to conclude work urgently on Single Market Act I files that remain open, while aiming for as much progress as possible on key Single Market Act II files as they are published over the coming months.

This meeting agreed further important action on cutting red tape. An extensive consultation with small and medium enterprises has identified the top ten areas of EU legislation that impose the highest compliance burdens. The Commission will come back to leaders in June with concrete proposals to address these SME concerns. In identifying the top ten most burdensome EU laws, the Commission included the following in the top five: REACH, Registration, Evaluation, Authorisation and Restriction of Chemicals; the value added tax legislation; the general product safety and market surveillance package; the recognition of professional qualifications; and, the shipments of waste and waste framework legislation.

The Commission will ensure swift and effective implementation of its regulatory fitness or REFIT programme, rapidly identifying the regulatory areas and tranches of legislation with greatest potential for simplifying rules and reducing regulatory costs. We look forward to its first proposals in this area in the autumn. This is also a key focus for us domestically under the Action Plan for Jobs. For example, we estimate that the single application system we are introducing for up to 25 licences is set to save the retail sector upwards of €20 million per annum.

This is led by the Minister of State, Deputy John Perry, and beginning with the retail sector as a pilot project, an integrated licensing application system will be designed in the first half of 2013 and implemented by the fourth quarter of this year.

We did not have a full discussion on strengthening Economic and Monetary Union. That awaits finalisation of the report to be presented in June by President Van Rompuy. However, the European Council took the opportunity to recognise again that any new step towards deeper EMU must be accompanied by parallel steps to ensure stronger democratic accountability and legitimacy. We have also been asked by President Van Rompuy to address the social dimension and as we move forward, we must never forget the necessity to bring people with us.

A key element in qualitatively deepening EMU is, of course, banking union. The Irish Presidency continues to give top priority to files relating to the promotion of banking union and the good progress we are making was recognised by the European Council. We have achieved provisional agreement with the European Parliament on the single supervisory mechanism, SSM, as well as reaching agreement on the capital requirements directive, or CRD IV as it is known. These are significant achievements which represent important steps towards banking union, restoring confidence in the European banking system and building stability across Europe. The setting up of the supervisor will pave the way for the European Stability Mechanism to take on the direct recapitalisation of banks.

Intensive efforts are under way by the Irish Presidency to accelerate Council discussions on the banking resolution file, with a view to reaching agreement on key political issues. All of this important work is under way in the context of the key decisions made by the Heads of State and Government on 29 June last year, when “they affirmed that it is imperative to break the vicious circle between banks and sovereigns.” We will spare no effort in working to deliver on that commitment. The discussions in that context are being led by the Minister for Finance.

Following the conclusion of discussions at the European Council on the Thursday evening, leaders of the 17 euro area member states met for a euro summit meeting. We heard from ECB President Draghi on how to lay the foundations for growth. In his interesting presentation he highlighted some of the critical factors required, including confidence, credit and competitiveness. This was followed by a useful exchange in which we each reflected on some of the key issues confronting individual member states. In this discussion I highlighted the progress Ireland had made towards recovering its competitiveness as we looked forward to exiting our programme later this year.

While we welcomed the new Cypriot President, Nico Anastasiades, to the table, we did not discuss the developing situation in Cyprus in detail as it was to be discussed by Finance Ministers in the eurogroup chaired by Dutch Finance Minister on the Friday afternoon. It is welcome that it has been possible for the Cypriot authorities to reach an agreement with the troika that will allow a programme of support to be put in place. As the House will be aware, this was a very complex and sensitive process and will be exceptionally challenging for the Cypriot people. From hard won experience, we in this country know the real strain associated with the agreement of such a programme and the genuine anxiety and concern it causes among citizens. I hope it will be possible for the Cypriot Government and people to focus fully on economic recovery, although I appreciate there is a very difficult journey ahead. I assure them that the Government and people of Ireland are with them at this difficult time and that they can rely on our support as they seek to emerge from their difficulties. I very much welcome the fact that all deposits in Cypriot banks below €100,000 have been fully safeguarded. This is an important reassurance for savers across the European Union. Unfortunately, given the debt dynamic in Cyprus, there were simply no easy options available. The path now agreed, although onerous and challenging, represents the best available outcome in these very difficult circumstances for the Cypriot people.

While economic matters were the focus of our work on the Thursday afternoon and evening, on Friday morning, 15 March, we moved on to foreign policy matters. We had a useful and welcome discussion on the European Union’s strategic relationships, with a special focus on Russia, one of a series of such discussions planned by President Van Rompuy. The wide-ranging and positive discussion, in which the complexity of our relations with Russia was fully recognised, focused on the many areas in which we enjoy strong co-operation in mutual trade and investment; our energy relations; and our relations as partners in international fora in the pursuit of peace and security. It also addressed the areas in which there were differences and we reflected on how best to convey our differing views in our dialogue with Russia. There was a clear agreement that the European Union must adopt a more co-ordinated approach to its relationship with Russia and that we needed to work towards a stronger, single EU message on key issues in the strategic partnership.

Also on Friday morning Prime Minister Cameron briefly updated leaders on preparations for the G8 Summit, which will take place in Lough Erne, County Fermanagh in June. The main agenda will deal with terrorism, tax, transparency and trade. We are co-operating closely with the British authorities to assist in ensuring the success of this significant event.

Before the meeting concluded, the issue of EU policy on Syria and, in particular, the question of the arms embargo were briefly raised by President Hollande and Prime Minister Cameron. After a short exchange of views, it was agreed to ask EU Foreign Ministers to address this topic as a matter of urgency, starting with a thorough discussion at the informal foreign affairs meeting that took place in Dublin last Friday and Saturday. As the Tánaiste hosted that meeting in Dublin Castle last weekend, he will address the matter in his remarks later.

While in Brussels, I also had a number of meetings which might be of interest to the House. On 14 March I co-chaired the tripartite social summit, which brings together social partners at EU level. We had an excellent exchange with representatives of European trade unions and businesses on how to move from crisis to stability and to generate growth and employment. We also exchanged views on the social dimension of EMU.

While the multi-annual financial framework was not on the European Council’s agenda, I met Presidents Barroso and Schulz to discuss the consultations we have had with the Parliament to date and ensure we were all working together co-operatively to secure the earliest possible agreement. Putting a budget in place for the European Union for the period 2014-20 will help to ensure a degree of certainty and security that will underpin economic stability. Separately, I had a brief bilateral meeting with Prime Minister Cameron, building on our summit meeting in London earlier this month.

The outcome of this month’s European Council was welcome, for the European Union, as well as for Ireland nationally and in holding the Presidency. There was recognition of what had already been achieved, including under the Irish Presidency, but, more importantly, there was a recognition that a wide range of measures which had been agreed remained to be implemented or to be implemented in full. We must act on these measures. In the coming months, in the second half of our Presidency, we will use all of our energy to make as much progress as is humanly possible across the full range of our priority files, all the time with the objective, front and centre, of restoring stability and encouraging sustainable growth and job creation. I will, of course, continue to keep the House updated on all relevant developments.

Deputy Micheál Martin

The Taoiseach has, once again, come into the Dáil to tell us how he and his colleagues in the European Council are on top of things, that they are working flat out on a wide range of policies which are restoring confidence and will deliver jobs and growth. Listening to the Taoiseach's statement one would think the European Union was progressing steadily with calm and controlled leadership. However, the reality is that these very leaders have, once again, undermined confidence in Europe and deepened an already severe crisis.

The events of the past few weeks show the exact opposite of the picture the Taoiseach has presented. A complacent and casual summit meeting produced nothing new. It has been followed by an incompetent and profoundly damaging series of events relating to the situation in Cyprus. A deal originally welcomed by the Government as delivering stability, in fact, threatened financial meltdown. For the first time, a member state of the euro area has publicly announced that leaving is a realistic, immediate option. At a stroke, confidence has been undermined and uncertainty has returned.

The link between sovereign and banking debt has not been broken. Respect for all member states, irrespective of size, has not been shown.

Basic principles relating to the security of average deposits in banks have been torn up. Four years into the crisis, the European Union's first bank run was prevented by closing banks and introducing capital controls which had been banned for decades. The Taoiseach has claimed in the House that progress was made when leaders agreed to keep going with the same economic policies. Ireland, as holder of the Presidency of the Council, has the power to promote new measures. However, the Taoiseach is happy to carry on without proposing a single significant initiative. In the last week no effort has been made to assert the spirit of solidarity that is supposed to underpin the work of the European Union. There has been no accountability. The cycle of complacency and crisis has been reinforced. The Taoiseach remained silent when the head of the Eurogroup and anonymous Commission sources tried unilaterally to exclude bank recapitalisation from the work of the ESM.

The current panic with regard to the situation in Cyprus is the biggest example yet of failed leadership at European level. The impact of the collapse of its two leading banks on the entire Cypriot economy can be directly traced to the write-down of Greek debt that started 12 months ago. That write-down was fully justified. In fact, it might not go far enough. The failure to take any action on the situation in Cyprus until the last possible moment has caused immense damage. The Taoiseach admitted that the impending crisis was not covered by the summit at all, which is an extraordinary revelation.

The Taoiseach

That is not what I said.

Deputy Micheál Martin

It is.

The Taoiseach

It was covered. I said it was to be discussed by the Finance Ministers directly afterwards.

Deputy Micheál Martin

The Taoiseach said it was not covered.

The Taoiseach

The Deputy should read the speech. That is what I said

Deputy Micheál Martin

It was an extraordinary statement by the Taoiseach.

The Taoiseach

Will I read it again for the Deputy?

Deputy Micheál Martin

The Taoiseach and his counterparts did not even discuss this full-blown crisis or meltdown.

The Taoiseach

The Deputy is always at this.

Deputy Micheál Martin

As the Taoiseach knows, the threat to Cyprus from the Greek deal was raised in this House on a number of occasions, as was the possibility that Cyprus might be forced out of the euro area. I raised these issues on a number of occasions. They did not appear out of nowhere. Having said that, the scale of the incompetence and inaction in the last fortnight was a surprise. Everyone in Europe should take it as a failure that four years into the financial crisis, the ECB can still threaten to close down a country's banking system, in effect, unless that country immediately agrees to its terms. The initial proposal to tax all depositors, regardless of their levels of savings, to recapitalise the banks caused alarm within minutes of being announced. It undermined one of the core principles on which the entire banking system was based. It suggested deposit guarantees would no longer be treated as sacrosanct but would instead be seen as conditional. If the proposal had been proceeded with, it would have undermined the capital base of banks, made their funding more expensive and further damaged the lending without which families and businesses could not prosper. This decision could not possibly have survived. Thankfully, the Cypriot Parliament stopped it before it could do more damage. I would like the Taoiseach to explain how his Government could possibly have agreed to this deal. The Minister of State, Deputy Lucinda Creighton, has acknowledged that the Eurogroup Finance Ministers made a mistake when they agreed to the deal.

The Taoiseach

The Deputy knows that the proposal came from the Cypriot Government.

Deputy Micheál Martin

The Taoiseach said at the time that it was a good deal for Cyprus, a good deal for Ireland and a good deal for Europe.

The Taoiseach

I do not speak for the Cypriot Government.

Deputy Micheál Martin

That is what the Government stated in welcoming the initial deal.

The Taoiseach

It made the proposal.

Deputy Micheál Martin

The Government agreed to it at the Eurogroup of Finance Ministers. There is no welching on this.

The Taoiseach

The Cypriot Government made the proposal.

Deputy Micheál Martin

The Government made a mistake. It was wrong to have agreed to the deal. I would like the Taoiseach to explain why the Government issued a statement welcoming the proposal and claiming it provided the basis for long-term stability in Cyprus. Why did he and the Irish Presidency of the Council quietly support the bullying of Cyprus with threats to immediately withdraw liquidity from its banks? The Taoiseach spoke in London recently about how Ireland had not been treated fairly in 2010 - he included his typical partisan digs in the speech - but was happy to support the same treatment of Cyprus just a few weeks later.

As the full details of the final deal have not been properly analysed, we cannot say what it means for Cyprus or Europe. The complete burning of bondholders and shareholders is welcome. It reinforces the fact that equity demands further significant relief for Ireland. The various parts of the troika have not clarified their financial commitments or the terms of the commitments. There is also a lack of clarity about the Russian loans. A first look at the impact of the measures suggests the Cypriot economy will lose 18% of its GDP this year and next. This is a severe recession by any measure. The undermining of the country’s main industry will compound it. Over 150,000 Cypriots are employed in financial services. Even in the absence of the final details, we can see that Cyprus is threatened with a further cycle of escalating debt and stagnation. As a result of the impact of the events of the last week, the Cypriot public has been radicalised and discontent is likely to increase. This has been reported all over Europe and across the globe.

The continued limits on bank transactions show there is great uncertainty about the deal, even among those who agreed to it. We should not allow the introduction of capital controls to pass without noting that the removal and prohibition of such controls have been a core element of the Single Market for decades. Their introduction within the eurozone is unprecedented. This poses a long-term problem for banks in many countries that have substantial non-national deposits. As with previous bailouts, this support programme is flawed because it does not provide a means for helping the economy to transition. It provides no funding to soften the blow of massive and immediate contraction. Clearly, a functioning banking system and sustainable public finances are needed if an economy is to grow. Equally, a recovering economy needs a stimulus. Severe problems will be caused by the failure to provide external support for the real economy and thereby give hope to those facing the impact of the substantial reduction in national income which is about to begin. This failure is reinforced by the decision of the Taoiseach and his colleagues to reduce the EU budget and their rejection of any consideration of the type of transfers that are essential if growth is to return in Europe.

The Commission announced yesterday that it intended to establish a task force on Cyprus. This seems to mean there will be a slight reprioritisation of existing funding and extra loans will be co-ordinated through the European Investment Bank. There will be no direct assistance. We are expecting economies to recover and overcome large debts through structural reform alone, but that has not worked and will not work. The lack of extra funding for regions and countries that are in trouble is damaging the whole of Europe. Stronger economies are losing far more in lost growth than they would have transferred through larger EU budget contributions. Countries such as Ireland have no option but to implement fiscal consolidation, but we should be doing so in a less damaging and less unfair way. Europe as a whole remains one of the world's most wealthy regions. Its combined debt levels are fully manageable. It has the capacity to deliver a stimulus, but it lacks the leadership to act.

It seems from reading the ten pages of conclusions issued after the summit that the leaders chose to spend two days in Brussels ignoring the reality of what is happening throughout Europe. The conclusions are full of statements about how progress has been made and a steady course is being followed. When they are translated into everyday language, however, it is clear that the leaders believe they have already agreed all of the right policies which merely have to be implemented. The air of unreality in the conclusions suggests the Council has given up trying to do anything significant. The main item agreed at the summit was a series of reports on the economic prospects of member states. Any criticism of member states is based mainly on their failure to cut spending or raise revenue fast enough. The European semester process has been reduced to a control mechanism, rather than a genuine effort to agree to economic plans. It has been shown time and again that the policy of control is doing substantial damage in Europe which, unfortunately, is not recovering. Growth projections have been cut and unemployment is continuing to increase across Europe.

The Taoiseach has told us that "jobs and growth" is the slogan for our Presidency of the Council. While he has repeatedly spoken about what is supposedly being done to deliver jobs and growth, the details show that this is more about empty words than substance. The multi-annual budget agreed to by the Council proposes to cut Europe’s ability to help countries. There will be no stimulus provided by the European Union. In some areas, it will promote a further contraction. The budget imposes a severe 10% cut on struggling rural and farming communities, thereby undermining one of Europe’s few successful and properly funded activities. Even though everyone agrees that research and innovation are vital for growth, leaders have agreed to an 11% cut in research funding. On four separate occasions the Taoiseach has talked about taking decisive action on the emergency that is youth unemployment throughout Europe.

He has claimed that Europe has agreed to deliver the "youth guarantee" of a quality education or training place for every unemployed young person within four months. To support this, he has repeatedly mentioned the €6 billion which has been agreed for youth unemployment in the new budget. This is worth examining in detail. There are currently more than 7 million young people unemployed in the Union. The funding is to be allocated across the full period of the new budget and much of it is the repackaging of existing funds. If we put this aside and assume that all of the money is new, this so-called "youth guarantee" involves exactly €122 per unemployed youth for each year of the budget. It is a classic example of wanting to be seen to do something rather than actually doing anything.

What I find hard to understand is why, in the face of this lack of ambition, urgency or engagement, Ireland refuses to speak up for a different approach. It may well be that nothing could dislodge certain governments from their refusal to contemplate giving the EU the funding and policies to actually help deliver jobs and growth. What is certain, however, is that there has been no concerted effort to try to persuade them.

My party’s position is that we reject the analysis of those who blame Europe for this crisis. Certainly, European policies have made it worse in some cases, but the failure is not that of the Union but of its leaders and its members who refuse to operate in the spirit of solidarity and cohesion which is supposed to be the foundation of the Union. We believe there is now an absolutely compelling case for a significant increase in EU resources as part of a wider agreement on a genuine monetary union. This cannot happen if those who represent citizens at the Council table refuse to even raise the issue. The biggest threat to the Union today is not the traditional anti-EU element of the right and left; it is the supposedly pro-EU politicians who indulge in nationalist posturing and refuse to commit to an agenda of making the Union work for all of its members. I welcome the fact that the proposals for the single supervisory mechanism are proceeding, but what I do not welcome is their incomplete nature and the failure to move ahead with the resolution and deposit protection measures which are the other two essential elements of a proper banking union.

As I have said before, the justice of Ireland’s case for further significant relief from banking-related debts gets stronger all the time. The Taoiseach owes it to this House and to the Irish people to explain what exactly he is doing to bring this about. He has yet to publish the requested evaluation of the long-term impact of the conversion of the promissory notes. He has said nothing about the retention by the ECB of profits on Irish bond holdings and he is silent about the impact of the Central Bank of Ireland being forced to sell off its holdings sooner than anticipated.

This was a complacent summit which did nothing to stop the cycle of stumbling from crisis to crisis. Its message was “carry on regardless”. It did not even agree one of the incremental steps which have replaced the desperately needed radical plan for delivering growth and jobs. The world is looking on while the people in Cyprus have been refused access to their own money as the banks have been closed since 15 March. Confidence in the ability of the EU leaders to deal competently with this ongoing issue is at an all-time low and this is worryingly increasing the anti EU sentiment that is growing at too rapid a rate in Britain and across the EU. In the meanwhile, all we have seen from the Irish Presidency is regular press releases over-spinning everything and reinforcing this complacency.

Deputy Gerry Adams

I wish to share time with Deputy Seán Crowe.

An Ceann Comhairle

Is that agreed? Agreed.

Deputy Gerry Adams

While the last European Council meeting focused on the European semester and the economic priorities for the EU in 2013, the reality is that events in Cyprus have dominated attention over the last ten days or so. It is clear, both from the economic priorities emanating from the Council and its approach to the Cyprus crisis, that the EU is wedded to the failed policies of austerity, or fiscal consolidation, as the Taoiseach calls it. There is nowhere the dynamism and determination needed to tackle the jobs crisis across the EU. However, it is on the Cypriot situation I want to focus my remarks. It is there that we see the real dysfunction at the heart of the EU approach to the economic crisis.

The fact that the Eurogroup, including the Minister, Deputy Noonan, would sign up to a bailout which contained a levy on bank depositors under and over €100,000, while sparing senior bondholders in the banks, quite frankly beggars belief. That was a huge mistake by the Government. The Taoiseach admits in his statement today that the issue was not discussed in detail at the summit yet he welcomed and signed up to this development. Following this, European leaders stood back over the last week and allowed Cyprus to be brought to the brink of economic collapse. Instead of assisting the people of the island, they have bullied it and accused the Cypriot people of being the authors of their own demise. So much for European solidarity. We do not see such allegations being hurled at larger European states when they get themselves in difficulty.

The revised bailout agreement means that senior bondholders will take a hit as will deposit holders over €100,000. While I welcome the decision not to hit deposit holders under €100,000, the reality is that the Rubicon has been crossed. International depositors looking at the mess in Cyprus may consider not just withdrawing their money from banks there, but from across the EU. It is claimed in some media that several large multinationals withdraw their money from eurozone banks every Friday in case something happens over the weekend, and that was before this latest crisis.

The prevailing sense is of a European establishment making it up as it goes along. The decision to try to hit depositors under €100,000 put into sharp focus ECB President Draghi's statement last July that the bank will do whatever it takes to preserve the euro. This appears to now include hitting depositors and possibly those with under €100,000 in a bank. The Irish Government welcomed this, which was a mistake. The Cypriot Parliament rejected it but the damage was done by then. Why should investors, especially large investors, trust the EU or the ECB? Fears that bank accounts could be raided in future bailouts were given added weight by the head of the eurozone finance ministers. who at first suggested that the Cyprus bailout could be a template for future action and then had to retract this.

The ECB put Cyprus under huge pressure to agree a plan by threatening to collapse the Cypriot banking system. The bailout that has now been agreed includes the increase in its corporation tax from 10% to 12.5%. This is a sovereign state having a new tax rate imposed on it. The Irish Government claims the EU cannot make us increase our corporation tax rate, yet the Government was part of the group forcing this on Cyprus.

Sinn Féin at the beginning of the Irish banking crisis called for bondholders to be burned. When we advocated the burning of bondholders in banks, Fianna Fáil, Fine Gael and Labour told us it would never happen, that the EU would never let it happen and that banks had to be bailed out at any cost. The EU appears to have now signed off on the burning of senior bondholders in Cypriot banks.

Last June, the Government told us that a seismic game-changer had been reached which would see the separation of banking debt from sovereign debt. It told us that in future bank crises the ESM would directly recapitalise banks and the sovereign would not be expected to take on a bank bailout. It told us that, because we had taken on this liability, we would be retrospectively recapitalised. The EU could have committed to using the ESM to cover losses needed for the Cypriot banks. It did not do this and the question is why it did not. Where now is the commitment to separate sovereign debt from bank debt?

Comments today and yesterday by some politicians in Europe throw into doubt whether the ESM will ever be used to recapitalise banks, whether retrospectively or not. Yesterday, the European Commission confirmed that it hopes the ESM fund will not be used for directly recapitalising banks. This seems to confirm comments by the chief of the eurozone finance ministers, Mr. Dijsselbloem, who yesterday questioned whether the ESM bailout fund will ever be used to rescue banks directly. Where now are Ireland's hopes that the ESM will be used to recapitalise the pillar banks? What about the €30 billion of taxpayers' money this Government and its predecessors gave to Bank of Ireland, AIB and Irish Life & Permanent?

There seems to be a complete U-turn on EU policy about the use of the ESM and the burning of senior bondholders. This is a U-turn which causes real problems for citizens of this State who had this debt foisted on us by Fianna Fáil. We now have a legacy bank debt which may never be dealt with.

The critical questions for the Government in all of this are what is the point of the ESM and where does Europe now stand on banking solidarity. What is the Irish Government's attitude towards the burning of depositors in Irish or European banks and why did the Government support it in the Cypriot case? Will the citizens of this State ever receive debt assistance for the debt this Government and the previous Government put on the shoulders of taxpayers to bail out banks with taxpayers' money? Will this be done through the ESM or without it?

Prior to the European Council meeting, the Taoiseach agreed in the Dáil to raise the Jerusalem report published by European diplomats. They raised serious concerns about the actions of Israel in building settlements and excluding Palestinians from their land. The Taoiseach made no mention of this in his statement today. Did he raise this report at the summit meeting as he promised?

Deputy Seán Crowe

As Deputy Adams pointed out, the EU made a huge mess of its response to the economic situation in Cyprus. Many people listening at home would agree with this assessment. For too many people, it will be seen as further proof that the EU's austerity response to the crisis facing many member states is failing. No discussions on the MFF or the budget took place at the European Council meeting. Listening to the Taoiseach's speech prior to the meeting, we would have been under the impression that this would have been on the table. The Taoiseach said a discussion took place afterwards. It seems to have been an afterthought. The European Parliament overwhelmingly rejected the EU budget proposed by the Council, a piece of breaking news I outlined to the Taoiseach in this House. If the Council's proposed budget had been passed, it would have been the first time in 56 years that the EU budget had been cut, which would have made no sense while the EU continues to face significant economic problems. The Council's proposed budget was an austerity budget that would have locked the EU into austerity for the next seven years. Many of us said in this House and elsewhere that it did not contain sufficient spending power to boost investment in jobs and would lead to many member states being starved of strategic investment in key areas.

Thankfully, 506 MEPs, who are probably more clued in to what is happening on the ground, also believed this and voted against the Council's proposed budget. Will the Taoiseach outline at some stage whether the discussion on the MFF will be placed on the agenda of the next Council meeting in May? Has the Irish Government given up on its chance to raise the MFF with the European Council during Ireland's Presidency?

The European Parliament's rejection of this budget presents a lifeline to the Taoiseach. It is a real opportunity to renegotiate a better deal. The Parliament's rejection also allows him to argue for a greater stimulus investment in jobs and growth, for which many people across Europe are arguing. Major savings can also be made on unnecessary administrative costs. I have raised this issue on numerous occasions. I hope the Taoiseach will raise this issue when the budget is being discussed at the European Council. The monthly charade involved in thousands of MEPs, officials and documents decamping from Brussels to Strasbourg should be discarded in favour of the European Parliament having one seat. It is an inefficient and hugely expensive process. If one talks to most people across Europe, they will agree that this is the case. The EU could save an estimated €200 million per year or €1.4 billion over a seven-year period of the current budget. If this money was invested in job promotion, it would have great potential to change people's lives. I hope the Taoiseach takes the opportunity given to him by the European Parliament and uses Ireland's Presidency to renegotiate a pro-growth, pro-jobs, progressive budget which is desperately needed by Ireland and the EU.

The loss of Irish MEPs was also not placed on the Council meeting agenda. Again, many people are asking why this was the case. A total of 12 Irish MEPs voted against a proposal which would, yet again, reduce the influence and amount of MEPs Ireland has in the European Parliament. This included four MEPs from the Taoiseach's party and three MEPs from his partners in Government, the Labour Party. Could the Taoiseach tell us whether this rejection of the proposal by seven Government MEPs is a reflection of the Government's unhappiness with this proposal? Ireland has lost out with regard to successive seat redistributions which has a negative impact on the ability of Irish MEPs to defend Irish interests and makes it increasingly difficult for Irish representation to the European Parliament to reflect adequately the range and diversity of political opinion in Ireland. The fact that the larger member states all maintain their current allocation of seats while relatively smaller and medium-sized countries such as Ireland have their representation reduced serves further to strengthen the view regarding the substantial influence of these larger countries in deliberations not only of the Parliament but within the EU. The Taoiseach received a letter this morning from the three MEPs requesting that he consider taking measures to ensure the proposal that the Council sends to the Parliament for approval maintains the current allocation of seats to Ireland. If necessary, they also believe the use of the veto would be justified to ensure Ireland does not again lose out in this vital area. Will the Taoiseach argue in favour of Ireland maintaining its current allocation of seats at the next Council meeting? Would he be willing to use the veto to ensure Ireland maintains its current representation in the European Parliament?

It has also been reported that the French and British governments are actively lobbying to lift the EU arms embargo on Syria so they can supply Syrian opposition forces with weapons. Does the Taoiseach agree this will only serve to deepen the conflict and increase the hurt, pain and bloodshed inflicted on a daily basis by both sides on the Syrian people? I hope the Irish Government stands firm against any attempt to lift this embargo and puts its efforts into creating a negotiated settlement to end hostilities in the region. We need to get people talking instead of increasing the militarisation of the conflict in Syria. Ireland should use its Presidency to call for a cessation rather than an escalation of the conflict in Syria.

An Ceann Comhairle

I call Deputy Higgins who is sharing time with Deputies Joan Collins and Mick Wallace. Speakers have five minutes each.

Deputy Joe Higgins

The crisis measures imposed on the Cypriot people relating to the banking situation on that island show that the words emanating from EU leaders at their summits are utterly redundant. In June 2012, we were promised seismic changes in the way banking and sovereign debt would be dealt with in the EU. Instead, the citizens of Europe have been treated to institutional dishonesty and mendacity by a dissimulating EU leadership.

In the old days, bank robbers wore masks and waved guns around. There was no mistaking their intention. The gang leaders demanded the cash and they fled the scene fearful of capture. In today's European Union, bank robberies are planned in Brussels and Frankfurt. The godfathers united in a gang called the troika send their hitmen and hitwomen in pinstriped suits who stay in luxury hotels at the expense of their intended victims and rob with the threat of a nuclear wipe-out of bank depositors, bank workers and the very economies of the target countries.

In the old days, bank workers, aggrieved depositors and victims of bank robberies, could turn to the law for redress. In today's European Union, the bank robbers are the law. This is the surreal new world of the European Union where the establishment of the EU, Big Brother and, it would seem, the ghost of John Dillinger, have morphed into an economic Frankenstein that terrorises citizens, robs their assets and lays waste their economies.

Once, the European Union establishment used to boast loudly that it was a haven of democracy and solidarity, a beacon of light in our world and an example to be imitated by the savages unlucky enough to be outside its borders. After two weeks in which the Cypriot people - Cyprus is the smallest member state of the EU - have been threatened, terrorised and bullied by the EU, the IMF and the ECB, the moral reputation of this troika lies somewhere south of that of robber barons and economic gang rapists.

That an Irish Government as President of the EU would warmly welcome the first edict relating to Cypriot banks that literally would rob working people and pensioners in Cyprus and literally steal the widow's mite, is a grotesque betrayal of the generosity of the Irish people. We have a Government which is in a position of perpetual prostration in face of the demands of the institution of European capitalism, the IMF, the ECB and the EU bureaucracy itself. As an Irish legislator and socialist, I apologise to the people of Cyprus for the treacherous role of the Irish Government in its collusion with the modern robber barons of the troika as it seeks out a bailout of its diseased financial system.

Aggressive states invariably invent a pretext for an attack on another country; so also with the troika. The slander in this case is that Cyprus is virtually a client state of the Russian mafia. What nauseating hypocrisy. The EU was a key cheerleader for the privatisation of massive assets that belonged to the Russian people when Stalinism collapsed. This meant the pillage of the privatised assets by those who became oligarchs and billionaires.

For 20 years before the international financial crash of 2007, the EU was a key cheerleader and implementing agency for wholesale deregulation and liberalisation in the financial markets, enabling billions to be transferred freely all over the world in search of speculative profits. The people of Cyprus are the victims of these policies. If the financial markets system is sick, dysfunctional, destructive of democracy and exploitative of ordinary people and society - it is all of these - it has become so in the watch and under the legislative provision of the institutions now collectively known as the troika. The troika solution to the diseased system it has created is to burn the civilian population, leaving an economic scorched earth in its wake.

Cyprus is the last straw. It is time the victims turned. It is time that workers and the poor united across borders, from Greece to Ireland, to break this dysfunctional system, take the financial institutions into public ownership and democratic control and plan for people, not for private profit. That is the democratic socialist alternative.

Deputy Joan Collins

It is five years since the collapse of Lehman Brothers but in that time there has been no reform of the banking system nor any discussion or debate in Europe about the current banking system. Cyprus joined the European Union in 2008 and its loan books grew by 32% in one year. Its banks attracted depositors because of the high interest rates. Money in Cypriot banks earned twice as much as in Italy or Spain and four times as much as in Germany. The Cypriot banks were eight times the size of the Cypriot economy, employing 150,000 bank workers out of a population of 700,000. Losses on the Greek sovereign bonds equalled one third of the Cypriot GDP.

In former times, wearing his other cap, the Tánaiste would have questioned this domination by rogue banking systems of the world economy, nation states and people's lives. The Russian mafia has been referred to by Deputy Higgins. A banking Mafia is dictating the lives of ordinary people and causing penury in many areas of the world. These banks are engaged in casino capitalism. I ask why the Tánaiste, who is a Labour Party Minister, does not enter this key debate on how society should be run.

Two European economies have been destroyed, Greece and Cyprus and Ireland, Portugal and Spain are in deep recession. We need to move away from this casino banking mafia-run international system. The Tánaiste would have made the argument in the past that we need a banking system in which people can have confidence, that they can be assured that their money will not be put on the next horse in the 4.30. We need a system that serves the interest of the people, of small business and the economy in general. This should be a State-owned, democratic banking system. As Deputy Higgins said, this must be part of the debate when deciding how to move our economy forward.

The people of Cyprus are so bloody angry about what has happened. They are in tears. They are like the people who come to my office and to the Tánaiste's office with tears in their eyes because they cannot deal with the levels of debt, stress and pain. The Irish Government could play a key role in that debate. The Tánaiste is supposed to be a representative of the working man and woman and he should be speaking about their situation at the EU summit.

Deputy Mick Wallace

Latest events in Cyprus once again place a serious question mark over any notion of European solidarity. Where is the solidarity? How could the people of Europe think there is any such thing? The programme of austerity has proven to be a disaster. Europe is dominated by an absence of growth, by unemployment and by levels of youth unemployment in particular which vary from 30% to 60%. Europe is dominated by all the social problems which represent the fallout from these frightening unemployment figures. Is it a price worth paying?

In 1998, when Condoleezza Rice was asked if the deaths of 500,000 Iraqis in the 1991 bombing campaign was a price worth paying in order to control the price of oil, she replied, "It is a heavy price but, Yes, it is worth paying." The powers of central Europe would probably give the same answer if asked about the ravaging effects of austerity across Europe but the majority of Europeans would not.

The Cyprus experience marks an escalation in what is called austerity economics. This is an effort to pay for the cost of this now six year old global crisis in a new way. It is an effort to fund the bailout of banks in a new way. This new way was agreed last week by the European forces in control, the ECB, the EU and the IMF. It imposes on Cyprus a new step which is literally to snatch money from the bank accounts of many of the citizens of Cyprus. It is a form of blackmail. The officials of the banks and the political leaders are saying to the people, "This awful deal makes you - who have nothing to do with the crisis and did not get any bailout - pay the cost of the crisis and the bailout. You must do this because if not, we will do even more damage to you and your economy. So, give us your deposits, give us your money, pay more taxes, put up with fewer social programmes, because if not, we will impose even worse on you." This is the basic idea of austerity.

On the decision to take money from depositors, a depositor, whether a business or an individual, puts his or her money into a bank in the belief that its security is guaranteed because otherwise, no one would put their money in banks. Shareholders and bondholders may be investors and speculators but depositors are not. The plan is to take the depositors' money, thereby destroying all confidence and the presumption of security or insurance, in the language of these politicians, in order to recapitalise and restructure our banks. Translated into simple English, they will take the depositors' money and bail out the banks. In other words, the money leaves the accounts of the depositors and goes into the account of the bank itself. The banks, through the government, are stealing from their own depositors.

A woman struggling to run a family business in Cyprus said the whole point of the bailout was to shrink the banking sector but instead they destroyed the entire economy. It is simply an attempt to save private banking. It is a refusal to confront private banking, not just in Cyprus or Greece but across the world, that has driven us into a catastrophe of global proportions.

Governments are doing everything to fix the situation without imposing on them and without questioning their failed performance. It is an amazing study in how to solve a problem by refusing to confront its cause. In The Guardian today, political editor, Seumas Milne, does not mince his words when he writes:

The deal forced on Cyprus by the German-led Troika at the weekend isn't a bailout: it will effectively destroy the island's economy. Instead of getting a grip on its grossly inflated banks, it will impose a brutal credit contraction, combined with sweeping cuts and privatisations, wiping out perhaps a quarter of Cyprus's national income. Ordinary Cypriots, not Russian oligarchs, will pay the price.

Some have hailed the fact that the raid was carried out on Cypriot bank deposits over €100,00 rather than on the public purse. At last, it has been said, the rich and those responsible for private banking failures are being made to cough up. That would have been a good thing but it is savers not bankers or shareholders who are taking the 40% hit. Many of the targeted depositors include pensioners, who are scarcely rich, and small businesses, which will now go bust. The Cypriot Government should have learned from Iceland instead and taken over the banks, isolated the bad loans, protected deposits, imposed losses on the wealthy and used a publicly-owned banking sector to rebuild the domestic economy. This would have offered citizens a better future - almost certainly, I admit, outside the eurozone - and encroached on private capital's privileges. Clearly, that could not be tolerated. Instead, in classic EU style, Cypriots have been given no say while German MPs vote on the deal. Across Europe, people are being held to ransom by banks, bondholders and corporations determined to ensure they do not bear the cost of the crisis they created and by politicians who regard it as their job to oblige them.

Acting Chairman (Deputy Tom Hayes)

We will move on to questions.

Deputy Micheál Martin

Who is taking the questions? The Tánaiste will forgive me for asking. The presence of the Minister of State at the Department of Foreign Affairs, Deputy Lucinda Creighton, suggests she might take questions, which she is well able to do. I would like to ask her about her criticisms of finance Ministers at the Eurogroup meeting, but I am not going to do that.

I put it to the Tánaiste that the Taoiseach in his speech to the House said that while the new Cypriot President was welcomed to the table, there was no discussion at the summit of the developing situation with Cyprus as it was to be discussed by the finance Ministers. It is an incredible statement. We have just witnessed an incredibly incompetent approach to the resolution of the Cyprus crisis which has been going on for nine months. It has almost precipitated a significant banking run and a meltdown in Cyprus with consequences beyond to such an extent that capital controls have been imposed, which are unprecedented in the EU and are against its entire spirit. Banks have remained closed since 15 March 2013. The Tánaiste's colleague, the Cypriot foreign Minister, has admitted that Cyprus had not anticipated the Eurogroup demand that Nicosia impose a deposit tax. He went on to say that Luxembourg was the only country to support the Cypriot position. Behind the scenes, Greece had said it was with them but the only country to support them at the Eurogroup meeting and in general was Luxembourg. Everybody else remained silent. The foreign Minister said the proposal of the troika - or directorate as he called it - to impose a draconian deposit tax represented a ruthless decision to wreck the country's economic system.

Why did Ireland remain silent? Why did we not back Cyprus in this situation? It is extraordinary that Cyprus has been hung out to dry and that decisions have been taken which will have far-reaching implications for its sustainability as an economy into the future. Do we have any principled positions on these issues? We welcomed the original across-the-board tax on deposits, which was correctly overturned by the Cypriot Parliament. Why did we not support Cyprus in its hour of need?

Minister for Foreign Affairs and Trade (Deputy Eamon Gilmore)

It is not true that we did not support Cyprus in its hour of need. Ireland expressed its solidarity with Cyprus with regard to what was happening there. No country wants to see a crisis in its banking system. Cyprus's banks are closed and people are limited to taking €100 per day out of ATMs. We have seen a very severe package being put together to address the banking situation.

The sequence as I understand it began some time ago when it was known that there were problems in the Cypriot banking system. A general election took place in Cyprus and there was a change of government. Discussions took place which resulted in a early proposed package of measures, some of which were favourable to the Cypriot Government. It was rejected by the Cypriot Parliament and came back for further discussion.

There is no doubt that what is happening in Cyprus is serious and severe. The imposition of major levies on deposits and people's savings has a very severe impact. It is not a route that this country, thankfully, will go down. We are in an entirely different situation now. The way we handled the banking crisis that we inherited from Deputy Micheál Martin's Government was entirely different. Thankfully, we have not had to travel the same route as Cyprus.

Deputy Gerry Adams

Without doubt, the Government supported and welcomed the initial Cypriot deal, which was rejected subsequently by the parliament in Cyprus. That was entirely reprehensible and I would like an explanation for it. There is no point in being rhetorical about solidarity when the Government was on board for the taking of money from bank deposits.

At the last discussion in the House before the summit, the Taoiseach gave me a firm commitment that he would raise there the Jerusalem report. The Jerusalem report indicts the Israeli Government, particularly, though not exclusively, for its settlement policy. The Taoiseach did not mention it in his remarks. I asked him the question while he was still in the Chamber but he did not respond. I ask the Tánaiste now if the Taoiseach, in keeping with the commitment he gave in the House, raised the Jerusalem report at the summit.

Deputy Eamon Gilmore

What I find interesting about the discussion on Cyprus is that when arrangements were initially agreed, there were voices here asking why we did not do what Cyprus was doing. Now we know. We are not doing what Cyprus is doing because it would not be in the interests of our people.

Deputy Micheál Martin

That is what Deputy Eamon Gilmore said we should do before 2010.

Deputy Eamon Gilmore

No one wants to see a situation where a major hit is made on the deposits of savers. Last week, when the Cypriot deal was initially done, people asked why we did not follow suit and said it was a great idea. Now we know and those who were arguing one way now have an entirely different position.

On the Jerusalem report, it was agreed at the summit that foreign affairs issues, of which there were a number, including the issue of Syria, would be referred back to the Foreign Affairs Council. There was a meeting of foreign affairs Ministers last weekend in Dublin at which the issue of Syria was discussed. There is an ongoing discussion on the Middle East peace process and an ongoing dialogue between the European Union and the United States of America, in particular.

President Obama and Secretary of State, John Kerry, visited the Middle East last week. I had discussions with Secretary of State Kerry before the visit and we are in continuing contact about the visit and about getting discussions moving to try to bring about a settlement of the crisis in the Middle East. The Taoiseach and I discussed the Middle East peace process with President Obama when we met him during the St. Patrick's Day events. We will keep up contact with the United States Administration to use the leverage of the United States Administration and the European Union to try to renew the talks and discussions to get a settlement of the Middle East peace process.

The European Union has taken a strong position on the settlements, which are illegal. They should not proceed with the continuation of settlements in the West Bank. If they continue, it will make the achievement of a two-state solution physically impossible. We need to concentrate on renewed efforts to get talks going to bring about lasting peace in the Middle East.

Deputy Richard Boyd Barrett

As is typical of the Government, the Tánaiste has tried to distance himself from the crisis in Cyprus and said it is different here. I refer to an article in The Irish Times, which quotes a German banker who headed up the Deutsche Bank London operation and who was involved in the IFSC:

Instead of having to go all the way to Wall Street, German banks soon found a casino in their own euro zone backyard: Dublin. “Ireland, with its tax breaks, became a convenient place to do all of this business.” [He goes on] “If you set up a tax haven, however, you have to be clear that people will come who are not necessarily interested in business but simply the tax benefits. It was Ireland that opened a Pandora’s box.”

I put it to the Tánaiste that it is an accurate description of the IFSC as was and as is. The comparison with the casino financial system in Cyprus is very strong. The only difference between what happened in Ireland and in Cyprus is that the intervention of the Cypriot people last week forced the EU finance Ministers, including our Minister for Finance to back off on an outrageous proposal to raid the savings of ordinary people under €100,000 and forced Governments to burn the bondholders and corporate depositors and protect those with savings under €100,000. That contrasts sharply with the Tánaiste's continued determination, in the context of Ireland's crisis, to protect the bondholders and the corporate depositors and inflict all the pain on the people who have under €100,000. The Tánaiste should not tell us he would not consider raiding the bank accounts of ordinary citizens because the Tánaiste has just given himself the power to do that. The Government will raid the bank accounts and wage packets of ordinary citizens to impose the home tax.

Acting Chairman (Deputy Tom Hayes)

Can Deputy Boyd Barrett ask a question?

Deputy Richard Boyd Barrett

Is it not true that the Government has done the unthinkable by protecting the bondholders and corporate depositors and inflicting all the pain on ordinary householders-----

Acting Chairman (Deputy Tom Hayes)

Is that Deputy Boyd Barrett's question?

Deputy Richard Boyd Barrett

-----while the people of Cyprus have forced the troika to back off in its efforts to do the same in Cyprus?

Deputy Eamon Gilmore

I neither know where the question is in that rant nor the point being made.

Deputy Joan Collins

They are raiding our pockets.

Deputy Eamon Gilmore

Let us start of the beginning. This country is not a tax haven.

Deputy Richard Boyd Barrett

Why do German bankers think so?

Deputy Eamon Gilmore

Deputy Boyd Barrett will find anyone he can find to quote to have a cut at his country. There is a time when one should take some degree of responsibility for the well-being of the country. On the issue of banks, we are not in the same situation as Cyprus. We are not taking a cut at people's savings. I do not know if Deputy Boyd Barrett agrees with the proposition that there should be a 30% or 40% take from deposits of people.

Deputy Richard Boyd Barrett

Over €100,000.

Deputy Eamon Gilmore

The Deputy agrees with it over €100,000.

Deputy Richard Boyd Barrett

Bondholders first, then corporate deposits.

Deputy Eamon Gilmore

Let us be clear on this because it is an interesting point. Deputy Boyd Barrett agrees that deposits over €100,000 should be taken and that we should have a 30% or 40% take of the money out of-----

Deputy Richard Boyd Barrett

Bondholders first, then corporate deposits.

Acting Chairman (Deputy Tom Hayes)

This is going nowhere.

Deputy Eamon Gilmore

What the Deputy is saying is that 30% or 40% of the money in people's deposits over €100,000 should be taken.

Deputy Richard Boyd Barrett

The Tánaiste should not put words in my mouth.

Deputy Micheál Martin

There is no by-election in Dún Laoghaire.

Deputy Eamon Gilmore

With somebody's pension, for example, or the lump sum someone received on retirement or when someone sells a house and puts the money on deposit, Deputy Boyd Barrett thinks it is okay-----

Deputy Richard Boyd Barrett

Corporate deposits. How many times must I say it?

Deputy Eamon Gilmore

-----to take 30% or 40% from it. It is an interesting theory but, like many other things Deputy Boyd Barrett says, it will not work in practice.

Acting Chairman (Deputy Tom Hayes)

I would prefer if the ranting was cut out.

Deputy Micheál Martin

The Tánaiste's Cypriot colleague has issued a long statement------

Acting Chairman (Deputy Tom Hayes)

We have only five minutes and I want to get around to other Members.

Deputy Micheál Martin

I will be very brief. He issued a long statement detailing what happened and what is interesting is that they had no expectation of being ambushed by a deposit tax. He singles out Germany as having as significant influence on developments. He says that they were alone and that only Luxembourg spoke up in their favour. The Tánaiste may attack Deputy Boyd Barrett about deposits but the Irish Government agreed to a cut in deposits below €100,000 in the context of Cyprus. Why did we agree with that? Why did we issue a statement saying it was good for Cyprus, good for Ireland and good for Europe?

The head of the Eurogroup has said, backed up by anonymous Commission officials, that the ESM will not be used for the recapitalisation of banks. He wants to exclude the recapitalisation of banks from the remit of the ESM. What is the Irish position on that?

Deputy Gerry Adams

I refer to the Jerusalem report. The Taoiseach made a firm commitment to raise it at the summit. The Tánaiste said it was not raised because it was brought to the Foreign Affairs Council and then he took us on a wander through the efforts to restart the peace process in the Middle East, which I support. I spoke to the Secretary of State, John Kerry, in some detail and I spoke very briefly to President Obama-----

Acting Chairman (Deputy Tom Hayes)

Can Deputy Adams ask a question?

Deputy Gerry Adams

The issue is that the Taoiseach made a firm commitment in the Dáil to raise the report. Was the report raised? If it was not raised at the summit, as I do not think it was, did the Tánaiste raise the matter and, if it was raised, is the Government acting on that?

Deputy Eamon Gilmore

With regard to Cyprus, it is worth going back on the sequence of how the agreement was initially reached and, following its voting down in the Cypriot Parliament, there was-----

Deputy Richard Boyd Barrett

After protest.

Deputy Eamon Gilmore

-----renewed discussion and a revised agreement. It is worth reflecting on the degree to which our situation is dramatically different from that of Cyprus. It is worth reflecting on the scenario where banks are still closed in Cyprus and depositors face a very severe cut or levy on their deposits.

It is not a situation in which we would wish to find ourselves but it is one in which we could have found ourselves if our banking situation had not been managed as it was by the Government.

Deputy Micheál Martin

By the previous Government.

Deputy Eamon Gilmore

On the issue of the ESM and the recapitalisation, irrespective of what any individual may say or opinion that may be expressed by individuals, there is an agreement and a conclusion which was reached at the European Council last May and repeated in October and in December which provides for the recapitalisation of banks by the ESM. That is a specific commitment.

Deputy Micheál Martin

The head of the Eurogroup's statement remains unchallenged by the Government.

Deputy Eamon Gilmore

In regard to Deputy Adams's question on the Jerusalem report, as I said, what happened at the summit was that foreign affairs issues were referred to the Foreign Affairs Council. I am dealing with the issue of the Jerusalem report at the Foreign Affairs Council and with the High Representative in the context of the efforts we are making to try to get talks resumed to secure a settlement in the Middle East.

Deputy Joe Higgins

The Tánaiste said the Government supported Cyprus in its hour of need. Would it not be true to say the situation was that the Government supported Cyprus as a scaffold supports an unfortunate about to be hanged? That was the extent of the solidarity. Why did the Government, through the Minister for Finance, support the initial proposal to reach into the bank accounts of low and middle income workers literally to steal the widow's mite? Does the Tánaiste now disassociate himself from that policy and from the statement by the Government that this was a positive development for Cyprus, the eurozone as a whole and Ireland?

If he does disassociate himself from it, will he follow it through and instruct the Revenue Commissioners not to reach into the bank accounts and the wages of workers on behalf of the Government's new austerity property tax? Is it not the case that the Tánaiste left the people of Cyprus to the wolves just as he prostrates himself in front of the financial markets in implementing their policies in this country to the detriment of our people?

Deputy Eamon Gilmore

In response to Deputy Higgins, the proposition that there should be a levy on deposits under €100,000 did not come from Ireland. It would be worth the Deputy's while checking from where it came before making that kind of allegation.

I thank all the Deputies for their contributions to the debate. This month's European Council meeting represented an important opportunity for European leaders to take the pulse of the Union, particularly with regard to economic and social policy. It is fair to say, as the Taoiseach noted at the start of today's debate, that while leaders recognised and, indeed, welcomed the considerable achievements that have been made, the emphasis must remain on the continuing need for implementation of the wide range of measures that the Union has already agreed. Full and timely implementation of what we have agreed will ensure that our currency and the Union are returned to stability and that our energies are converted into restoring sustainable growth that generates jobs for our people.

I am happy to report that the first half of our Presidency has already seen a series of important achievements not least the provisional agreement we reached earlier this month with the European Parliament on the single supervisory mechanism for European banks, which is an essential precursor for the direct recapitalisation of banks by the ESM; the youth guarantee, which promises to provide young people with a good quality offer of employment, continued education, an apprenticeship or a traineeship within four months of becoming unemployed; agreement on the capitalisation of European banks, the CRDIV; the two-pack of economic governance measures; and an agreed Council position on the reform of the Common Agricultural Policy, the source of the vast majority of transfers to Ireland from the EU budget. These are real achievements, each of which has the potential to contribute positively to realising our Presidency priorities of stability, growth and jobs.

At the European Council, the Taoiseach reassured his colleagues that, as holders of the Presidency, we will continue to engage with partners and with the institutions to ensure every opportunity is availed of to ensure we follow through on implementation across the broad. The spring European Council was an important moment for governments to look in a very concrete way at the real economic and social challenges now being faced in most of our European capitals. The issue of jobs was at the heart of much of that debate.

This month's European Council marked the conclusion of the first phase of the European semester process, with the provision of guidance to member states as they now set about preparing stability programme updates under the Stability and Growth Pact and national reform programmes under the Europe 2020 Strategy.

The country-specific orientations for each member state will be returned to by leaders in June as will a full review of the Compact for Growth and Jobs, a year on from its adoption. That will be a very important. I welcome the fact that this meeting of the European Council explicitly recognised unemployment, especially youth unemployment, as the most important challenge facing us. That tallies well with what this Government has been saying over the past two years and with our priorities as holders of the Presidency. We now have agreement on the youth employment initiative and the youth guarantee. What is critical now is that they be implemented imaginatively and with energy.

Importantly, leaders also recognised the ongoing potential of the European Investment Bank to play an important role as a catalyst for growth and job creation. In hard cash terms, the €10 billion increase in the EIB's capital will go towards assisting in the co-financing of up to €180 billion worth of projects up to 2015. That is real money and real investment.

The potential of the Single Market to assist in boosting growth and employment remains. To make that potential real, we are prioritising the reaching of agreement on the key remaining Single Market Act I files. We also intend to progress, to the degree possible, Single Market Act II files, as they are published.

I welcome also the concrete moves which leaders have endorsed towards reducing the regulatory burden, especially on our SMEs, the backbone of our domestic economy and of domestic employment. Reducing unnecessary burdens at the EU level should complement what we are doing nationally and contribute to improving competitiveness. In each of these areas, what is now needed is urgent action and concerted implementation.

As holders of the Presidency, we continue to work closely with President Van Rompuy as he prepares the report on strengthening Economic and Monetary Union which he will present to the June meeting of the European Council. While there was no substantive discussion of this at the European Council, the meeting took the opportunity to take stock of progress towards the creation of a banking union and towards delivery of the commitment to separate banking and sovereign debt made last June and reiterated by the European Council in December.

Acting Chairman (Deputy Tom Hayes)

The time has expired, so I must ask the Tánaiste to conclude.

Deputy Eamon Gilmore

I can make the remainder of this script available.