Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Wednesday, 19 Jan 2011

Vol. 727 No. 1

European Council Meeting: Statements

I call on the Taoiseach to make a statement under Standing Order 43. Statements shall be confined to the Taoiseach and the main spokespersons for Fine Gael, the Labour Party and the Technical Group, who shall be called upon in that order. They may share time, which shall not exceed 15 minutes in each case.

I seek the indulgence of the House. No discourtesy is intended to the Opposition spokespersons or the Leader of the Opposition by asking whether I can leave the Chamber after giving the speech, rather than remaining here.

No problem. When has the Taoiseach ever shown Members discourtesy?

I thank the Deputies.

As Members will be aware, the European Council met in Brussels on 16 and 17 December 2010. This was its sixth full meeting in 2010 and an additional meeting of Heads of State or Government of the eurozone also was held in May. This unusually high number of meetings reflects the unprecedented economic events which confronted the Union last year. Economic matters were also very much to the fore in December.

At its previous meeting in October, the European Council endorsed the report of the task force on economic governance that undertook its work under the stewardship of the President of the European Council, Herman Van Rompuy. Further to that report and to ensure balanced and sustainable growth, the Council also agreed on the need for member states to establish a permanent crisis mechanism to safeguard the financial stability of the euro area as a whole. This permanent mechanism would come into effect in 2013, replacing the temporary, three-year arrangements put in place in 2010. We also invited President Van Rompuy to undertake consultations on a limited treaty change required to that effect. At that time, we agreed to return to the matter at our December meeting.

Following the October meeting, consultations were held with all member states, both on the question of a treaty amendment and on the general features of a permanent crisis mechanism. On 28 November, the euro group agreed on the key features for a European stability mechanism and issued a statement to this effect. On 10 December, President Van Rompuy reported on his consultations, noting that all delegations agreed that the mechanism should be established by the member states whose currency is the euro. All member states whose currency is the euro should take part and those whose currency is not the euro might decide to participate in operations conducted by the mechanism on an ad hoc basis. President Van Rompuy reported that all delegations had confirmed their readiness to consider limited changes to the treaty to that end and that all were agreed that the amendment should be brought about through use of the simplified revision procedure provided for in Article 48.6 of the Treaty on European Union. This is the procedure that applies when a proposed amendment concerns a policy area and when it would not result in an increase in the Union’s competences.

At our meeting in December, the European Council welcomed this report. We agreed that the treaty should be amended to provide for the permanent mechanism, to be called the European stability mechanism, to replace the temporary arrangements established last year. We also agreed on the draft text for the necessary amendment to be adopted under Article 48.6. This article requires that a number of institutions, including the European Parliament and the Commission, be consulted prior to the adoption of a decision to amend the treaty by the European Council.

I apologise for interrupting the Taoiseach, but may Members have a copy of his statement?

It should be on the way.

I agreed that these consultations should be concluded in time to allow formal adoption of this decision in March 2011, completion of national approval procedures by the end of 2012 and entry into force of the amendment on 1 January 2013.

The proposed amendment is simple and states:

The Member States whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any required financial assistance under the mechanism will be made subject to strict conditionally.

Once agreed and ratified, it will be inserted into Article 136 of the Treaty on the Functioning of the European Union.

The Government is satisfied with this simple and straightforward text. Having considered the matter carefully, including the legal advice of the Attorney General, the Government is confident that it is compatible with the Constitution. As no amendment of the Constitution arises, a referendum will not be required for Ireland to ratify the amendment.

The European Council also called for Finance Ministers of the euro area and the Commission to finalise work on the intergovernmental arrangements setting up the future mechanism by March 2011, integrating the general features set out in the euro group statement of 28 November which we endorsed. The mechanism will be activated by euro area member states in case of risk to the stability of the euro as a whole. We also called for an acceleration of the work on the six legislative proposals on economic governance proposed by the Commission, building on the recommendations of the Van Rompuy task force, in order that they can be adopted by June 2011.

The meeting also represented a valuable opportunity to discuss the broader economic issues confronting the union in general and the eurozone in particular. There was a general commitment to do whatever is required to ensure the stability of the euro area as a whole. In a statement issued after the meeting by the heads of state or government of the euro area and the EU institutions, we stated the euro will remain a central part of European integration and called for determined action in a number of important areas. The statement called for the full implementation of existing programmes, noting the impressive progress made in implementing the Greek programme and the agreed adjustment programme for Ireland, including the adoption of our budget for 2011.

It called for the keeping up of fiscal responsibility by all, renewing our commitment to implementing budgetary policy recommendations strictly, fully respecting the fiscal targets for 2010 and 2011 and correcting excessive deficits within the agreed deadlines. It also called for a stepping up of growth enhancing structural reforms, for strengthening the Stability and Growth Pact and for implementing a new macro-surveillance framework from summer 2011.

The statement called on all concerned to ensure the availability of adequate financial support through the EFSF, pending the entry into force of the new permanent mechanism. It noted that, so far, only a very limited amount has been committed from the EFSF to support the Irish programme. It also called for a further strengthening of the financial system, in terms of the regulatory and supervisory framework, and the conducting of new stress tests in the banking sector. Finally, it expressed full support for the independent role of the ECB in ensuring price stability and anchoring inflation, thereby contributing to the financial stability of the euro area.

We agreed that elements of the strategy set out in the statement will be further developed in the coming months as a comprehensive response to any challenges, together with the new arrangements for economic governance. Given the tendency of the markets to react, or over-react, when ideas at an early stage of consideration are aired publicly, I urged colleagues to ensure that this work be taken forward in a considered, discreet and careful way.

I do not, therefore, intend to go into detail on the work now being undertaken on foot of the mandate given by the European Council in December. I do, however, wish to assure the House that I took the opportunity of our discussions to emphasise once again the importance of Ireland's corporation tax arrangements in the context of our economic recovery. As the House will be aware, various issues and options relating to the EFSF are under consideration. These were discussed at the euro group and ECOFIN meetings this week and I expect this work will be carried forward in the coming weeks and months.

In addition to the matters I mentioned, the European Council considered a number of other issues which I will mention briefly. Although we did not have a substantive discussion of the matter, we look forward to the Commission's proposals for the new multi-annual financial framework for the Union which is expected to be brought forward by June. We invited all relevant institutions to co-operate in order to facilitate its timely adoption.

We also welcomed the first progress report presented by the High Representative on the European Union's relations with its strategic partners. We endorsed the Council's conclusions of 14 December on enlargement and agreed to give Montenegro candidate country status. The European Council condemned the violence following the second round of the presidential elections in Côte d'lvoire and confirmed the EU's determination to take targeted restrictive measures against those who continue to obstruct respect for the sovereign will expressed by the Ivorian people. Finally, we welcomed the successful outcome of the United Nations climate change conference in Cancun.

As I said at the outset, the work of the European Council during 2010 was dominated by the economic situation. As we face into 2011, it is clear this will continue to be the case. As the Commission said in its annual growth survey, published last week, there are signs of economic recovery, albeit uneven ones, across Europe. While financial markets remain volatile, the real economy has shown signs of improvement in some quarters, leading to growing exports. Nonetheless, uncertainties remain, particularly due to the risks associated with the sovereign debt market. European economies, including Ireland, face major adjustments. The financial sector across the Union has not yet returned to normal conditions and there are vulnerabilities to stress and dependency on state support.

Credit conditions are not yet back to normal and in a number of member states household and corporate debt levels are still very high. The Commission's growth survey notes that the crisis of recent years, despite the significant steps taken by the Union to address it, has had a far-reaching impact. It has resulted in a large scale loss in economic activity, a substantial increase in unemployment, a steep fall in productivity and badly weakened public finances.

Across the Union, about 9.6% of working population is unemployed. Some 80 million people are estimated to live below the poverty line. The Commission assessment is that medium-term potential for growth in the EU will remain low, at approximately 1.5 % until 2020, if no structural action is taken to resolve the productivity gap with our main competitors. As the Commission states, recovery alone cannot take Europe back to the pre-crisis economic situation.

To avoid stagnation, unsustainable debt trends, accumulated imbalances and to ensure its competitiveness, Europe needs to accelerate the consolidation of its public finances, the reform of its financial sector and front-load structural reforms now. That is why we have collectively adopted the Europe 2020 strategy which aims to secure the reforms necessary to restore the Union to a growth trajectory. Member states have now submitted draft national reform programmes under the strategy, under which they are to set national targets in the areas of employment, investment in research and development, education, social inclusion and climate change. These programmes are to be finalised by mid-April.

Taken together, the process of reform under Europe 2020, the review of the ESFS currently underway, the establishment of a permanent stability mechanism in 2013 and the new framework for reinforced economic governance within the Union represent a significant and comprehensive approach to restoring growth and economic stability and sustainability across the European Union. This will continue to be our most important challenge in 2011.

I wish to share time with Deputies Barrett and Creed.

At the recent meeting of the European People's Party, EPP, we made the point, which backs up the Government's case, that the 12.5% corporation tax rate is of fundamental importance to the Irish economy and its attractiveness for foreign direct investment. As I pointed out previously, it should be noted that this country is not dependent on manufacturing t-shirts or shoes. We have many of the world's finest people working in information technology, pharmaceuticals and biotechnology companies in Ireland which play an important part in the country.

The take from corporation tax is in excess of €3 billion, which is an important amount of money in its own right. However, more important is the strength of the trust that was given by Ireland from the outset in respect of the corporation tax rate. President Sarkozy attended a number of meetings of the EPP but I did not share his view on this. When Europe signed up to the Lisbon treaty, it signed up to all that is in it where it was made clear that the right of each individual country to deal with its own business was sacrosanct. In that regard I fundamentally disagree with President Sarkozy.

The Irish people voted in favour of the European Union and the Lisbon treaty and for its full potential in terms of the EU institutions. As big countries stand by small countries in the political sense, we now have a problem which will have to be dealt with. Turning away from a crisis is never a solution. There is a real financial crisis and it is unfair to expect a country like Ireland to accept a burden of €100 billion arising from all of the complications in the banking structure.

The problem will not be solved by letting Greece, Ireland or Portugal run their course until the IMF or EU money runs out. There is serious exposure by international banks to sub-prime mortgages that have been bought in from the United States in the past number of years. I would like to think that what the Minister for Finance said here last week is not true in the political sense and that it is possible, through good politics and agreement across Europe, to get a better deal than we have. An interest rate of 5.8% is too high. I recognise the difficulty in this regard, but just as the fundamental principle of political responsibility between large and small countries applies, so it should apply in finding a solution to this crisis. One way of dealing with that would be for Europe to recognise that there must be a clear banking strategy in each country and across Europe, as applies in the United States. The Federal Reserve knows what happens in Oregon or in Florida, in California or in Connecticut. It has a handle on it all and can know what is happening in individual banks. We do not seem to have that strategy across Europe. We need to ensure a strategy is put in place for each country that will stand by the principles and commitments of what is involved here.

Why should we not have a facility at European level? For example, there are approximately €60 billion worth of tracker mortgages in the Irish system. These are running at a loss and that loss must be funded either from deposits coming in or bank borrowings. There should be a mechanism whereby mortgages like that could be moved to a special purpose vehicle, which could be funded through the ECB or some other vehicle and insured against losses by the State, in order to remove that element of the burden on the taxpayer from the banking structure. This would bring a measure of relief that would be important in terms of perception.

In the next number of years, this issue will be sorted out and it would be fortunate if one could look back from five years hence and see what triggers have been pulled to bring about that change. Last week the Minister said this cannot change and that we are locked in to the rate, but this week it has become his personal mission. It is not his personal mission, but a country mission. If we are to have good policies across Europe, we must have definitive clarity about the banking strategy that will allow countries to stand up to the mark and sort out their problems. However, we need help. We are not seeking help with two hands out, but seeking structural change. I believe that can be achieved through good politics.

Following on the point made by Deputy Kenny, I am delighted to see that at long last some attempt is being made to use joined up thinking when it comes to dealing with European economic matters. As I said when on a recent visit with the Minister to the European institutions, our problem was not caused solely by Irish citizens. It was caused mainly by irresponsible banking arrangements which, from time to time, had been examined by those in the European institutions and given the green light by them. I resent very much the ongoing targeting of the Irish as being irresponsible in the manner in which they dealt with their economy. I have pointed out previously the need for an independent rating agency to be set up by Europe to rate independently each member state's economy. We fail to realise that, as anyone in business would tell us, the big and strong have the power to negotiate. There is no reason the European Union cannot use its strength and its 27 members to negotiate proper terms for borrowing throughout the world.

I do not expect the Germans to carry debts for which we are responsible or partly responsible. However, if we had an independent rating agency that could rate each member state, it might be possible to deal with debt. If we happened to be in division three in that regard, then when money was borrowed we would have to repay at a higher rate than those in division one. At least we would be using our strength to be able to borrow money and would not be subject to rating agencies about which we know nothing and which speak from both sides of their mouths, leaving us stranded and dependent on handouts from other people within Europe. I do not accept that. We are quite capable of dealing with our own problems given time and I am certain the new Government will seek ways and means of reversing the situation in which we find ourselves.

I would like to congratulate Mr. John Ging who has been appointed Director of Operations at the United Nations Office for the Co-ordination of Humanitarian Affairs.

This gentleman is a former member of the Irish Defence Forces and his promotion highlights the good name of Ireland and the reputation we have achieved throughout the world in the area of peacekeeping. Mr. Ging is ideally qualified for his new position and I wish him well in it and congratulate him on behalf of all the people of the country.

Before I move on to the other issues debated at the Council meeting, I would like to point out that the documentation supplied to us regarding the outcome of Council meetings is pathetic. I had to get on to the Whip's office this morning to try tp find information on the other issues, but nobody came back to me on that. What, for example, does the statement that the European Council welcomes the first progress report presented by the high representative of the European Union in relation to its strategic partners mean? What is in that report? We need information and that was what the Lisbon treaty was supposed to ensure.

I would like to highlight the problems in Haiti. I do not know whether the issue of Haiti was debated at the European Council. What is happening in Haiti is disgraceful. Billions of euro have been committed to Haiti, but the situation there is a disaster. There are 450 peacekeepers in Haiti, but there should be 4,500 there to help the police force. Some 4,000 prisoners escaped from prison in Haiti due to the earthquake. These people are rambling around causing havoc through rape and the destruction of the reputations of innocent people. Every type of criminal one can think of is wandering about the streets of Haiti, making life impossible for ordinary people. There are no structures in place to deal with the issues. Will the Minister of State ask the high representative to do something to awaken the world to the need to provide proper peacekeepers to that part of the world who can implement a plan that will bring about normal living standards for ordinary people? The situation is disgraceful. I saw a programme on television recently that demonstrated what is happening there and it would be worth everyone's while to look at some of the programmes that have highlighted the situation there. I ask for Europe to do something about it. I hope the High Representative will proceed with the concept of having a proper civil corps that will allow volunteers to go and help.

When the history of this period of the European Union project is written, the Lisbon treaty will be seen as the high water mark in terms of political and economic co-operation. The period since then has been characterised, regrettably, by a return to more nationalistic ambitions and a lack of cohesion in terms of the required economic response to deal with the euro crisis that continues to engulf Europe. I am not convinced there is a comprehensive response in place. The response has been piecemeal and has failed to grasp the central issues. If Margaret Thatcher was correct about one thing, it was that one cannot buck the market. Regardless of the statements issued repeatedly by leaders in Europe, the market has not responded positively. We remain in trepidation that countries like Portugal, Spain and Italy will be the next in line. That is because the responses to date have not been confidence inspiring or confidence building in terms of the markets, which is regrettable. That lack of cohesion has been manifest by unilateral solar runs by people such as, previously, Chancellor Merkel and more recently, President Sarkozy not alone on the Irish corporation tax but on, for example, the repatriation of the Roma population in France to Romania.

All of these are straws in the wind which one might say are totally disconnected from the core issue now confronting us. However, they are signals that we should not ignore. We require not a more French or German Europe but a more European Germany and France. As a country that has always subscribed to the concept of confronting problems together, it is regrettable to see these trends emerging.

Europe has a banking crisis. It has not gone away. Irish and other banks here were recently stress tested. We now find those stress tests were not worth the paper they were written on and there are to be new stress tests. There is a beginning of a realisation that this problem is only in its infancy. It is a much bigger problem than Europe has been prepared to confront to date. The public manifestations of this in, for example, a country like Ireland will become apparent in 2011 when the moratorium on mortgages expires and the 35,000 people in mortgage arrears of more than three months and the 12,000 people who have made no payments for more than 12 months will be in the firing line. That is the reality of the banking crisis facing Europe.

The bailout we received from the IMF and EU was effectively a bailout for French and German banks who loaned money to us to loan to mortgage holders here. If a price is to be paid by people who loaned or borrowed foolishly, equally there is a price to be paid by people who loaned foolishly. That is what is missing. We must face up to these problems.

Some 35% of the fund of €440 billion that has been established under the European stability facility is underwritten by what are known as the PIIGS, Portugal, Ireland, Italy, Greece and Spain. It is an inadequate fund by multiples of ten in terms of what is going to be needed to deal with the banking crisis in Europe. We would do well to face up to that rather than bury our heads in the sands and hope it will go away. If not, the words of former British Prime Minister, Margaret Thatcher, namely, "There is no way in which one can buck the market" will come back to haunt us.

On the Taoiseach's response to changes to the Constitution not being required as a result of treaty changes, he might be right. The Taoiseach receives good advice from the Attorney General and I have no doubt that this is the case. However, I believe there is a need for an independent mechanism at arms remove from Government that will adjudicate on these matters. The last thing this body politic needs is to be dragged kicking and screaming to the Supreme Court, with all the attendant negative publicity that goes with it because we will all be tarnished for taking the same view in terms of legal opinion.

I suggest to the Minister of State that he and his Government colleagues submit this treaty amendment to the courts. They should do so unilaterally and should not be out-flanked by the usual crackpots who have opposed at every juncture our closer integration and co-operation in Europe, which I believe is on balance a good thing. The Government should submit this matter for adjudication in the courts rather than, as is inevitable, wait for someone to take a court case on it. To be vindicated in that sense will give the Government greater moral authority than will its stating it knows best, having taken advice from the Attorney General. I accept that may be a mere window dressing issue.

We have a serious problem, namely, a European banking crisis which will manifest nationally. Now that the big issues such as cleansing of developer loan books and recapitalisation of the banks have been dealt, the banks will go after Joe and Joan in terms of their mortgage, which is the real problem for 2011. The State needs to get its act together and to assist in an innovative way people with mortgages, in particular those on sub-prime mortgages, getting onto high street variable rates.

Article 29.4.4° of the Irish Constitution, Bunreacht na hÉireann, states: "Ireland affirms its commitment to the European Union within which the member states of that Union work together to promote peace, shared values and the well-being of their peoples." Those underlying principles, which we not long ago put into the Constitution, are principles which have been the motivation of those of us in politics and society who support the evolution and development of the Union and the European ideal.

One of the founding fathers of the European project, Mr. Robert Schuman, in his speech to Strasbourg on 16 May 1949, announced a bold new idea, namely, a century of supranational communities. He stated that the creation of such supranational communities was the duty of Europe and Europeans to save humanity from the scourge of selfish nationalism typified by the calamities of the 20th century. Later in the same speech, Schuman described the litmus test, as he saw it, for what is European. I am not sure if the Minister of State, who is conversant on these matters, is aware that he set the test as being those having the European spirit. He stated: "The European spirit signifies being conscious of belonging to a cultural family and to have a willingness to serve that community in the spirit of total mutuality, without any hidden motives of hegemony or of the selfish exploitation of others". That European spirit, which was the idealism of the founding fathers of the Union, is now being tested.

EU Council President Van Rompuy said last year that the future of the Union is in question now and that we are in a survival crisis. The question that must be asked is where in this crisis are the modern day Schuman or Jean Monnet? Where is the vision to take domestic political risk and to show true European solidarity? Many of our citizens are dismayed at the attitude of our European colleagues to Ireland's economic woes. It is true — we cannot gainsay it in this House — that those woes are largely self inflicted and responsibility for this must be acknowledged and accepted by the banking community, regulators and political system. We expect understanding and real solidarity in our time of need.

Ireland was long the poster boy for what European Union membership could bring. The European Union revelled in us and we in it, perhaps getting too big for our boots in believing the publicity of the ever sustaining Celtic tiger. The challenge was and is for the Union to show a modern version of that European spirit to deal with the calamity now facing Ireland and other European countries and the challenge this poses for every member of the Union. Granted, our Government was singularly inept in its recent negotiations with the European Commission and the International Monetary Fund.

Our weak Government played a weak hand in critical negotiations for this country. It accepted an interest rate that punishes the Irish people. It is in Europe's interest that Ireland recovers economically and does so quickly. That fact seems to have been blurred by a banker's view of what is now described as moral hazard. The granting of solidarity funding was judged to require a degree of pain to discourage further delinquency. This mindset is more akin to the aftermath of the First World War in Europe when Germany was to be broken rather than the spirit that existed following the Second World War when those who understood what a divided Europe would mean wanted bonds of economic and cultural solidarity to prevail.

The comments of French President, Nicolas Sarkozy, are a case in point. He said Ireland cannot benefit from the EU's financial aid while maintaining its low corporate tax rate regime. The president knows full well how important this is to our economic well-being. It was important in the past as we evolved from a poor agrarian economy into a modern industrialised economy but the regime is more important today because we have to rely on export growth to drive our economy out of deep recession. Together with my party leader, I spelled this out to the French ambassador to Ireland and I also spelled this out to the European Commissioner, Olli Rehn, when I met him on two occasions with colleagues. I am sure every other Member, particularly those who are members of the Oireachtas Joint Committee on European Affairs, have underlined the importance of this issue to the representatives of every other member state. It is not out of a lack of understanding or ignorance of the import of what he said that the president spoke.

President Sarkozy also said that he and Chancellor Merkel will reinforce European economic integration and progress towards fiscal convergence. This is his view but we know what we promised the people in the negotiations on the Lisbon treaty. We received written confirmation from the Commission in the lead-up to the second referendum on the treaty. Commissioner Kovacs confirmed that all proposals on tax matters will continue to be decided on the basis of unanimity; that no member state of the Union can or could in the future be obliged to participate in any proposal for a set of rules governing a common consolidated corporate tax base; and that all members states have and will continue to have a veto on matters affecting direct taxation. He further confirmed that the position of the Commission was that "Each and every member state is free to choose the direct tax system that it considers most appropriate for its own requirements provided they respect Community rules such as non-discrimination". That was the pact we had with the people and the committee that I, as a pro-European, and my party made.

I echo some of the concerns expressed by Deputy Creed. Europe is not an exclusive Franco-German project. The specific and unique needs and requirements of all member states, particularly smaller member states, must be fully comprehended and respected by all. Labour is a pro-European party in the social democratic mainstream. We communicate and interact regularly with our social democratic colleagues across the Union and beyond. We support a Union of common values and solidarity. The benefits of such a Union have been self-evident in this country and on the Continent for more than half a century. We will guide this unique project onwards because we want it to have a future.

We will examine in detail the proposed revision of the Lisbon treaty to underpin our currency "to put our economies back on track", as Commission President Barroso said. The Taoiseach has indicated that such a narrow revision will not necessitate a referendum in Ireland. It is highly likely that this view will be challenged. Deputy Creed called for the establishment of a validating body other than the Attorney General to give independent views but I am afraid that would not have any status because it is the citizen's right to ask the Supreme Court to make a decision. No matter what intermediary is determined to do this, somebody will contest a decision of this nature in the Supreme Court, as is his or her right. I do not disagree with the view that the Government could be proactive on these matters in order that it is not seen as a victory for somebody to test them.

In the document on political reform I published on behalf of the Labour Party, I specified that advices such as this from the Attorney General should be put in the public domain, whatever the convention. There are advices which are client confidential but these are public interest issues and I hope such advices will be made known generally in order that it is not simply an assertion of the Government when we parse and analyse the wording and that there is a clear, legal underscoring of the fact that it does not require in the Government's view a constitutional amendment.

A huge amount of work must be done on this matter and others. This work is in Ireland's interest and it has been made more complicated by yesterday's resignation of the Minister for Foreign Affairs. The Taoiseach indicated to the House earlier that he will take on that role. There is a full-time role for such a Minister at this juncture to do the nation's business and the Taoiseach cannot subdivide his activities to do an adequate job in that respect. We need a foreign Minister. Appointing an individual for a few weeks — even, for example someone as experienced in European matters as the Minister of State, Deputy Roche — would only be a stopgap because people know full well we are facing a general election shortly. For people to have the force and authority to argue their case, we need someone with a long-term mandate in that important job. What is required, therefore, is not a temporary replacement of the Minister for Foreign Affairs but the permanent replacement of this entire Government.

I would like to mention a number of other issues but as my time is almost up, I will do so during the question and answer session. Although my contribution has been dominated by the economic crisis, as was the Council meeting, other issues were discussed. I would be interested in teasing out the views of the Minister and the Council on the situation in Côte d'Ivoire. It is a very worrying development in West Africa. What communications have the European Union, the Commission or the High Representative had with ECOWAS which largely composed the intervention force in Côte d'Ivoire? I wish to know also whether the democratically elected President Ouattara will have his position vindicated. I will take the time to explore those matters during the question and answer session.

Ba mhaith liom mo chuid ama a roinnt leis an Teachta Finian McGrath.

Ní raibh deis agam fáilte a chur roimh an Aire nua Gnóthaí Eachtracha sula bhí air imeacht. Tá sé spéisiúl go bhfuil sé ag filleadh ar ghnó a bhí aige cheana. Ar aon chaoi, díreoidh mé anois ar an phríomh cheist atá á phlé anseo faoi láthair.

The main focus of the December European Council meeting was the proposal to amend the Treaty of Rome for the purpose of establishing a permanent mechanism to safeguard the financial stability of the euro area. The amendment is intended to enter into force on 1 January 2013. We have noted that from the Council's conclusions, but also from what the Taoiseach had to say in the House earlier. I note also from the conclusions of the European Council summit that the intention is to use the simplified revision procedure provided for in Article 48(6) of the Treaty on European Union for the purpose of effecting this change. That was one of the controversial changes that was introduced on the passage of the Lisbon treaty. It was one of the mechanisms we specifically opposed because it allowed the Government to bypass the public will in this State and to alter the treaty almost as and when it wished.

I note with deep concern the comments of the Taoiseach in the aftermath of the summit suggesting that such a change would not necessitate a referendum in Ireland. Perhaps he is basing this view on the premise that having already handed over and therefore lost our economic sovereignty to the EU and the IMF that this country has nothing left to lose. I wish to put on record that my party alone in this House — with no exceptions — argued that the creation of this mechanism would lead to greater treaty change in the future being decided upon by the European elites with no reference to the Irish people. That is exactly what is now happening. When we raised those concerns during the debate in this House we were dismissed as scaremongering. We were told that the change was only a technicality and there would not be any untoward effects but that is exactly what has come to pass. The Taoiseach hardly needs me to remind him that he encouraged the Irish people to support the Lisbon treaty on the basis that it would solve our unemployment crisis. That has not happened yet and the mechanism is being used to further erode our economic sovereignty. It is just another broken promise from this broken Government.

I remind the Minister of State, Deputy Roche, and the Taoiseach by extension, despite their belief that the Government can constitutionally introduce the amendment without recourse to the people, that it was also believed that was the position in the case of the Single European Act. It took the courage of Raymond Crotty to defeat the Government at that time. I cannot recall the specifics of the case but in a subsequent treaty the then Attorney General was of the opinion that it was not required to put it to the people but the Government prevailed and the treaty was put to the people on that occasion. On a number of occasions the advice given by the Attorney General to the Government has proven to be flawed. Just because the advice of the Attorney General is that the Government does not need to hold a referendum does not mean it should not put the proposal to the people. If the Irish people accept such a significant change as is being proposed in this case to tie us in the way that is being suggested, that is the ultimate democratic endorsement of the proposal.

I had intended raising the ceasefire by ETA and the hopeful change in the political climate in the Basque Country. However, as it was raised previously by my colleague, Deputy Ó Caoláin, I will not refer to it now but I might raise it during the question and answer session.

The European Council's decision to create a permanent mechanism to provide supposed help to member states who find themselves in financial difficulty presents major problems for this country in the future. If that is the same type of help that has been given to this country in recent weeks then perhaps the other member states of Europe should be questioning it and quaking in their boots. The disastrous involvement of our country with the support mechanisms provided by our friends in the EU to date has brought this country to the verge of social and economic bankruptcy, helped in no small part by the policies of the Government. The interest rate being charged on the first part of the EU loan drawn down by this country on 12 January is scandalous. The EU is set to make a tidy profit of 3% on the loan. So much for aid. This is a case of aid being tied to profiteering which is pushing up the cost of the intervention to an already beleaguered Irish economy. We must strongly question why the Government entered the Irish people into such a bad deal and why the European Commission, in its apparent attempt to help the economy, is taking advantage of the weakness of the Government's incompetent negotiating. It is barefaced profiteering that brought about this crisis and the same profiteering will only make the Irish situation worse. I urge caution on the Portuguese, Spanish and Italians in supporting such a mechanism in case they or other countries who might struggle in the current economic climate need help. The EU, the institutions, the European Central Bank and other financial institutions in Europe are intent on profiteering on the back of the misery those countries are facing currently because of wrongdoing by the banking sector.

The transfer of the loans is the final nail in the coffin of Irish economic sovereignty. The conditionality attached to the loan, as seen in the memorandum of understanding, will hinder economic growth and cripple the economy, throwing it into a self-defeating policy spiral. The State's structural deficit is fixable. We have shown how one can fix it. It is the insistence by the Commission and the IMF that bank bondholders must be honoured that is plunging us into crisis. Let us remember that the Commission is telling us what to do while conversely penalising us through inflated interest rates as part of the same policy. It seems that the new plan produced by the European Council will inevitably mean more of the same across Europe with banks getting away scot free and continuing to happily speculate while the risks of their actions are borne by the State or more precisely the citizens, the ordinary working people. The savage austerity package advocated by such organisations as the ECB and the IMF are forcing the people to pay the costs of the crisis which they did not cause. This will have a deflationary effect on the economy and limit economic growth. Instead of getting to grips with the root cause of the crisis caused by greedy speculators, it seems we are dealing with lists of demands from financial markets. We cannot merely engage in technical tinkering. A permanent mechanism for the maintenance of financial stability must include measures to better regulate market activity and clear commitments to the maintenance of minimum social standards. The reality of what the European Council has called on Ireland to adopt is a permanent mechanism that will not save but rather punish member states. I urge the Minister of State to reject it and I urge the Minister of State and the Taoiseach to put it to a vote of the people.

I thank the Acting Chairman for the opportunity to speak to this debate on the European Council. Before considering the details of the matter I point out that it is relevant to hold a detailed debate on the role of the European Council of Ministers and the broader issue of the European Union, especially in the current economic crisis. Recently, we witnessed the intervention of the ECB and before that we held a debate on the Lisbon treaty. These were major issues for the country and its future development. Legitimate questions must be put and answered by Ministers and the European Council.

Let us consider the current economic crisis and the bailout issue. The bailout has fundamentally changed Ireland's relationship with the European Union and this new reality must be addressed. Multi-billion euro loans are not given lightly. It is well known in European Union circles that those involved want the finance Bill through as quickly as possible. There is a volatility in the air, and Mr. Olli Rehn, although he may not say as much publically, is aware of the rumblings in Europe. Further economic damage is widely feared, which is why all politicians must be careful when dealing with Ireland's economic interests.

I accept it is not all bad news. There is some good news and hope for our country. I am aware there is sympathy in Brussels and other quarters of the European Union for us on our high interest rate as part of the bailout. Some sensible people recognise my argument that expensive loans could hamper our economic recovery. Are they willing to consider the re-working of the interest rate? This is why we need strong leadership on this matter: it would push open the door for the people. The Dutch and Germans appear to be awkward and we must keep a close eye on the French as well. I say as much as someone who has been going to France for more than 20 years.

The Skibbereen Eagle.

I love the country, the climate and the people but the French will always put France and its people first, regardless of the consequences. This is something our Government and leaders should do more often, especially when Irish Ministers are at council meetings. This is relevant to today's debate. I believe in a Europe of equals which respects independence and diversity. This is something we must develop and build.

Legitimate questions have been asked recently about the Lisbon treaty debate. There were many posters throughout this town and the northside of Dublin indicating that support for the Lisbon treaty equals jobs. People ask me where these jobs are now. Some 30% of my election team held major concerns about the Lisbon treaty and we held a broad debate on the matter. The "No" campaign highlighted the matter and made relevant points which require direct answers. We were informed that there would be guarantees on the tax issue and I was one of those who went along with that guarantee. Now, there are rumblings in Europe about examining our taxation system and bringing it to the same levels as others in the European Union. We must keep an eye on President Sarkozy in this regard.

There are foreign policy scandals in Iraq and Afghanistan and we need more support for the Palestinian people. I commend Mr. John Ging, the Irish person who has carried out tremendous work with the Palestinians, on his recent promotion. Regarding the broader issue, we must be conscious of our identity and heritage. This morning, the Taoiseach referred to poverty in Europe. Throughout the European Union some 9.6% of the working population is unemployed and 80 million people are estimated to live below the poverty line. These are the important issues. I believe in a Europe built on equality, social justice and which respects the independence of each nation state. This is my vision for Ireland and our European neighbours.

We move on to the session on questions. I call Deputy Creed.

I have two brief questions on the recently announced stress tests for European banks. Will the Minister of State outline what this development says about the previous stress tests, which gave a clean bill of health to the banks that the taxpayer in this country has had to bail out since? What confidence can we have that these new stress tests will plumb the depths of the banking crisis throughout Europe? Does the Minister of State not agree that Europe must face up to its banking crisis? We have been asked to bail out others as part of the deal we received because our deal was to pay off German and French banks which lent money here.

I refer to the holding of the referendum and the matter of submitting the case to the courts for adjudication. I realise the Minister of State cannot indicate what the Government will or will not do but will he discuss the matter with the Government? One of the benefits of such an approach would include greater clarity and transparency in the process and the decision making.

The point made by Deputy Creed on the issue of stress tests is valid because the stress tests were questioned at the time. I refer the House to a point made by his colleague, Deputy Barrett. There is a necessity within Europe for countries to have their own mechanisms for examining where they are. He has made the valid point that there has been dependence on highly questionable ratings agencies, which gave AAA ratings to junk in the United States. I hold a certain resentment toward their making a judgment on this or any other country in Europe. One thing to emerge from the current crisis is that Europe will examine this matter. That addresses, in part, the issue raised by the Deputy. There was a lack of credibility in the stress tests and, I hope the next set of stress tests will be far more rigorous. I take the point made by the Deputy which is correct. There are some fundamental issues within European banking which must be examined.

The second point raised by the Deputy was taken up directly by Deputy Howlin and indirectly or tangentially by Deputy Ó Snodaigh. They asked if there were an adjudication by the Attorney General should we have some autonomous mechanism to give a third view. There is merit in this but the reality is that, as Deputy Howlin stated and as Deputy Ó Snodaigh indicated, some people take a rather jaundiced view of Europe. This is their entitlement because they are citizens and they must be able to raise a challenge in the Supreme Court. I have no doubt that whatever mechanism is put in place, some of the "same old, same old" will remain. I do not mean this in a negative sense. I have much time for people who have taken a different view to mine on Europe because it is their right and our debates on Europe have been stronger because of it.

The issue of how we create more objective debate and analysis on Europe must be examined. Deputy Howlin made the point that an argument could be made that the Attorney General's advice could be laid before the House, which is probably worth considering. I am unsure if that would assuage some concerns because a cynicism and concern exists and it will emerge from time to time. It is appropriate that there is a final arbiter in the Supreme Court.

The Taoiseach stated to the House this morning that the Council agreed that "elements of the strategy set out in the statement will be further developed in the coming months as a comprehensive response to any challenges, together with the new arrangements for economic governance". He went on to say that he does not "intend to go into detail on the work now being undertaken on foot of the mandate given by the European Council in December". I am somewhat concerned at the democratic deficit implicit in this.

The Taoiseach indicated that he did this for fear of the markets overreacting. We need to know about discussions concerning convergence or economic governance matters. Otherwise, it only feeds into the cynicism referred to earlier by the Minister of State. Where there is not full transparency, there is a belief in conspiracy. A mechanism has to be found to address this, whether it is by briefing principals in the House or through the committee system. We need to move to the European norm where such matters are debated properly in an accountable parliament.

Many are interested in the role played by France in Côte d'Ivoire since its independence. A democratic presidential election was held there recently but the elected candidate has not been able to take office. International support has been given to the candidate but the former president's supporters are rallying support abroad while armed militia are active in the country. What contacts has the Union had on this matter with the various parties and organisations, particularly ECOWAS, the Economic Community of West Africa States, which has mandated the intervention of troops in the country?

The Taoiseach spoke about Montenegro's candidacy for EU membership having been accepted. I am concerned we are allowing countries go on the candidate list for a long time without any conclusion, such as in the case of Turkey. There needs to be a fuller debate about what is European and the European spirit being the defining characteristic of membership. We may need to be more precise than Mr. Robert Schuman was on this matter. What is the status of the integration of the Balkan states such as Serbia, Croatia and Montenegro? Otherwise, if their membership is not fulfilled or is delayed, it only causes frustration for those who aspire to Europe.

In my concluding statement, I will deal with the question raised by Deputies Kenny, Barrett, Creed and Howlin as to what is European.

The situation in Côte d'Ivoire after its November presidential election was considered at the meeting. The Union, along with ECOWAS, the US and the UN, has indicated its concerns over the difficulties experienced by the duly elected president. Following the action taken by the African Union and ECOWAS to suspend Côte d'Ivoire from their groups, the European Union has agreed to impose travel restrictions and put in place asset freezing for specific persons associated with the previous regime there. As Deputy Howlin knows, over the years in similar situations in other African countries, national assets were stripped and removed from the countries, impoverishing the people and leaving behind devastation. It must be said many such assets were transferred to parts of Europe, which is not a particularly moral stance.

The European Union is supporting African leadership on this issue and the peaceful resolution of the election result. It will be kept under consideration by the High Representative for Foreign Affairs and Security Policy, Baroness Ashton.

Does the European Union support the intervention by ECOWAS military forces?

It has not reached that point yet. The issue needs to be strongly dealt with, a position which the European Union supports. I have said before in the House that Africa first should resolve African problems. Given Europe's history of colonisation in the continent, we should not be the first to intervene in such matters but should support an African resolution.

Yes, that is a more preferable approach.

It is obvious Montenegro has worked hard to achieve its membership candidate status. The Croatian application for EU membership will progress rapidly during the Hungarian EU Presidency. The Croatians are anxious to achieve membership and have tried to tick all the required boxes.

Deputy Howlin made a good point about the long drawn-out process of Turkey's membership and Mr. Robert Schuman's concept as to what was Europe. There is the issue, always in the background, never to the forefront, about where Europe begins and ends geographically. The Government, along with the main Opposition parties, has always taken the objective view, a better one than many of the others in Europe, that once Turkey meets various membership criteria, it has the right to progress. I have had many discussions with my Turkish counterpart on this matter in the past and the Turkish Government is making impressive efforts in this regard. I agree with Deputy Howlin that rhetoric in certain European quarters about Turkish membership, jingoistic in some cases, needs to be careful because it could undo a huge amount of work.

European Union membership is a positive force in democratisation, bringing about the rule of law and rectifying the effects of horrific events such as those experienced in the Balkans. It can also be a positive and progressive force for reform in Turkey. We should not lose sight of this.

While the recent changes in the Basque situation were not part of the Council meeting, EU restrictions are in place against several Basque political parties such as Herri Batasuna. Given the change in circumstances, will the Minister of State encourage the EU to examine lifting these restrictions? Such a move may stimulate a more sustainable and secure peace process in the Basque region.

During discussions on the Lisbon treaty, it was agreed to establish a high-powered group to examine future treaty changes. Has this group made any progress, received any remit or made any reports to the European Council?

Will the Minister of State outline the timeline for Ireland's adoption of the Lisbon treaty amendment if no constitutional referendum will be held on it? The Taoiseach earlier said it will be discussed at the next Council meeting and, thereafter, it is up to each member state to deal with it through their individual ratification processes? Will it be ratified here before the end of this Government or be put off for the new Government to ratify? Did the Government give a guarantee to Mr. Herman Van Rompuy, the President of the European Council, that it would not be delayed in Ireland as there would not be a need for a referendum?

Was there any discussion about the proposal floated at the October Council meeting by Germany and France to suspend the voting rights of Euro member states which violate the budgetary principles of the EMU? Is that proposal still being pushed by larger states such as France and Germany? Have we managed to attract allies to the cause of ensuring that this proposal is never progressed?

Deputy Ó Snodaigh has reminded me that I did not provide an answer in respect of a question put by Deputy Howlin. I will place the relevant information on the record of the House when replying to Deputy Ó Snodaigh.

In respect of the Basques, in the first instance we should be guided by the Spanish Government. This issue will have to be dealt with in that context. A number of remarkable and welcome changes have occurred in northern Spain in recent times. I welcome the fact that peace will come and I hope the peace process in Spain will bring an end to acts of terrorism and acts against members of the civilian population. A parliamentary question relating to this matter has been tabled for tomorrow and I will deal with it in greater detail at that stage.

Deputy Ó Snodaigh inquired when there will be finality in respect of the proposed treaty change. The matter is due to be dealt with by the European Council on 25 March. The issue of when the Dáil will discuss the matter will very much depend on what happens with regard to the general election. I have no special knowledge regarding the date on which the general election will be held. If I had such knowledge, I would not share it Deputy but would rather use it to my benefit within my constituency. The matter in question will be dealt with by the next Dáil. Changes must be made to give permanent effect to what is proposed and these will come about in the next year.

The Deputy raised an extremely important point which was also raised by Deputy Howlin. I apologise to Deputy Howlin as he left the Chamber because I believe I did not deal adequately with the question he put. The point at issue relates to the legislative or other proposals which will fall to be dealt with. Basically, there are a number of such proposals. The first of these relates to the issue of the sanction on voting rights, which received pretty short shrift from several member states, including Ireland. I would not like to be the Minister responsible for asking the Irish people to approve of such a sanction in a referendum. The answer supplied would be extremely short and the second word contained in it would be "off".

There are a couple of proposals arising from the work done by President Van Rompuy and others to which consideration must be given. A regulation to strengthen the preventative element of the Stability and Growth Pact has be brought forward and everyone would welcome this. We need a better-regulated path in this regard. Deputy Creed referred to this during his contribution. There is also a regulation to strengthen the corrective element of the Stability and Growth Pact and we must consider how to make it stronger by introducing the necessary corrections.

Deputy Ó Snodaigh also referred to sanctions and enforcement. A proposition in this regard remains on the table. How we will proceed in this area will be dealt with in the longer term. From speaking to representatives of other member state Governments, from visiting those member states and from attending Council meetings, I am of the view that having the suspension of voting rights as one of the sanctions would not be acceptable. This goes to the heart of the matter, namely, the fact that Ireland is a member of a community. There are no large or small countries within such a community. One of the essential secrets of the success of Europe has been that member states, regardless of whether they are large or small, are treatedwith equal respect as nations. The proposal on voting rights has no chance of getting off the ground.

There is also a regulation relating to making corrections to macro-economic imbalances. Related to this are issues about the enforcement of measures to correct imbalances in the euro area. Work has also been done on a directive on fiscal frameworks. All of these matters will fall to be dealt with in the very long term. Anything that would have a major impact in the context of treaty change would obviously have to be dealt with by the Houses.

I already dealt with the question of when we are likely to see change in the agreement relating to the treaty. This will happen after 25 March next, when the European Council is due to meet. That date is not necessarily of more significance in the context of events in this country.

We have come to the end of the question-and-answer session. Perhaps the Minister of State will proceed with his closing remarks.

Deputy Kenny made a strong point regarding the seriousness of the position of the European banks and referred to the sub-prime markets. The Deputy also made a very interesting comment in respect of the Federal Reserve in the United States and sought to relate this to Europe. The most important point he made has also been made on several recent occasions by Dr. Garret FitzGerald. We need have no delusions regarding our capacity to change matters within Europe. Ireland has had a disproportionately positive impact on Europe. The way to achieve progress within Europe is by groups working together.

Deputy Kenny referred to his efforts within the European People's Party, EPP, to try to persuade Chancellor Merkel or President Sarkozy that their extraordinary focus on Ireland's corporation tax rate is just not helpful. As Minister of State with responsibility for European affairs, I have always been strongly of the view that we should seek to create groups within Europe. These groups should not be hostile, nor should they divide on the basis of big versus little. What we must do is build a group which focuses on the community method. As Deputies Creed and Barrett stated, the essential secret of the success of Europe is that member states operate as a community. The idea that we should begin to sanction each other or that we must always look after our own national interest first is corrosive in nature and undermines the entire process relating to Europe.

Mr. Robert Schuman's genius was to recognise that countries which had previously resolved matters through the horror of warfare could instead resolve them through negotiations and to their mutual benefit. It was his view that by pooling small elements of sovereignty we could create something bigger. That is the basis of community method. It is not the case that a couple of larger states within Europe somehow dominate the debate. As I have stated at European Council meetings, it is extremely unhelpful that the idea has been created that, somehow or other, one or two big countries are responsible for setting the agenda. That is not the case. The idea to which I refer is a dangerous and corrosive delusion because it undermines the view among the citizenry of Europe that we are all equal.

I value my country no less than President Sarkozy values his. During the course of the Convention on the Future of Europe, I suggested to a famous French politician who was arguing that big countries and their smaller counterparts should not be treated equally, that he should read the Treaty of Rome because the essential ingredient thereof is the concept of equality.

Deputy Kenny's point is extremely important. One of the things we have not done as well as we should have is to try to use the European political families, namely, the EPP, the socialist grouping or the European Liberal, Democrat and Reform Party, ELDR, to discover the logic of our position. As I informed my French counterpart at a Council meeting in Budapest last week, we have no objection if the Government of France wishes to lower its corporation tax rate to 10%, 5% or 0%. That is its business. We have set for ourselves a rate of corporation tax which is mutually beneficial to Ireland and Europe. It is not a question of our playing a zero-sum game or trying to beggar our neighbour. Europe also gains if Ireland attracts foreign direct investment. We have been very successful in attracting such investment and this matter must be viewed in that context.

Deputy Barrett inquired about the discussion with the strategic partners on the question of the High Representative. At the September meeting, the High Representative was tasked with commencing discussions with third countries — the United States, China and Russia — that are of significance in the context of our future. The High Representative has been building on the relationships with China and Russia in particular. The report received related to that specific area.

Deputy Creed referred to the issue of the community focus. I am strongly of the view that this focus is the essential strength of the European Union. If the Union allows itself to be driven by one or two powerful countries, then it will surely spiral downward and will lose the central position it holds. As Deputies stated, we must ensure that the community method will prevail.

I agree with Deputy Howlin's general comment on CCTV. This is a major debate that will arise in the near future. What is proposed makes no sense. I made the point at last week's General Affairs Council meeting that the idea that introducing this complex addition on top of all other tax systems will simplify matters is a delusion.

I thank Members for the contributions, which, as always, I enjoyed. I hope I answered all the questions put. I will deal further and in some more detail with the issue of the Basques on Question Time tomorrow. I thank Members for the attention and for their questions.

Sitting suspended at 2.20 p.m. and resumed at 2.30 p.m.