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Pre-European Council Meeting: Statements (Continued)

Wednesday, 12 December 2012

Dáil Éireann Debate
Vol. 786 No. 2

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  1 o’clock

(Speaker Continuing)

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

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

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

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

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

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

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

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

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

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

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

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

An Leas-Cheann Comhairle: Information on Michael Kitt Zoom on Michael Kitt I call Deputy Gerry Adams, who is sharing time with Deputy Seán Crowe.

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

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