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European Council Brussels: Statements (Continued)

Wednesday, 19 December 2012

Dáil Éireann Debate
Vol. 787 No. 4

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(Speaker Continuing)

[Deputy Eamon Gilmore: Information on Eamon Gilmore Zoom on Eamon Gilmore] I met Mr. Khatib at the Foreign Affairs Council at the beginning of last week and I hope to have the opportunity to meet him here in Ireland if that can be arranged.

A very clear conclusion was reached and a very strong statement was issued on the building of settlements on the West Bank. It is our view, as stated repeatedly, that the building of the settlements on the West Bank will make a two-state solution impossible.

The Taoiseach has discussed the da Silva report with British Prime Minister, and I have discussed it with the Secretary of State for Northern Ireland and with the Deputy Prime Minister. It is a matter we expect to discuss again with them.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett I have two questions.

Acting Chairman (Deputy Tom Hayes): Information on Tom Hayes Zoom on Tom Hayes Time is moving on. I ask the Deputy to be brief.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett The Acting Chairman should not worry. I will not take as long as Deputy Martin did.

The development of the banking union and supervision of the banks by the ECB is being presented as a sort of panacea to which we should look forward. Why is that being presented as some sort of positive development when the ECB, by any reasonable assessment of what has gone on, has an enormous responsibility for the failure of the banking system and the financial system in Europe? Many of its decisions have worsened that situation and its priorities seem to be entirely at odds with the concerns of ordinary citizens. Ordinary citizens and their public representatives, at least at a public level, are saying that we need jobs, economic growth and a path out of recession. The ECB's priorities are none of those things. They are about book-balancing, profit-maximisation for the banks, and insisting that public authorities should not interfere with banks when we need more interference judging by what has happened and is happening. Why is this being presented as some sort of positive development and what assurances can the Tánaiste give us that the ECB having this level of power over the banking system will improve the situation in any way?

Approximately two weeks prior to the latest Council meeting, the biggest general strike in European history, if not in world history, took place. Much as the Government likes to blame me and certain people on the left for protest, it cannot blame this one on us. This was an unprecedented, co-ordinated, European-wide mobilisation of working people, of the less well-off of their civil society and trade union organisations saying this was not working for them. It is not dealing with unemployment or producing economic growth, but is impoverishing people and they want an end to these policies.

Acting Chairman (Deputy Tom Hayes): Information on Tom Hayes Zoom on Tom Hayes Deputy-----

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett Our unions are planning on doing something early in the new year. What can the Tánaiste say to them? Is there anything coming out of this summit that offers them anything when the Government's medium-term fiscal outlook indicates that unemployment will go from 14.8% to 13% by the end of 2015? The promise is that we will get a reduction of less than two percentage points in unemployment.

Acting Chairman (Deputy Tom Hayes): Information on Tom Hayes Zoom on Tom Hayes A question, please.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett What does that offer us?

Acting Chairman (Deputy Tom Hayes): Information on Tom Hayes Zoom on Tom Hayes That is the question.

Deputy Peter Mathews: Information on Peter Mathews Zoom on Peter Mathews We are running short on time. I would like the Taoiseach and the Tánaiste to take particular note of the four aspects of the contribution made by Deputy Donnelly about 20 minutes ago. He mentioned the ECB and its incompetence at various stages to date. He raised the question of the adequacy of the banking union and what its purpose is. Deputy Wallace further developed the point by reference to Wolfgang Münchau article that what has been envisaged in the banking union could fall very far short of what is needed. We need more than the political plastering over of the situation that has happened in recent times. There have been large deluges of financial rain and the system has surcharged and then abated. It has not gone away and the fundamental engineering of the banking system with 6,000 banks in the eurozone, is still very weak and has not been addressed.

I believe I gave the Tánaiste or the Taoiseach an article on Deutsche Bank approximately two weeks ago. As admitted by very senior people within Deutsche Bank, there had been an accounting fraud at a level of up to €12 billion at the height of the financial crisis. These banking institutions are quite fragile. They have been plastering over their own fundamental engineering weaknesses. During our Presidency of the European Union in the next six months, we can and should bring these to the top of the agenda. We should be mindful of Deputy Donnelly's final point. We will be careful that all the visitors see the natural comforts of hospitality when they are here and will not be aware of the one in four households whose mortgages are in distress. They need to get tutorials about this when they are here because we will not be in a position to add weight to the argument and justify the case that we need the right dose of financial antibiotics - not a small dose that will fail and will allow the body relapse into economic underperformance. We need a big cortisone injection, which is a big write-down, as nothing less will suffice.

Acting Chairman (Deputy Tom Hayes): Information on Tom Hayes Zoom on Tom Hayes I ask the Tánaiste to answer the questions and perhaps give his final statement.

Deputy Eamon Gilmore: Information on Eamon Gilmore Zoom on Eamon Gilmore Deputy Boyd Barrett's questions get to the heart of the matter. He asked why we say that banking union is a positive and how that relates to the imperative to create jobs and get economic growth in the European economy. Deputy Martin will remember the banking crisis although of course he does not want to be reminded of it.

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin I certainly do.

Deputy Eamon Gilmore: Information on Eamon Gilmore Zoom on Eamon Gilmore At the start of the banking crisis this State took responsibility. The State gave the guarantee, took on the debts of the banks and placed those debts on the shoulders of the taxpayer. The ECB position throughout that period was that this was the way to go, that Ireland's banks' problems were problems for the Irish State and the Spanish banks' problems were problems for the Spanish state and so on. Its position was that if something went wrong with a country's banking system, that was that country's problem and it was on its own.

Deputy Peter Mathews: Information on Peter Mathews Zoom on Peter Mathews On the understanding that it was a liquidity crisis, which it was not.

Deputy Eamon Gilmore: Information on Eamon Gilmore Zoom on Eamon Gilmore That fundamental view of the banking crisis has now changed. There is a change in European policy on banking. That change is expressed in the conclusions of the June summit which clearly stated that bank debt and sovereign debt were to be separated and that Europe would proceed with the establishment of a banking union, which, once the single supervisory mechanism was put in place, would provide for recapitalisation of banks to be done through the ESM. In other words, the problems of the banks in individual countries used to be the taxpayers' problems, whereas now the problems of banks within the eurozone system are essentially a European problem. That is why banking union is being established and why it is a positive.

How does that relate to the imperative to create jobs and growth? We need to have a functioning banking system within Europe in order to underpin economic activity and to ensure that credit is made available to businesses which create jobs and generate economic growth.


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