Adjournment Debate. - Economic and Monetary Union.

Wednesday, 20 March 1991

Dáil Éireann Debate
Vol. 406 No. 7

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Mr. Spring: Information on Dick Spring  Zoom on Dick Spring  I took the opportunity of [1804] asking the Minister for Finance to respond in the Dáil to the reported remarks of the president of the West German Bundesbank to the following effect: that he favours a two-speed approach to the question of economic and monetary union. I have done so for one reason: it is about time someone in Government stood up for what is in Ireland's interest, and a two-speed approach to European union certainly would not be in our best interest.

There is a temptation always to describe anyone who expresses even a hesitation about EMU as a begrudger or an anti-European. I strongly believe that it is the good Europeans who must be prepared to fight to develop a vision of Europe that has room for every one of its citizens and that is prepared to address the fundamental problems faced by Europeans who are at a disadvantage. There is a huge difference between being a good European, as I understand it, and a European lapdog. I am very much afraid that on the Government benches there are far more European lapdogs than good Europeans, more interested in the photocalls that European Councils offer than in making any demands that might give offence to the Eurocrats.

The remarks made by the president of the Bundesbank prove one assertion that we have been making for some time, that work is very far advanced in European circles on the details of what European union will mean. There are very senior and highly paid European public servants who have already debated and decided, as far as they are concerned, all the principal issues surrounding the establishment of a European Central Bank. They have settled among themselves how much independence and authority it will have and how much it will be able to influence the budgetary and fiscal policies of each State in Europe. As I said, all these matters have been discussed in detail. All that remains now is to manipulate the politicians into agreeing with the Eurocrats, and that will be easy as far as we are concerned because here in Ireland [1805] we have never discussed, even in principle, these issues or all the other issues involved.

The Taoiseach said in this House this morning that it will be the politicians and not the bankers who will decide the future direction of Europe. Unfortunately, I believe the Taoiseach is deluding himself. Politicians who do not bother to take up and express a position, who do not bother to consult their own communities, who allow a democratic deficit to grow in regard to fundamental issues and who refuse to allow and encourage public education and debate are simply playing into the hands of the bankers. That is exactly what is happening in this Parliament in the context of this debate.

I have read the Irish statement of position on this fundamental issue. It is contained in ten pages of double-space typing addressed in the form of a letter to the president of the Intergovernmental Conference on Economic and Monetary Union. If it were reduced to booklet form it would not fill both sides of an A4 page. What a collection of clichés it represents. According to this document we are in favour of European union, just as we are in favour of virtue; we think more cohesion would be a good thing; it must be on the agenda and it must be discussed, but we have no demands to make in this regard and no mechanisms to put it forward; we want to see the Central Bank accountable, but we have already agreed to the objective of a single monetary policy for the Community, with very tight disciplinary measures on any member who runs a budget deficit; we think something should be done about jobs but there is no mention of an industrial European policy and no demands about the elimination of incentives that attract industry to the centre. There is just a bland statement that more jobs would be very nice indeed.

In short, if the president of the West German Bundesbank had written our opening position he could not have done a better job. I have to ask just who are the Government representing in these negotiations? Are they completely unaware of the problems of small open [1806] peripheral economies with high unemployment and substantial social problems? Are our Government blind to the fact that Europe must be made to respond to the needs of all its people and not just to the needs of the richest? When will our Government include the rest of the people in their preparations? When are we going to be told where our Government stand and, above all, when are the Government going to stand up for the people who elected them?

Minister of State at the Department of Finance (Mr. V. Brady): Information on Vincent Brady  Zoom on Vincent Brady  I am aware of the reported suggestion to which the Deputy refers. I do not, however, have the full text of the speech of the president of the Bundesbank so I am not in a position precisely to assess the context in which his remarks were made. Consequently, any comments I have to make are subject to that reservation.

My first remark is that there is nothing new in what Herr Poehl had to say. He has, in fact, addressed this theme on at least one previous occasion, but he is not alone in thinking that some member states may not wish to or may not be able to move to EMU as quickly as others. In this, EMU is not an exception. There are areas of Community activity where member states who were not ready to assume a particular obligation were allowed to derogate for a period from assuming their responsibilities. In other instances, a member state's voluntary participation in a particular scheme later than others has been accommodated without great difficulty.

This latter instance is most relevant to the present case because each member state is free to embrace or reject EMU. The closest analogy to it is, perhaps, the European monetary system. When this system was set up, not all member states participated in its exchange rate mechanism. Yet it was so structured that those currencies which did not participate initially were able to go into it at a later stage. Indeed, we had the example of sterling's smooth entry last October, more than 11 years since the system was set up.

[1807] The European Council of 27-28 October last also had regard to the possibility that not all member states would be able to progress to EMU at the same pace. With the exception of the UK, that council decided that the second phase of EMU would begin on 1 January 1994 after certain conditions had been fulfilled. One of these was that the greatest possible number of member states had adhered to the exchange rate mechanism of the EMS. There could be no clearer demonstration of the practicality of the European Council's view of the present reality and of the way to proceed to EMU. Against that background, it is incorrect to dub as “two-speed” an approach which seeks to accommodate the capabilities of individual member states to the objectives set in common.

As for the Government's position, it would be our wish that all member states should progress in step towards EMU. We must, however, recognise the reality of a situation in which one member state may not wish to take a particular path to EMU and one or two others may not be ready irrevocably to lock their exchange rates to those of the remainder member states.

We are, however, crystal clear as to Ireland's place in the process. Just as we participated as full members of the EMS right from its inception, we intend to be among the founder members of EMU. It is with justification that we take that stance because our inflation rate is now one of the lowest in the Community, our public finances are in order and our external payments are in comfortable surplus.

Press reports from Bonn stated that the German Chancellor, Helmut Kohl, has today rejected the suggestion of the president of the Bundesbank that German monetary union has been a disaster. Herr Kohl told a business meeting that monetary union had been a crucial step towards German unification, adding that social tension was diffused by the timely introduction of the West Germany currency.

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