Wednesday, 29 June 2011
Dáil Éireann Debate
The Taoiseach: Last week’s meeting of the European Council focused on a number of issues of vital interest for the future of the Union and its citizens. On Thursday evening, the Council discussed economic matters, with discussion falling into three broad areas — economic policy co-ordination under the European Semester and Euro Plus Pact; implementation of the package of measures that were agreed in March; and the ongoing crisis in the eurozone, including the situation in Greece.
We brought the first European Semester to a close. This process began in January with publication of the Commission’s annual growth survey. Based on this, the spring meeting of the European Council in March agreed a set of priorities for fiscal consolidation and structural reform across the Union. Based on these priorities, in April, member states submitted national reform programmes and stability or convergence programmes. Having assessed these, the Commission then made a series of recommendations to each member state, and these were adopted by the European Council last week. These recommendations should now be reflected in member states’ national budgets and in their programmes of structural reform for 2012.
In Ireland’s case, it was recommended that we continue to implement the EU/IMF programme as the best means of securing our economic recovery. I was happy to reiterate the Government’s commitment to this vital task. Recent events have demonstrated how interdependent we are within the European Union. An economic setback for one is an economic set back for all. The European Semester process is a significant step towards enhanced economic policy co-ordination and, as such, it is to be welcomed. Of course, individual member states remain responsible for their own budgetary choices, and that is as it should be. However, there is now a shared understanding of the steps each needs to take and a political commitment to implementing what has been agreed.
President Van Rompuy welcomed the fact that the country-specific recommendations were adopted without having been watered down. I agree that this sends out a strong message that we are ready to do what needs to be done. It goes without saying that the case for closer co-ordination is even greater in the case of a shared currency. For that reason, in March it was agreed that countries in the eurozone, and any outside that chose to join, would aim to go further through the Euro Plus Pact in order to boost competitiveness and foster growth. A total of 23 member states are now part of this process and have submitted a range of commitments. In Ireland’s case, they are part of our EU/IMF programme or the national recovery plan.
At the meeting we agreed that these commitments were a step in the right direction. However, there was also acceptance that in their next round of commitments member states need to ensure a broader scope, a more concrete approach with more specific and measurable commitments, and a higher degree of ambition. On the pragmatic co-ordination of tax policies under the pact — through which we will work on the exchange of best practices, the avoidance of harmful practices and proposals to fight fraud and tax evasion — we agreed to hear a progress report from Finance Ministers and the Commission at the next meeting in December. We also took stock of progress on the comprehensive package of measures adopted by the European Council in March. This package has been now almost fully implemented.
Agreement has been reached on the European Stability Mechanism and on amendment of the European Financial Stability Facility. All member states will now take the steps necessary to ensure ratification of the Treaty by the end of 2012, to allow it to enter into force in 2013, and to provide for the rapid entry into force of the amended EFSF.
As I have previously informed the House, now that the final details are known the Attorney General is examining what will be required in legal terms to allow Ireland to proceed to ratification. Without prejudice to the outcome of this examination, it is worth recalling that the previous Attorney General was satisfied that the proposed change to the Union’s Treaty, which will allow for the establishment of the ESM, had no constitutional implications and that, therefore, no referendum was required.
We welcomed progress on the package of six legislative measures which will strengthen economic governance within the Union. These will strengthen the Stability and Growth Pact and reinforce macroeconomic surveillance. There was some disappointment that it has not yet been possible to secure final agreement with the Parliament to allow adoption of the measures on first reading. President Van Rompuy urged the Parliament not to let the better be the enemy of the good. This was good advice which I hope will be heeded.
In considering how best to realise Europe’s potential for growth and job creation we agreed that the administrative burden on SMEs needs to be further reduced and that, where appropriate, micro-enterprises, which are the smallest of the SMEs, should be exempted from certain future regulations, or at least, be subject to a lighter regime. In this regard, we welcomed the Commission’s intention to assess the impact of future regulations on micro-enterprises and to screen existing laws to identify existing obligations from which they should be excluded. We agreed to come back to the matter in December. Given the critical importance to our recovery of the SME sector in Ireland, I very much support and welcome this work and I look forward to its being taken forward as a matter of urgency.
Finally, our economic discussion looked at the situation of member states currently under an EU/IMF programme. Naturally, this part of our discussion focused on Greece, where events continue to unfold. We welcomed the progress that has been made, particularly in the area of fiscal consolidation. The extent of the effort of the Greek Government and people to get back on track is sometimes overlooked in the heat of debate, and this is not fair. Of course, a great deal more remains to be done. There was strong support for Prime Minister Papandreou’s efforts to secure the agreement of his Parliament for the programme of austerity measures which is necessary if the fifth tranche of funding under the Greek programme, amounting to some €12 billion, is to be released in time to meet the country’s funding needs in July. Adoption of these measures will also open the way for the elaboration of a new programme of funding for Greece, which the Greek Government has now requested.
The Heads of State or Government of the euro area agreed that the required additional funding will be financed through both official and private sources. We endorsed the approach agreed at the eurogroup meeting on 20 June, under which voluntary private sector involvement would be pursued through informal roll-overs of existing Greek debt, avoiding a selective default. We asked finance Ministers to continue their work to allow the necessary decisions to be taken by early July. We also called on all parties in Greece to support the programme’s main objectives and key policy measures.
It is difficult to see Greece emerging from its current predicament unless some form of political unity of purpose is achieved. There is a mountain to be climbed and all must play their part. In saying this, and in setting out what now needs to be done, the European Council made clear its appreciation of what the adjustment effort means for Greek citizens. Nowhere is this more keenly felt than here in Ireland. I extend my very best wishes to the Greek Government and people, who must make some exceptionally serious decisions about their future direction this week. We offer them our support and solidarity.
There was no detailed discussion of the situation in Ireland, though in its conclusions the European Council welcomed the progress we have made in implementation of our reform programme and agreed it was on track. I stressed again to the Council the need to ensure that every element of a programme, including pricing, contributes to the prospects of early recovery and a positive outcome. Ireland wants to return to the markets as soon as possible.
As the House is aware, in my conversations with President Sarkozy I again took the opportunity to explain the importance of the issues involved for Ireland, both the rate attaching to our loans and our rate of corporation tax. On the latter, he is fully aware of our situation and that we will not be moving. We agreed that our finance Ministers and officials should continue their work together with a view to reaching a mutually acceptable outcome. I hope this can be done as speedily as possible.
The meeting also welcomed the new Portuguese Prime Minister, Pedro Passes Coelho, to his first European Council, and welcomed his Government’s strong commitment to implementing the Portuguese programme of reforms.
The question of migration was central to our discussions on Friday. The free movement of people under the treaties is one of the most tangible achievements of European integration. It is most obviously given effect through the Schengen arrangements in which most member states participate. For the arrangements to work as they should, there must be mutual trust between member states, and external borders must be properly managed.
At our meeting last week, decisions were taken on four key issues. First, we agreed that the best way to decrease migratory pressure from the south is by helping young people in north Africa and the Middle East to build a future in their own home countries. Therefore, the new partnerships we intend elaborating with the countries of the region will include migration, mobility and security dimensions. Second, on asylum we said we consider the recent Commission proposal on procedures and reception conditions as a basis for future negotiations. We confirmed the 2012 target date for the establishment of the common European asylum system. Third, on Schengen we agreed that, without undermining the fundamental principle of free movement, the system could be improved. We agreed that, as a last resort, there could be a safeguard mechanism to be invoked in response to exceptional circumstances which were putting at risk the overall functioning of Schengen. This would allow the reintroduction of internal border controls in a genuinely critical situation. Any decision in this regard would have to be taken on the basis of specified criteria, and would be limited both in time and scope. The Commission was asked to table a proposal for such a mechanism in September. Fourth, the European Council welcomed the recent agreement on strengthening Forex, the Union’s agency for external borders. We agreed that the European border surveillance system will be further developed as a matter of priority to be operational by 2013. We also agreed that work on, so called, smart borders should be pushed forward rapidly to ensure we fully realise the potential of technology to assist in this vital task.
For reasons with which the House is familiar, Ireland does not participate in Schengen. However, our people do benefit whenever they travel in the area and we have a strong interest in ensuring the system operates as efficiently and effectively as possible. The decisions taken last week are an important step in that direction.
Our discussion of international matters focused on recent events in the southern Mediterranean region, including Tunisia, Egypt and Morocco, where there are grounds for cautious optimism, as well as Libya, Yemen and Syria, where signs are more worrying. The High Representative, Cathy Ashton, briefed us on her recent visits to the region, including the current outlook.
I raised concerns on the situation in Bahrain in particular, and proposed that a reference be included in the Declaration on the Southern Mediterranean to be adopted by the meeting. This was agreed, and the declaration now notes that the European Council expressed its concern about “the process surrounding the trials and sentencing of opposition members in Bahrain” and “encourages Bahrain to ensure full respect for human rights and fundamental freedoms”.
The changes under way in the region highlight the need to break the current stalemate on the Middle East peace process. The European Council called for all parties urgently to engage in negotiations as the only realistic prospect of improving the situation on the ground and as a means to secure a lasting and comprehensive solution. The meeting of the Quartet, now scheduled for 11 July, will be important in this regard.
On Croatia, the European Council took stock of progress and agreed that accession negotiations should be brought to conclusion by the end of the month, with a view to signature of an accession treaty with Croatia before the end of the year. As someone who has strongly supported Croatia’s progress toward membership, I very much welcome this significant development. There is no doubt that the prospect of membership of the European Union is a strong anchor for peace and progress in the western Balkans, a region where stability cannot be taken for granted. With this in mind, the European Council agreed to return to the question of enlargement in December. We also expressed our welcome for the arrest of General Ratko Mladic as a positive step for international justice and for Serbia’s EU perspective.
President Van Rompuy set out for the meeting his plans for our work in the six months ahead. At our meeting in October, he expects that we will prepare for the meeting of the G20 that will take place in Cannes on 3 and 4 November. We will consider the external aspects of our economic policy, building on the work of the European Council meeting in September 2010, and prepare for a number of summits with key partners, including China, India, Russia and the US. In December we will consider the question of enlargement, the results of the nuclear stress tests now under way and follow up to the energy summit earlier this year. We will also return to commitments made under the Euro Plus Pact, notably on employment, ahead of the launch of the next European semester.
The leaders of the Council and other countries in Europe were very responsive to the decisions taken by Ireland and the progress made by this country and our people in meeting our commitments under the IMF-EU bailout deal.
Deputy Micheál Martin: Last week’s meeting of the European Council was the latest in an increasingly lengthy series of crisis meetings. Its primary objective was again to find a way of containing the threat of a significant sovereign debt default by showing how the leaders are committed to comprehensive and credible action. As even the most basic look at the events and commentary since Friday suggests, this objective was not met. No significant new measures were announced. The leaders failed to address any of the identified area of dispute and no sense of energy or determination resulted from the meeting. Between December and March there was a definite urgency with the communiqué drafted for the 11 March Eurogroup meeting drawing this together into concrete actions. That text addressed short, medium and long-term issues and it was designed to be swiftly implemented. This has not happened. The number of vital decisions that have been put off for another day is confirmation of what many are now calling the real European Union economic strategy — kick the can down the road and hope something turns up.
The Taoiseach’s approach to the summit was once again surprising. He raised issues of specific importance to Ireland in a way which was designed more for media briefing than achieving anything. He agreed a text concerning Ireland’s interest rate which is a significant step backwards but claimed it as a victory. Unbelievably, it remains the case that, after more than 110 days, the Taoiseach has yet to seek or hold a substantive bilateral meeting with a eurozone leader.
Following this summit, Europe is in a situation where its leaders have left in place funding conditions they agreed in March are unsustainable; have agreed a new ECB President without discussing any reform of the bank or challenging the new president about his views; have not given a sense of providing clarity on Greece’s situation; and have failed to consider issues relating to non-sovereign debt in the eurozone. The decision of the Council to circulate a glossy brochure about a new €250 million building for itself was, at best, foolish and, at worst, a signal of a complete lack of understanding of the current situation of Europe and the Union. For people who passionately believe in the European ideal, this is a depressing situation and there is no doubt that a significant intervention is required by leaders over the next two months to make sure we do not reach another moment of truth in September.
The situation in Greece rightly received the bulk of attention prior to the summit but it is not clear that anything new was progressed beyond the agreements reached at ECOFIN the previous Monday. When communiqués from these meetings state, “It was agreed by the leaders...”, the matter has often not been raised and it was agreed before they turned up in Brussels. Irrespective of the nature of support programmes and the handling of debt, further major fiscal and economic reform is required in Greece, something which its government freely acknowledges.
Prime Minister Papandreou is a highly knowledgeable, competent and sincere man. Both within Greece and internationally, he has worked tirelessly to help his country. Even though he is a socialist and he would like to take more politically popular steps, he clearly wants to do the right thing. In light of this, the leaders of Europe should show much more consideration in the language they use in talking about Greece and its leadership. It serves no useful purpose to question the sincerity of the Greek Government. Equally, the best approach to the opposition of many Greeks to economic reform is not to lecture but to engage.
The revised proposal for the European Stability Mechanism is good and the proposal to remove preferential creditor status is important. It should be of considerable assistance to Greece. What is not yet fully clear is whether the issue of the sustainability of debt has been adequately addressed. As we witnessed last year, the threat of contagion from either a badly conceived or partly executed measure is real. The Vienna initiative style of debt roll-over is worth trying and the move yesterday by President Sarkozy and the French banks is welcome. A substantial lengthening of maturities and improvement of the terms of Greece’s debt is essential.
The threat of the ratings agencies to deem this to be a de facto default is both wrong and a disgrace. The lack of even the merest hint of self-reflection about their role in the current crisis is amazing. They are supposed to provide guidance, not to be enforcers of an inflexible, damaging and self-fulfilling approach. If there is no legally forced restructuring, then threatening to call a milder initiative a default is simply wrong. While their lax policies provided a foundation for the financial crisis, their new more rigid policy could make it much worse. The reform and regulation of the ratings agencies should be returned to the top of the agenda for finance Ministers.
As the Taoiseach confirmed last week, he did not seek the inclusion on the agenda of any item relating to Ireland. He chose not to undertake a substantive bilateral meeting with any Head of State or Government involved in deciding matters relating to support for Ireland. What he did do was commit his staff to another round of briefing journalists with exaggerated and self-serving details about every real or imagined development.
A difficultly has developed regarding how the Taoiseach describes his international contacts. When he visited London in April, he claimed in an address to senior financial personnel that he had held meetings with Chancellor Merkel and President Sarkozy. When he was asked about this in the Dáil, he rowed back and admitted that the so-called meeting involved nothing more than briefly talking at the side of a busy Council chamber. On his way into the EPP meeting he told Irish journalists that there might be a breakthrough on the interest rate because “a form of words is being worked on”. This was quickly corrected by an official who said, “there’s always a form of words being worked on”. Later that evening, we had the almost surreal situation of the Taoiseach praising himself for telling leaders about the many virtues of this year’s budget. He neglected to say that he voted and campaigned against the same budget.
As is being revealed every day on issues from the local to the international, when the Taoiseach said repeatedly during the election, “my only concern is polling day”, he was telling the truth. The problem is that he has taking his campaign tactics into Government with him. The attempt to spin everything is being found out. This is why the Taoiseach chose to announce and give a title to his “Gallic Spat” with President Sarkozy, thereby exaggerating a far from unique encounter in order to polish his image as a tough new leader. The clear and damaging outcome of this public grandstanding is indisputable.
In April the Taoiseach announced that he was holding the first bilateral meeting in a “major diplomatic initiative” which he was going to lead. That meeting has so far been the only one. Instead of undertaking a tour of capitals, or taking up President Sarkozy on either of his two invitations to visit Paris, the Taoiseach has preferred to stay in Dublin and deliver regular and false attacks on the diplomatic activities of recent years.
Last week the Taoiseach had another brief encounter with President Sarkozy. Yesterday he refused to say how long it lasted. What is not in doubt is that all that emerged was an agreement to continue to leave matters to officials. Given the amount of time the Taoiseach has spent attacking the number of roles filled by Irish officials during past European negotiations, this confirms that he has had an irony bypass.
Deputy Micheál Martin: As the Taoiseach knows well, but refuses to admit because it would undermine one of his favourite attack lines, the interest rate on Ireland’s support package was a fixed figure and not open to negotiation. In subsequent discussions, our partners agreed to reopen the issue. This culminated in the February agreement, formally ratified on 11 March, that our interest rate should be reduced in order to ensure debt sustainability. The need for interest rate reduction was no longer for negotiation, just the timing.
In order to avoid answering any direct questions about his handling of the matter, the Taoiseach keeps patting himself on the back for holding a line on corporation tax which has been maintained by every Taoiseach and every Minister over decades. It has now emerged that President Van Rompuy tabled a text on 11 March which our Taoiseach rejected, in spite of general agreement that it posed no real threat to our corporation tax rate. It is about time that this text was published so that people can make up their own minds about this matter.
The delay in the deal to take account of the stress tests was reasonable, but given the fact that the stress tests and subsequent Government banking announcement were indistinguishable from expectations and existing policy, the failure to conclude a deal in March is inexplicable.
Beyond the fact that the Government has halved the value of what it is looking for from an interest rate deal, what is equally worrying is the weakened text to which the Taoiseach agreed on Thursday. In March, a reduction was recognised as a prerequisite for debt sustainability, yet on Thursday the Taoiseach agreed that debt sustainability would be achieved simply through the implementation of the current programme. The Taoiseach needs to explain this serious development.
The process for appointing the President of the European Central Bank managed to completely ignore the crisis, of which the bank sits at the very centre. It has been Ireland’s position since November that burning bank bondholders is an essential step. It was vetoed in November and the ECB continues to veto it, while issuing implied threats and refusing to provide a secure medium-term commitment to funding. Mario Draghi’s attitude to this issue has been unhelpful and his casual dismissal of Ireland’s reaffirmed wish to burn certain bondholders was unacceptable. He should not have been nodded through over dinner. The failure to discuss any reform of the bank is incredible. Just as importantly, the behaviour of France and Italy in effectively claiming proprietorial rights over seats on the executive council did much to confirm the idea of a bank which treats the periphery as a nuisance rather than as a core concern.
I hope someone from the Government will communicate to the ECB that its policy of aggressive anonymous briefings against member states must be stopped. The statement by the Minister for Finance on Sunday that the ECB would understand what he meant, “because a nod is as good as a wink to a blind horse”, perhaps suggests that it is time to arrange for a more direct system of communication.
The agreement to move to final accession procedures for Croatia is welcome and overdue. The Council failed to note its role in reaching out to an increasingly sceptical Croatian public, something I hope will be taken up by Foreign Ministers. I welcome the Council’s commitment to greater sanctions on the Syrian regime and the implication in its briefings that the Union stands ready to make significant steps to aid the people of Syria. I also want to acknowledge what appears to have been a positive intervention from the Taoiseach on the situation in Bahrain.
In the context of the wider issue of support for the new or potential democracies in the Arab world, the summit was disappointing. What we need is to show our deep and long-term commitment to the development of civic society, democracy and broad economic development in these countries. This requires a significant new initiative, a dedicated staff and extra resources. The Mediterranean and neighbourhood policies were designed for a different time and different challenges. No one is as well placed as Europe to help people who have created unprecedented opportunity through their bravery in recent months. It is time to show more substance in supporting them.
I remain a strong believer in the European Union and its ideals. I am very proud to lead the party which brought Ireland into the Union, the party which led the final process of enlarging the Union to include millions of people who had suffered for decades under communist dictatorships, and the party in government which ran a number of Presidencies ranked among the most successful ever. However, I reserve the right to be critical of its leaders and to point to serious failings in its actions.
I think the Minister of State, Deputy Lucinda Creighton, is wrong in the way she has sought to portray my comments and those of others as being negative or ignoring huge progress. I think she should reflect again on her recent comment to the Institute of European Affairs that “joining the EC in 1973 was an act of nation-building with arguably more tangible positive benefits for Ireland’s independence than the 1916 Rising”. It is not necessary to diminish the absolutely fundamental role of 1916 for this State in order to express support for the EU, and I hope we will not be hearing this line again.
This is Europe’s moment of truth, but it remains unclear how it will emerge from it. This summit has not provided the confidence-building momentum which was so badly needed. The Greek issue is in hand but not finalised. Ireland’s interest rate reduction is at best frozen and at worse a step backwards. Contagion remains an issue.
In this circumstance, the worst thing the leaders of Europe could do would be to continue to muddle through, hope something shows up, wait until the next summit and once again go through the motions. Now is the time to stop prevaricating, seize the problem and demonstrate to the people of Europe that the ideals of this Union are alive, are relevant and are a match for the problems we now face.
The substance of the Government’s approach to the EU summit seems to have been to convince our partners in Europe that we are not Greece. Nuair a bhí an pobal Gréigeach ag léirsiú tamall ó shin, dúirt siad “níÉireannaigh muidne”. Mar sin, tá dhá thaobh den scéal sin. The unfortunate reality is that if the Government continues to follow the failed policy of austerity, including public service cuts and increased taxes, to pay a debt mountain that nobody believes is tenable, then this State will be where Greece now is in a very short time. The Taoiseach and his colleagues were elected on a completely different mandate, but since the election, they have been implementing a Fianna Fáil manifesto.
Irish bond yields have surpassed 12% this week, which is a record high. Anybody with common sense will know this tells us the market does not believe that the policies pursued by the Government are working, or that Ireland will be able to repay its debt. The Government continues to bury its head in the sand on this issue, refusing to recognise that we cannot borrow our way out of a debt crisis, particularly one of this magnitude. The Government also seems to be oblivious to the social consequences of its policies on Irish citizens, particularly the most vulnerable. It is irresponsible to insist on taking on more debt at oppressive interest rates, while imposing even more austerity policies on citizens. This failure has been compounded by the flippant response of the Minister for Finance that all of these problems can be sorted out if only people would go shopping. This is the same Minister for Finance who recently defended the despicable universal social charge.
Tá muintir an Stáit seo faoi bhrú. Tar éis trí mhí in oifig, níl aon dul chun cinn déanta ag an Rialtas, go háirithe leis an ráta úis a íslú. As far back as 11 March, the Heads of Government decided that the interest rate of the EFSF loan should be lowered to take account of debt sustainability, but apparently not when it comes to this State. At the conclusion of last week’s summit, the Government had nothing to show for months of negotiations on this issue. The Government was elected on a promise to reduce the interest on the total bailout loan by 1%. It was claimed that this would save the Irish taxpayer around €400 million. However, the Minister for Finance told Deputy Doherty a different story this month. According to the Minister, this is not the Government’s goal. The Government now wants a 0.6% reduction, which is almost half of its promised reduction on any further draw down of EU money, and this would save taxpayers less than €200 million. That is, of course, important, but it is a drop in the ocean when one considers our economic difficulties. The real issue in all of this is not a small reduction, but the fact that our partners in Europe have imposed a 3% handling charge on the €45 billion in loans they are providing. This means that those who claim to be our friends are actually profiting from this calamity to the tune of €10 billion. This is what the Taoiseach should be negotiating, if he will not face up to the absurdity and obscenity of this significant debt.
There can be no shying away from the reality that this State and the people cannot afford the bailout and its punitive interest terms. That is evident every single day and I am sure the Taoiseach sees it as he goes about the country. I see it in my constituency, with more cuts in our health and education systems, more closures of hospital accident and emergency departments, reductions in wages being paid to low and middle income earners and the introduction of stealth taxes. Yet the Taoiseach has agreed to another €3.6 billion of cuts in the next budget. The Taoiseach is committed to lowering tax bands and credits as part of this, to generate general tax increases amounting to €1.5 billion and reductions in spending that includes social expenditure reductions. That is what the Taoiseach has signed up to implement. Yet, the Taoiseach, as well as the Tánaiste, are saying to the citizens that he will not raise taxes or cut social welfare. One cannot have a deal in which the Taoiseach has agreed to generate €1.5 billion by increases in tax and cuts in social welfare and then tell people that he will not do it. What other cuts to public services will he introduce? How many more areas will have to be closed? How many more special needs assistants will lose their jobs? How many children with special needs will lose their lifeline to education, with parents and their children losing their entitlements as citizens? How many children will be walking to school next winter? How many more workers will have their wages sliced, while also having to pay the universal social charge, property tax and a water charge and any other stealth tax that the Government can concoct? The claim that Fine Gael is the party that will not raise taxes or that Labour is the party that will defend workers all ring hollow when set against the reality of the decisions that this Government is taking.
I want to briefly comment on the European Council’s views about the humanitarian situation in Gaza. I share that concern. I know the Taoiseach has been in Gaza and I welcome the conclusions of the Council which call for a resumption of direct negotiations in the Middle East to provide the only real and realistic chance of improving the situation on the ground and leading to a lasting and comprehensive solution in that part of the world. I have been there a number of times, including a few days in Gaza, and I warmly welcome the unity pact between the Palestinian groups. That needs to be responded to positively and built upon. I want to support the crew of the MV Saoirse, the Irish ship to Gaza which will travel with the international freedom flotilla. I know some of those on board, including members of Sinn Féin, and I wish them all well. I commend all of them on their courage and on standing up for the rights of the people of Gaza to live free of oppression. This second flotilla should be allowed safe travel and the Government should be speaking to the Israeli authorities to ensure that they get it. I further urge the Government to do all in its power to end the siege of Gaza and the suffering of the Palestinian people. It is neither right nor fair that, in an area as close to the county of Louth as makes no difference, people should be kept in an open air prison. The Government should support the unity efforts of all of the Palestinian groups and their demand for the recognition of their statehood, when it comes up in the UN later this year.
Deputy Pádraig Mac Lochlainn: It is welcome that the Taoiseach raised the issue of Bahrain at the European Council but that does not go far enough. The situation in Bahrain has caused great alarm to many in the medical profession in Ireland. The Royal College of Surgeons in Ireland has refused to condemn the arrest and detention of doctors, who were not only trained and are fellows of the RCSI but served as interns in Irish hospitals. Those doctors in Bahrain have been arrested and detained for carrying out the duties of their profession in accordance with the hippocratic oath. It is an outrage and an insult to the medical profession across the world and yet — I can only assume this — because the RCSI and others do very serious business in Bahrain, with an investment of €60 million and hundreds of trainees and staff, the RCSI refuses to speak out against this outrage. It spreads further, because the Sunni minority in Bahrain who rule that state in cahoots with Sunni colleagues in nearby kingdoms, which are not democracies, put together militia to keep down the democratic rights and entitlements of the Shia majority. Not so long ago, the Shia majority in Bahrain was 70% of the population, but that has decreased to 60% because of the strategic migration of emigrants to close down that number.
What is happening in Bahrain is a profound embarrassment to the Irish State. Our President together with a former Taoiseach opened the colleges in Bahrain and we have not done enough to make it clear that what is being done in the kingdom in an insult to democrats and an outrage to doctors across the world. I implore the Government to do much more than to ask the powers in Bahrain to do this.
I will now address the issues in Palestine and Gaza. We have a statement from the European Council that refers to the situation in Gaza, which remains of concern. Humanitarian assistance delivered to the population in Gaza should be in accordance with the relevant framework and decisions of the UN and should take care not to endanger human lives, which is I presume a response to the flotilla which is on its way to break the naval blockade and the wider blockade. The international community and the UN should hang their heads in shame because there have been repeated UN resolutions on the wider issue of Palestine and demands that the Israeli state immediately cease its illegal blockade and imprisonment of the Palestinian people who have to live in Gaza and endure an existence in that place.
Let me read some of the statistics, of which I know the Taoiseach is aware. I acknowledge that the Taoiseach visited the people and I am sure he must have been moved to hear the stories and see it at first hand. More than 70% of nine month old children in Gaza are anaemic, 13.2% of the children in Gaza suffer irreversible stunted growth, 66% of households in Gaza are food insecure and 75% of the Gaza population rely on humanitarian food assistance. That is a shocking statistic. There are dangerous shortages of medical supplies in Gaza’s hospitals and 1,500 were murdered, the vast majority of whom were innocent civilians, by the Israeli state. Where is the consistency? We have a UN resolution against Libya to protect the Libyan people, which is immediately enacted by NATO and the international military forces. We have the same put to the Israeli state, where they murder and imprison those people in the state, and nothing is done to enforce the resolution. They get away with murder.
A call has been sent out to civic society internationally to assist Palestine. The Palestinian people are a proud people and what they need is freedom, to have their dignity respected, the ability to be able to export and to have a proper existence. Because the international community has refused to carry out its own resolutions, and has stood idly by, as tragically happened on this island at one time, we now have a situation where peace activists are imploring the international community to inspect its ships and to verify the cargo. Some ships are carrying passengers but the vast bulk of the cargo is humanitarian aid, thousands of tonnes of it. Our Government, the UN Secretary General and the EU, having failed to act to protect the interests of the people of Gaza, are now saying to those courageous peace activists that they cannot do anything either. Not only will they not act, those who decide to act and put their own lives at risk are told they will not be protected. These international bodies will not tell the Israeli state to clear the path and to permit the landing of this aid; they will not even verify the cargo on the ship to demonstrate that there are no weapons on board.
What are the people of Gaza to do? Who will help them? Who will hold up international law against the Israeli state? Here is the difficulty. Ordinary people, NGOs and every human rights organisation worth its salt has said the blockade and the hijacking of boats on international waters are illegal acts. These actions are repugnant to international law and decency but that is ignored.
Irish citizens are joining courageous citizens from other nations to do the right thing by the people of Gaza. If there is to be consistency and we are to retain international goodwill, we must ensure the resolution of this situation and ensure that the aid gets through. The Israeli state must be confronted on its illegality and its terror once and for all.
Deputy Richard Boyd Barrett: Next week, from 6 June until 16 July, the EU-IMF delegation will come to Dublin to implement further austerity, as agreed at the European Council meeting, austerity that the Taoiseach and other European leaders appear to commend as a good thing but which is resulting in tremendous suffering for the people of Greece in so far as it is being implemented there and tremendous suffering for people here.
Notwithstanding the insistence that there is a difference between Greece and Ireland, while the EU-IMF are here, protests will commence and continue for those ten days. There will be protests over the closure of Loughlinstown Hospital accident and emergency services, a closure that is being replicated in hospital accident and emergency services all over the country and which I hope will lead to further protests. On 12 July students will protest over registration fee increases while on 13 July there will be a large protest outside the Dáil by parents of special needs children who, as a result of the cuts this Government is imposing on those resources for our most vulnerable citizens, do not know if their children will have an education come September. On 14 July communities all over Dublin will protest the axing of bus services, with hundreds of buses and dozens of routes, mostly serving the elderly, the vulnerable, the immobile and young, being taken out of service. On 16 July all of those groups, and many others affected by the austerity that the Taoiseach and the other EU leaders wish to impose on the people of the State, will mobilise in a final demonstration demanding jobs and an end to cuts and austerity as dictated by the EU-IMF.
These people will protest because they are the victims of the austerity programme European Council leaders have once again signed off and are determined to continue to inflict on the people of this country to pay off the bankers and bond holders who caused the crisis. Most of those protestors, as is the case in Greece, will feel there is a bizarre disconnect between this Government and the European leaders and the concerns and needs of ordinary people. The Greek people and the Irish people cannot understand how the Government or the other European leaders believe that savaging the incomes of ordinary people, attacking the most vulnerable and imposing austerity that is increasing unemployment in this country daily, cutting hospital services, bus services and inflicting austerity on the most vulnerable who bear no responsibility for this crisis, will achieve anything. What planet is the Taoiseach living on if he believes this will help economic recovery? Austerity in recent years has done the opposite; it has made things worse and will continue to do so. Is there any understanding that if the Government takes money out of the pockets of ordinary people or if it attacks the education system, it does not aid economic recovery, it sabotages the prospects for it?
I ask the Taoiseach to reconsider, to show a bit of spine and stand up to the economic madmen in the ECB, the IMF and the EU who are inflicting extreme suffering on people and shoving down their throats an economic strategy that is failing to a disastrous extent.
Deputy Mattie McGrath: The European Council meeting was an opportunity for the Government to stand up and be counted in the national interest. We have been good Europeans, as has been recognised over the years, with Ireland being held up as a role model for other countries. We benefited from EU membership but we also paid a great deal. Now we are paying dearly for the mistakes of a small minority. It is very disappointing because when the Taoiseach and his Labour Party colleagues were in Opposition, they voted against every provision in the budget. People are bewildered then, after so many promises, that the Government can come and steal the clothes of the last Government. They are sitting in different benches but they have exactly the same policies.
I supported Deputy Kenny as Taoiseach and I wish him well but we must stand up to the ECB. The world is watching what is happening in Greece with trepidation because it could throw us all into chaos. I know the Minister for Finance is working hard to avoid that contagion and we hope the Greek situation will be stabilised but we all know Greece does not have a hope in hell of repaying the money.
I feel in my bones that we cannot pay the money we are being asked to pay either. I have been a small businessman since 1982 and I understand a small bit about business. That is why I voted against my late colleague, Mr. Brian Lenihan. The interest rate is too punitive and the amount of money we must pay back is too much. We all agree the ECB must be independent from political interference and that is the case in terms of its day to day business.
In a time of crisis, however, when the European system itself is at risk, there should be provisions for the Heads of State, through the European Council, to challenge the role of the ECB. We must have those provisions because if we do not we are going nowhere and the same will happen when the next crisis occurs.
This country must secure a more sustainable rate of financial support. We are getting a reasonable rate from the IMF but we are being screwed — I do not like to use that word — and blackguarded by our so-called friends in Europe. They are making a healthy profit while we are sucking the lifeblood out of communities. I agree with what was said last week by the Minister for Finance, Deputy Michael Noonan, that we should try to lift the economy but how can we when we have health levies and social charges among others taxes in order to try to pay the interest, let alone the entire loan?
The health service is being diminished. I too am concerned about the general hospital in south Tipperary in spite of commitments by the Minister, Deputy James Reilly. I am also concerned about the cuts in education services, rural transport, elderly care services, small two-classroom schools and school transport. Various schemes have been put in place through many years of hard work and now they are just being wiped away. I do not blame it all on the Government but we must go back to Europe and renegotiate. We must see the bigger picture. They will have to see it too.
We anticipate further increases in interest rates by the ECB. Where is the care evident in that? The banks will have to absorb some of the interest rate increases themselves instead of just passing them on. We get over one crisis and then we are hit by an increase in interest rates again. Mortgage holders and ordinary business people are bewildered. They cannot see any light at the end of the tunnel. Those in Europe will have to listen. We will have to show backbone, stand up and fight our cause. We will have to be proud of the tricolour and let people know we will be a good European nation only when we get fair play, not when we are blackguarded, downtrodden and put down. Our German and French partners are not being fair. Their banks were 50% culpable for the mess we are in. They should take at least 50% of the blame, not get away scot free.
Deputy Clare Daly: It is unsurprising that the European Council meeting focused so much on Greece. I note the Taoiseach’s comments earlier offering support and solidarity to Greece. The antics of the Government are a peculiar definition of solidarity given its repeated statements of support for the vicious and brutal austerity plan that is being put before the Greek Parliament. I reject the notion that has been put forward by the Government that it is somehow in this country’s interest for Greek people to have foisted upon them a vicious austerity programme. How could that possibly be in the interests of ordinary people in this country?
Let us look at what is being proposed in order for Greece to get the second misnamed bailout: a 10% cut in public spending; a 33% reduction in public sector wages and the virtual sacking of 20% of the public sector workforce; and the Greek economy will have to pay back €100 billion over three years, a staggering 40% of GDP. How could such a programme possibly be in the interests of any ordinary person in this country, particularly when the fruits of such austerity which has already been imposed on the economy have resulted in unemployment ballooning in Greece, 50,000 businesses going to the wall and industrial production falling by 20% with another 12% drop expected? All of that is to deliver nothing except what everybody knows could be the best outcome, a certain delay in what is inevitably now going to be a default.
What the Government has been reflecting is not that it is good for ordinary people in this country that Greek people are pauperised in this way, but rather its concern that a default by Greece would lead to huge losses for European banks, in particular German and French ones, and then a crisis in the eurozone and a consequential knock-on effect in terms of the strategy of the Government. The people who are worried about what is going in Greece are the banks and speculators who caused the problems in the first place. If ordinary people in this country really want to express support and solidarity, it is best expressed by offering support for the movements of mass opposition that is taking place in Greece and Spain, where the media has played a terrible role in keeping extremely quiet about the amazing developments that have taken place in Spain with millions of people taking to the streets, the occupations of squares and the huge demonstrations of enraged youth and workers inspired by the events in North Africa and the Middle East. That points a way forward out of this mess.
It is welcome that the Greek trade union congress has for the first time in 20 years called a 48 hour general strike. It is clear that more such action needs to take place and that the way out of the crisis is for ordinary people in Greece at a local and national level, and similarly with people in Spain and this country, is for us to link up in a united way to develop opposition to the austerity that is being imposed and to build solidarity across national boundaries. As other Deputies have highlighted, it is uncanny how similar the attacks are and the measures that are being foisted on Irish people through the EU-IMF deal. In some cases what is being foisted on ordinary people in other European countries is even worse.
The way forward is to step up the action that is taking place on the streets, develop it and come up with a solution that does not make ordinary people pay for a crisis that was not of our creation but goes back to the bankers, speculators and big bondholders across Europe who benefited substantially in the good times and now expect ordinary people to put their hands in their pockets and pay with our lifestyles and those of our children into the future. It is important that those struggles link up and that we do not bow down to the dictatorship of the financial markets as the Government does but that we stand up and ensure society is run much more democratically and for resources to be controlled in the interests of all people throughout Europe rather than the hierarchy at the top of the EU.
Deputy Micheál Martin: Will the Taoiseach agree to publish and make available to Members the text tabled by President Van Rompuy on 11 March on which the Taoiseach intervened which contained issues relating to CCCTB?
The Taoiseach: No, I will not publish that text because I disagreed with it. Surely Deputy Martin did not expect a Taoiseach to go to a Council of Europe meeting and agree to raise our corporate tax rate? Is that what he expected me to do? I have no intention of doing that. Deputy Martin, rightly, supports that position. The House has given a firm commitment in that regard. The reason we do not have the interest rate reduction applied to us, which was agreed in principle, is because there was a demand that we would increase our corporate tax rate as a condition of that reduction. The leader has agreed in principle that a reduction should be applied to the countries in the EFSF bailout situation. We were not in it then because the stress tests were not completed on our banks. That responsibility was given to the Ministers for Finance. We have made some progress on that. We are not shifting from our corporate tax rate.
The European Commission published its paper in respect of a common, consolidated, corporate tax basis. I have no problem at all involving myself in a discussion on that but I do so from a position of having a healthy scepticism about it. It is a legal requirement of the Commission to produce its proposals for legislation. Governments in other countries have objected to that. I have made my position clear. The officials continue to talk. The Ministers for Finance continue to work on the matter and I hope they can bring it to a conclusion. When it is brought to a conclusion I hope Deputy Martin will welcome it and we will move on.
Deputy Micheál Martin: They all agreed there should be a change in the terms and a reduction of the interest rate. The only issue was timing. In the interests of transparency, the Taoiseach should share that text with every Member of the House and the general public so that people can objectively make up their own minds on whether corporation tax was threatened by the compromise text put forward by Van Rompuy. If the interest rate had been reduced——
Deputy Micheál Martin: The Taoiseach should allow me to ask the question. If the interest rate had been reduced without compromising the corporation tax rate, Ireland would benefit by hundreds of millions of euro. We cannot make up our minds if we have not seen the compromise text put forward by Van Rompuy to break the deadlock on 11 March. It is a simple request. The Taoiseach has lectured everyone on transparency.
Deputy Micheál Martin: He said this would be a more open Government which would do the “divil and all” in terms of transparency. Yet, I made a simple request — would he publish that text tabled by Van Rompuy — and he flatly refused. Does that not make a mockery of his commitment to transparency?
The Taoiseach: No leader before me had ever been in a situation in which an offer of support was conditional upon this country’s raising its corporate tax rate. I refused to do that, I still refuse to do it, and I will not move on it.
Deputy Gerry Adams: As the Taoiseach has heard me say before, I do not understand his negotiating strategy, although I have tried hard. I do not think Fianna Fáil has much credibility on this issue, but that is scéal eile. When Fine Gael was in Opposition, he was quite rightly against this deal. What are his objectives? He has set them in broad-stroke terms. Since he came into Government, every time he goes to a summit or mentions the EU-IMF deal he says he is for the deal. He says the Government is committed to it and that we are paying our way. How on earth does he intend to catch their attention? This focus on the interest rate, welcome though it may be if and when we get a reduction, is similar to the fable of the emperor’s new clothes. The fact is that our partners are imposing a hefty 3% surcharge on their lending to Ireland which, according to figures from the Minister for Finance, will cost the Irish taxpayer €3.4 billion for every percentage point. It does not add up. It is absolutely crazy. It does not work out in any economic or financial configuration.
The social consequences of this deal are dreadful. Sometimes when one listens to the rí rá here as Deputies heckle and barrack, one would think they had lost sight of what is happening out there in communities, hospitals and schools.
Would the Taoiseach not agree that the dreadful social consequences of this deal are too great for Irish taxpayers to have to pay? Would the Government not be better to do now, in a planned way, what it should have done when it came into Government — that is, to tell our partners in Europe that this is not sustainable? We cannot pay.
The Taoiseach: The Deputy asked about our objectives. Our objective is to get back to a situation in which this country is in charge of its own economic destiny. That means we must pay our way, meet our conditions and get out of the IMF-EU bailout deal as quickly as we can. That is why the Government has taken decisions on the banks and to give some element of stimulation to our indigenous economy within the constraints of the IMF-EU deal. That is why the Government is now focused on the scale of what we have to do to close our budget deficit. The Deputy is aware that if one is spending €20 billion more than one is taking in, there is a problem. We will not get out of this unless we deal with these problems. There is no point in running away from it.
Every time we make any kind of comment here, we are all agreed that our corporate tax rate stays at the level it is at. This country is not the one that said it would impose a condition over and above what we are already meeting in the IMF-EU bailout deal. I want the Deputy to know that the conversations I had with President Sarkozy last week were different in tone and content from those we had previously. We have made some progress on this. Every other leader with whom I spoke the other day — President Barroso, Prime Minister Van Rompuy, Mr. Trichet from the ECB — recognised what is happening here to the extent that this country is meeting the terms and conditions of the EU bailout deal, which neither the Deputy nor I asked to get into and which the Government denied we were getting into at the time. However, we are in there, so we must deal with it.
I recognise the challenge our people face. People with distressed mortgages, those on low pay or those who are locked out of employment because of the structure of the joint labour committees are coming to me as they are to everyone else. Our job is to stimulate our own economy, increase our exports even further, improve our productivity and build on our flexibility so that foreign direct investment will continue. Our people will have credit available to them as a consequence of the Government’s decision to deleverage the banks’ assets. We must now make them prove that credit is available for small business. As the Minister for Finance pointed out, there was a lack of demand for credit, because in many of those cases, when seeking credit, people went the wrong way by buying property in Bulgaria and elsewhere, ruining businesses they were in themselves. It is a fact of life. Our objectives are to get out of this mess, put our country in a much firmer position, provide employment for our people, close our budget deficit and have a country we can be proud of. I know the Deputy has some constructive suggestions to make in that regard.
Deputy Richard Boyd Barrett: Well, the Taoiseach should answer these questions. How can he justify and explain the economic logic behind cutting special needs assistants, with the disruptive effect that will have on our education system and our young people, who are our economic future, the closure of accident and emergency wards in hospitals around the country, the savaging of the incomes of low-paid workers, despite the injustice of it and the clearly depressive effect it has on the economy, and the selling of State assets, many of them profitable, as is being demanded by the EU and IMF? How will that aid economic recovery? How is it fair? How will it improve the situation? The logic behind it is bizarre.
Is it not a fact that, in so far as there is now some discussion about shifting the burden on to the bondholders who actually caused this crisis, it is arising from the fact that the Greek people are protesting, rightly and justly, against the same vicious austerity measures that are being imposed on them? Did the Taoiseach discuss with his European counterparts contingency plans for the event of the eurozone breaking up? Are we in this country preparing contingency plans, such as printing punts, in preparation for the possibility that we might have to pull out of the euro? Can we have a direct answer to that question?
The Taoiseach: The answer to the Deputy’s question is no, we are not. Ireland is meeting its requirements and conditions, challenging though they are, and when the interest rate reduction is applied that will be of extra help. This debate is about the report of the European Council meeting, but the Deputy wants to raise the question of special needs assistants. This is an important, sensitive and personal issue for those to whom it applies. I and the Minister for Education and Skills have dealt with the matter. The Deputy is aware of the cap of 10,000 that applies to the number of special needs assistants. The Deputy is aware that the Minister for Education and Skills approved the allocation of 90% of assistants while retaining more than 400 for cases in which they may be required. No child who needs the attention of a special needs assistant will be left without one.
The Taoiseach: ——he would have noted that in many instances it became the norm for a special needs assistant to be allocated not because of disability or the particular challenges a child faced. This could not continue.
I know from visiting many schools the value of special needs assistants to children who need them. There will in fact be more special needs assistants in the system this year than ever before. Of course, Deputy Boyd Barrett will not recognise this. Neither does he want to understand the Minister’s logic in holding back more than 400 of these to ensure they are allocated to children who really need them.
The Taoiseach: Regarding the Deputy’s comments on accident and emergency wards, at the beginning of each year, hospital budgets are signed off. Some hospitals are already €100 million over budget. This cannot continue. Somebody must pay for this. We are in this situation not by virtue of choice but by virtue of circumstance. To make our way out of this, we are going to have to make adjustments.
The Taoiseach: The Minister for Finance is in the courts to see the subordinated bondholders take their share of responsibility. He will also take up the matter of the senior bondholders in Anglo Irish Bank in the autumn with the European Central Bank.
Deputy Boyd Barrett, along with some other Members, believes we can continue on as if nothing happened without any charges against us. Unfortunately, as the Greek Government has found out, one has to pay one’s way. It is not the case there is an endless stream of money pouring into the country. It is fine if Deputy Boyd Barrett does not want to accept that reality.
The Taoiseach: Peaceful protest is perfectly legitimate. Deputy Boyd Barrett has not made one single constructive suggestion so far, other than having protests about this, that and the other. Can the Deputy give me one constructive suggestion about job creation, how we can save on waste and cut out inefficiencies, or provide better standards by doing more with less in the public sector?
Deputy Pearse Doherty: The Taoiseach claims we must pay our way. Will he acknowledge that today the State will pay out €12 million on unguaranteed and unsecured bonds in Anglo Irish Bank? This is four times the amount needed to halt the cuts in the school transport scheme and would more than cover the deficits in some hospitals in the west. Last week, up to €14 million was paid out in such circumstances while over the next seven months up to €2 billion will be paid out because the Government has not yet moved against these unsecured bonds.
There has been a monumental failure on the Government’s part to secure a reduction in the bailout interest rate. In fact, since the Government took office the cost of interest on the European Financial Stabilisation Mechanism, EFSM, portion of the European loan has increased by 1%. On 12 January 2001, the rate stood at 5.425% but by 31 May 2011 it stood at 6.425%. Has this been brought to the attention of our European partners who are profiting to the tune of €10 billion from the 3% surcharge? The Taoiseach claimed the issue of pricing was discussed at the European Council. Was the fact that the interest rate is becoming more unsustainable discussed too?
The Taoiseach: The Minister for Finance is in the courts concerning the unsubordinated bondholders sharing responsibility. He wants to begin discussions with the European Central Bank regarding a large payment due for senior bondholders in Anglo Irish Bank. Formally, he has pointed out the pricing of these loans is too high, which has been generally accepted by the European Council. Some assume we are getting money for nothing. Obviously, we have to pay it back, albeit at too high a price.
The lending countries have to give their agreement to any reduction in the interest rates payable on these loans. While the majority want a reduction, some do not. All countries recognise that Ireland can be held out as a demonstration of how this facility can actually work to get a country back in charge of its own economic affairs. We have not given up in getting an agreement on an interest rate reduction. It was agreed in principle. All the countries involved accepted that the truth of the scale of what one is dealing with should be known before any further measure could be made. That is why the bank stress tests were important.
The Taoiseach: One condition being mooted is that of a rise in Ireland’s corporate tax rate. That is a move I will never contemplate. We are trying to get the interest rate reduction without affecting our corporate tax rate which I believe is possible.
Deputy Micheál Martin: I was surprised at the Taoiseach’s touchy response to my simple request to publish the text of the Van Rompuy compromise text from the 11 March meeting. Publishing it would allow people make up their minds objectively as to whether the Taoiseach skilfully handled the meeting or bungled it. He has decided not to publish it, however.
Yesterday, I asked about his recent meeting with the French President, Mr. Sarkozy but, again, I got no reply. Was it a substantive or cursory meeting? Where did it take place and for how long did it last? Was anything specific agreed, other than to keep doing what has been done since March?
What did the Taoiseach say to the Council about Mr. Draghi’s appointment as president of the European Central Bank? Did he agree to the Italian and French exchange of membership of the executive committee? Did he disagree with the ECB’s position on bank debt and decision to increase interest rates which will have a devastating impact on many in this country? Why did the Taoiseach agree to the text for the conclusion of the Council meeting which states Ireland’s debts will be sustainable without an interest rate cut, a direct reversal from the position adopted by the previous Government and this Government in March?
Deputy Mick Wallace: The Taoiseach claimed there is no demand for credit from small and medium-sized businesses, a point with which I disagree. Until we have a functioning banking system, it will be difficult to see any form of recovery in the small and medium-sized sector. I am aware of many businesses that have been refused credit. Despite all the State has done for them, the banks are still not open for business.
The Government’s idea in respect of a strategic investment bank is extremely good. It would make such a difference if the Government manages to put such a bank into operation. I do not know whether it is going to happen. I would have thought that the institution in question would have been put in place before now. I agree that the changes in respect of PRSI and VAT will provide a major boost to the restaurant and hotel industries. It will definitely stop the haemorrhage of jobs from those industries. However, there is definitely a need for a bank that is open for business because there is a demand for credit.
The Taoiseach: I share Deputy Wallace’s view. Work is under way in the context of introducing a partial loan guarantee scheme that will make it easier for banks to be more flexible in advancing credit to businesses which should be in a position to access such credit under appropriate conditions. As the Deputy is aware, the demand for credit has in many instances been restricted because of the poor condition in which some businesses currently find themselves as a result of their dabbling in the property market or whatever. It is a case, therefore, of returning to a position where credit can be advanced.
The decision made in respect of the main banks will ensure that there will be credit available. I am anxious that there be a system whereby we will be provided with regular reports which will demonstrate the new credit being made available to businesses rather than just being supplied with information relating to rolled-over or restructured loans. What we are seeking to do is critical in the context of expanding the indigenous economy and with regard to the creation of job opportunities.
I will be obliged to purchase a stopwatch in order that I might account to Deputy Martin for the meetings I have with people and the length of time it takes to conduct them. I assure the Deputy that unlike many members of the Government of which he was part, I contributed to every aspect of the debate that took place at the European Council meeting on Thursday and Friday last. All of the background material relating to decisions is not published prior to such decisions being formalised. The conclusions of Council meetings are published, however, and these are the subject of the debate in which we are currently engaged.
Ireland will make its repayments on time. It will be assisted in this regard by the advent of what was agreed in principle, namely, a reduction in the interest rate applied to our borrowings. The precise difficulty in this regard is being worked on. I hope the matter can be brought to a successful conclusion quickly. I am conscious of the fact that an interest rate reduction would be of extra benefit to us. We are adhering to the conditions — challenging though they are — attached to our deal.
Deputy Micheál Martin: The Taoiseach did not answer my three specific questions on the European Central Bank and the conclusions reached at last week’s meeting, which were different from what was agreed on 11 March.
Deputy Lucinda Creighton: I wish to close the debate by commenting on external relations issues. The Taoiseach touched upon a number of these issues but I wish to provide a more comprehensive overview.
The Taoiseach referred to the Council’s agreement that negotiations on Croatia’s accession to the European Union should be concluded by the end of the month. I am pleased to report that these negotiations are on track and that an accession conference to formally close the final negotiation chapters will take place tomorrow, 30 June. It should then be possible for the accession treaty to be signed before the end of the year. It is likely that accession will be set for 1 July 2013. The Commission will continue to monitor Croatia’s progress up to accession. I take this opportunity to congratulate Croatia, the Presidency and the Commission on the considerable work that has gone into the accession negotiations. Croatia’s success reaffirms the European perspective of the western Balkans in a broader sense.
On the European neighbourhood policy, the Council endorsed the new approach to relations with the countries of the EU’s neighbourhood. This new approach offers greater co-operation and economic integration to those countries that are making real progress on reforms. The Council also underlined the importance of the Eastern Partnership summit, which will take place in Warsaw at the end of September. That summit will provide an opportunity to provide strategic direction to the EU’s relationship with its eastern partners during the coming two years.
I wish to expand on the Taoiseach’s remarks on the European Council’s discussion of the situation in the southern neighbourhood. In respect of Libya, the Council’s declaration reiterates the EU’s firm support for UN Security Council Resolutions 1970 and 1973. The European Union is united in its determination to increase the pressure on the Gadaffi regime to allow the beginning of a political transition. The Council also considered the situation in Syria and strongly condemned ongoing violence on the part of the Syrian regime against its own people. It welcomed the adoption of new sanctions and expressed full support for efforts by EU members of the UN Security Council to seek an adequate response by the latter to events in Syria.
Ireland succeeded in raising the current unsatisfactory human rights situation in Bahrain at the European Council. I hope this will go some way towards addressing the concerns expressed by Deputy Mac Lochlainn. At the Taoiseach’s prompting, the European Council expressed its concern about the process surrounding the trials and sentencing of opposition members in Bahrain and encouraged Bahrain to ensure full respect for human rights and fundamental freedoms.
On the Middle East peace process, EU leaders looked ahead to the issue of a possible UN resolution on Palestinian statehood in the autumn. Broad concern was expressed regarding the potential for this to complicate the efforts to achieve that state as a reality. However, there was also general recognition that the Palestinians have been pushed into contemplating this step by the lack of progress on negotiations and that their strong preference would be to engage in meaningful direct talks with Israel — aimed at establishing the state of Palestine — by agreement on the outstanding issues.
The EU and its member states have taken two parallel initiatives to try to support and renew the peace process. High Representative Ashton has called for a political level meeting of the international Quartet and this will take place on 11 July. It is hoped that the Quartet can try to set out the parameters for renewed talks, building on the recent speech of President Obama, to provide clarity and reassurance for the participants about where renewed talks should lead. France has proposed an economic support conference on Palestine — also to be held in July — which would have a strong political element also aimed at preparing the parties for a renewal of talks. The Taoiseach spoke in favour of both these ideas. The European Council also considered the situation in Gaza, in the context of the second flotilla which is now imminent and the continuing captivity of the kidnapped Israeli soldier, Gilad Shalit, whose immediate release was demanded.
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