European Council Meeting: Statements in the Dáil

Apologies for the length of this but well worth noting the responses, particularly in light of Wu Mings disturbing analysis here.

The Taoiseach: On strengthened economic policy co-ordination, we agreed what has been called “a new fiscal compact”. Essentially, this is a set of reinforced budgetary rules for countries within the euro area. Specifically, we agreed that government budgets should be balanced or in surplus. Looking at where Europe is now, this is an entirely sensible proposition. We agreed that this rule shall be deemed to have been respected if, as a rule, the annual structural deficit does not exceed 0.5% of GDP. There is no doubt that this is a challenging ambition, but we agreed that it is necessary if we are to send a strong signal that we are serious about what we are doing. We will work carefully through the country-specific implications for Ireland once negotiations are under way.
It is, of now, a political agreement. Given the nature of what is involved, there are some very detailed technical and legal considerations that will need to be teased out carefully or analysed by experts before any legal text is adopted. This is an important process in which Ireland will be fully and actively involved.
To underscore our seriousness of purpose, member states will carry over this commitment into national law at constitutional or equivalent level, and the European Court of Justice will have a role in ensuring this is done properly. We are examining this requirement carefully, particularly in regard to how it dovetails with the fiscal responsibility Bill now being prepared.
We agreed that euro area member states that are in breach of the existing rules on excessive deficits will be obliged to work with the Commission and the Council in an economic partnership programme detailing the structural reforms required to get back on track in a sustainable way. The implementation of this programme and annual budgetary plans will be monitored by the Commission and the Council. This does not mean allowing the Commission or another entity to draft the budget for countries, which of course is their democratic responsibility. We also agreed that the rules for the excessive deficit programme should be tighter for member states in the euro area. Specifically, there will be automatic consequences for a member state that exceeds the 3% ceiling unless a majority in the Council decides not to adopt a Commission recommendation in this regard.

Deputy Micheál Martin: No, I am talking about the study on what was agreed. The Taoiseach, along with others, adopted a tough series of commitments relating to structural deficits and the reduction of debt.

The enforcement procedures are such that these rules will effectively set the entire economic framework for the future of this country. Not one person in the Council chamber last week could say what would be the impact of these rules. This is madness.
We want to be supportive of the new measures but early examinations of the new target figures are deeply worrying. It would appear that they will significantly undermine growth and hold back employment, while reducing government debts to a far lower level than the 60% mentioned. Analyses of the impact of the deficit limit suggest that it will lead to countries having almost no debt in the long run. In other words, it would involve significant austerity on effectively a permanent basis. In the name of saving the European sovereign debt market, these rules would end up closing it down.
Before there is any move to finalise agreements on these new fiscal control rules, detailed studies must be carried out and made publicly available. Many of the current troubles arose from politicians 20 years ago taking decisions about the euro without detailed evidence or discussions. This cannot be allowed to happen again. A decision of such magnitude, with such a profound impact on the social and economic future of Europe, should not be taken on the basis of plucking figures from the air because they sound tough.
The rush to enact these rules is being done in the name of showing resolve, which would supposedly restore confidence. This is nonsense. The idea that Italian debt is under pressure because the government has not enacted a strong enough law about future budgets would be laughable if it was not the policy signed up to by the Taoiseach and his colleagues last Friday. The real issue remains the uncertainty about the ability of governments to refinance existing debt. This uncertainty can only be dealt with if Europe has a significant lender of last resort. It is almost shocking that the Council spent hours reaching an agreement on fiscal rules and did not even discuss addressing the central role of the European Central Bank in inflating this crisis.
Mr. Draghi is right when he says the bank’s agenda is narrow, clear and independent. It is, however, not as narrow as he is interpreting it, and there is an urgent need to reform its work. It remains a mystery why the Taoiseach agreed to Mr. Draghi’s appointment without discussing these issues with him. This is a bank that raised interest rates after a recession had started.

Deputy Gerry Adams:  Last week, in advance of the European Council meeting in Brussels, the Taoiseach wrote to Council President Herman Van Rompuy. He told him: “Ireland has acted in the interests of the euro area by not imposing losses on unsubordinated bank bondholders and as a result has paid an extraordinary high price to protect the wider European banking system from contagion.” He went on to say that he would raise this matter with colleagues during the course of the summit.
Yesterday, during his briefing for Opposition leaders, he made it clear to me that he did not formally raise the issue of the extraordinary cost to Irish citizens of his policy and that of the previous Government of bailing out the banks. He did say he raised the need to “re-engineer our debt burden” with other leaders but that the summit was the wrong meeting to put forward Irish interests. He said there would have been no tolerance of any government raising its own specific issues. He said the focus was on the euro crisis.
However, when I raised this issue with him yesterday during Leaders’ Questions, he claimed I was misrepresenting him. I was not misrepresenting him. I repeated accurately what he told me. Maybe he misunderstood my question and gave me the wrong answer, but I did not misrepresent him. I will not misrepresent him or anyone else. I do not do business like that. Why would I? There is no point. I reject the assertion that I put words in his mouth.
In his letter he said his intention was to seek political support “from colleagues around the Council table for a process which would ensure that Ireland continues to make progress towards debt sustainability and an early return to the markets”. Did the 27 members of the Council discuss his appeal? If so, what was the response? What commitments did he secure from his colleagues? If the content of the summit statement released last Friday is anything to go by, it is clear, as it is in the Taoiseach’s statement today, that the issue of Ireland’s debt burden and the crippling austerity being imposed on Irish people to service this burden was not raised properly by him nor were any commitments secured.
The deal struck by 26 EU leaders on Friday, 9 December, in Brussels will not solve the eurozone crisis. Who knows what will happen, but in my opinion it will make matters worse. The agreement is not a fiscal compact. It is an austerity compact. It seeks to impose right-wing austerity policies in perpetuity. The difficulty for all of us is that the Taoiseach agrees with this. The agreement was not imposed on him and he was not coerced or cajoled into it. It reflects his policies and political stance as leader of the Fine Gael Party and vice president of the EPP. It also reflects the position of the Labour Party.
Figures produced by the Central Statistics Office yesterday showed that the long-term unemployment rate has increased from 6.5% to 8.4% over the year and that long-term unemployment accounted for more than 56% of unemployment in the third quarter. We have also discussed how the most vulnerable people are affected by these policies. Austerity does not work, except for the elites. The policy of austerity in perpetuity, which will be enshrined in law, is bad for Irish citizens and citizens across the EU.
Seeking to emasculate our economies as part of the reinvention of capitalism is bad enough, but the agreement last Friday also seeks to undermine member states’s democracy. Additional powers are to be given to the European Court of Justice and the European Commission to police the new 0.5% deficit ceiling and the existing provisions of the Stability and Growth Pact. These powers will enable the court to adjudicate when member states are in breach of the new austerity rule. This is a very significant development, the implications of which are as yet very unclear. The Taoiseach should have taken the opportunity today to clarify and set out his view on its implications.
Section 4 deals with the new austerity rule and states: “Such a rule will be introduced in member states’ national legal systems at constitutional or equivalent level.” The Taoiseach has agreed that the new austerity rule will be introduced into our Constitution and national legal system. For the information of the Taoiseach, there is no equivalent level with our Constitution. We are a State with a written constitution, which happens to be a good thing. Other states do not have written constitutions and the rule will be introduced at equivalent level to our constitutional position.
In his statement today, the Taoiseach said he is examining how this requirement dovetails with the fiscal responsibility Bill which is now being prepared. That baffles me. I asked the question yesterday and the Taoiseach responded in the same way. Did he not figure this out before he agreed to the deal? Did he not know what it involved? Is he now saying that primary legislation may have equivalent status to constitutional law? As I understand it, the difference is very straightforward; this Parliament can change law, but only the citizens can change the Constitution. As such, the position the Taoiseach has put forward is absolutely wrong.
We are told that the so-called golden rule – there is always a good buzzword to describe something which is bad for people – will empower the Commission to impose specific fiscal and budgetary policies on democratically elected Governments. The people elect a Government and that Government sets out its policies and seeks to implement them. The Taoiseach has railed against the Fianna Fáil Party and the Green Party for giving away our sovereignty, yet he now proposes to cede a large portion of that sovereignty in perpetuity. Moreover, he proposes to do so through the backdoor, by way of legislation. The transferring of powers from democratically elected politicians and member states to unelected judges and civil servants in Luxembourg and Brussels takes real power away from citizens. It is anti-republican and anti-democratic. The bottom line is that the agreement reached last Friday in Brussels will significantly reduce the ability of any future Government to implement policies under its own steam. Elections will become effectively meaningless and pointless because anything the people vote for will, under this new rule, have to be run past people in other states over whose election we have no control. It is totally undemocratic.
None of this will be any surprise to the Taoiseach. He was not bounced or shoved into this agreement. In his speeches in this House before and after previous summits, he stated his support for such developments. In a debate just before the summit he said, “Ireland supports the creation of stronger economic governance throughout Europe and especially throughout the eurozone”. On that occasion he talked about the bilateral meetings conducted by the President of the European Council, Mr. Van Rompuy, and indicated that senior Irish officials were engaging in those meetings. In all such negotiations, a great deal of the spadework is done in advance and we know the direction in which it is going. With that knowledge, the Taoiseach can use his influence to steer matters in a certain direction. Unfortunately for the rest of us, he was going in the same direction as the French and German Governments and some of the other larger states. The reality is that he was happy to give away these fiscal powers even before he went to the summit. Now he is examining whether the various provisions, particularly those relating to clause 4, can be brought in through some avenue other than a referendum.
There is an economic alternative to what is proposed in this agreement. It is encompassed in the principle upon which the Labour Party stood in the last election, as summed up in the famous phrase “Frankfurt’s way or Labour’s way”. It is about decency and fairness. It is about stimulating the economy, encouraging growth, getting people back to work and protecting the most vulnerable of our citizens. It is about having core values which seek to have the economy working in protection of social guarantees for citizens in respect of public services, including health, access to education and the right to a home and a good environment. That is the alternative to what is currently proposed.
While the Taoiseach has repeatedly said this is a political agreement, the last paragraph clearly states that the objective is to make a treaty. There is still space for the Taoiseach to reflect on the issues raised here, to review his support for what is a bad deal and to return to our partners in the EU on that basis. My party cannot and will not support the transfer of more powers from the Oireachtas to Brussels. Nor will we support the imposition of a draconian 0.5% deficit ceiling by way either of primary legislation or a constitutional amendment. The Taoiseach can say what he wants about my party, but he cannot deny we have been consistent on these issues from the very first referendum, when I was a very young man, in 1972 or 1973. The Sinn Féin position, supported at that time by others who are now in government, has been consistent at every single referendum in pointing out the undemocratic nature of the European system. We are not against the European Union; rather, we want a different type of union which values citizens, is based on equality and sees all states as equals.

Deputy Richard Boyd Barrett:  I am sharing my time with Deputies Shane Ross, Mick Wallace and John Halligan.
It is evident that despite all the hoopla, last weekend’s summit meeting of EU leaders was a spectacular failure. The record decline in the euro, the collapsing stock markets, rising bond yields, downgradings and threats of further downgradings of European debt, all testify to the failure of yet another summit. Summit after summit, failure after failure. The failure of the strategy being pursued by EU leaders and by the Taoiseach, has long been evident to ordinary workers and citizens and to the vulnerable, both in this country and in Europe, who are suffering mass unemployment, forced emigration, brutal austerity, cut after cut. Now, the speculators who caused the crisis, before whom the Government kneels and prostrates itself and demands that we kneel and prostrate ourselves, are betting that the Taoiseach’s plan will not work. They are voting with their feet and they are betting that Europe is going down.
The Fianna Fáil Government slaughtered this country with austerity to bail out the banks and they handed us over to the troika. By the way, they did not mention the ECB mandate when they were doing all this. When those of us who campaigned against the Lisbon treaty did talk about the ECB mandate and its failure to consider anything other than inflation and profit, we were ignored and ridiculed by Fianna Fáil. Nonetheless, I welcome their conversion on the road to Damascus.
The Taoiseach’s Government continues with the attacks on school children, on lone parents, on the elderly, on the disabled, resulting in unemployment – the very thing he said he would prioritise – getting worse, not better. In response to this situation, where the troika simply demands even more austerity, he comes back from this summit proposing that we support a pact based on permanently establishing a policy of bailing out the banks and permanent austerity visited on the people of this country and the people of the rest of Europe. He tries to cover that with talk of firewalls. What the hell are we talking about? Human shields would be a better description for what is happening and the policy being pursued by the European Union which is being implemented here. Our citizens’ livelihoods, services and incomes are being used as shields to protect bankers, bondholders and speculators. I ask the Taoiseach if there is any destruction he will not visit on our economy and which the EU leaders will not visit on the European economy, its citizens and even now, the European Union itself, which is threatened with break-up in order to protect a currency or to protect the people behind that currency or the speculators and the bondholders. Which is more important, the people, the citizens, their services, their livelihoods, their right to a job, or a bloody currency and the bondholders who stand behind it?
As we said yesterday, with this pact the Taoiseach proposes to set in stone a Stalinist-like centralised command economy of permanent austerity and permanent inequality. I wonder whether the EU leaders are quietly looking at China where there is economic growth and thinking that dictatorship seems to work in China. A brutal regime which does not give its citizens any rights results in economic growth. Perhaps they are looking at Russia where elections are being rigged and are deciding this is the economic model we should follow. It is a very alarming thought that this is the direction in which Europe is heading. The historic gains of fighting for democracy and for the right of citizens to control their economic and political affairs, to decide on their political representatives and institutions, are being systematically demolished.
It is indicative of that sort of contempt for democracy and for the needs and wishes of our citizens that the Government is trying to do every piece of gymnastics possible to avoid a referendum. Frankly, I do not know how the Government can argue for one second that a referendum is not necessary. This deal is not even within the structures of the European Union, it has no bearing, therefore, on measures we have passed in referenda. It is a new pact of a more anti-democratic Europe which is simply a creature, an agent, for the markets, for Goldman Sachs, for the bankers and the bondholders.
I appeal to the Taoiseach and to the Tánaiste to stand up for what is right, to stand up for the citizens of this country and, indeed, for citizens across Europe whose interests should come first. Democracy, jobs, public services, equality, fairness and decency, can be achieved if there is a willingness to bring these markets under control. Is it not embarrassing for democratically elected leaders across Europe to be dictated to by the markets and financial institutions which wrecked our economy? Their actions make a mockery of the Taoiseach and our democracy. He should stop it and stand up for the people.

Deputy John Halligan: Will the Taoiseach consent to the view that the vast majority of Irish people see this EU deal as a transfer of a significant amount of power from this House to the European Commission, the European Council and the European Court of Justice? At the same time, it will condemn the Irish people to years of further austerity measures. We are conceding more of our power and sovereignty to what is, in essence, a non-elected government. The tighter fiscal rules that are being agreed at European level will not solve the debt crisis. The draconian deficit ceiling of 0.5% of GDP will block economic growth and lead to greater poverty and unemployment. It is clear that any deal that is based on austerity measures and bows before the greed of the bank markets defies logic. It cannot work and it will not work.
The intense focus on the fiscal reform agenda is utterly marginal to the crisis in Ireland. People’s debts are continuing to rise while their incomes and the value of their properties are falling. How will it solve anything in Ireland at a time when debts are rising while property prices and incomes are falling? Does the Taoiseach accept that any deal based on austerity measures will not work? It will fuel what is being called the age of austerity. If the Government keeps imposing cuts and increasing taxes, our economy will continue to contract and our deficit will grow. I am not an economist but I imagine that if we continue to reduce spending in our economy, which is exactly what we are doing, the economy will be unable to grow. All the evidence suggests that the economy is not growing. It is certainly not growing at the level at which we expected it to grow over recent years. The measures that have been set out for the next few years will further deflate the economy. It will not grow in such circumstances.
I disagree with those who say they are concerned that there is more in this deal than meets the eye. On the contrary, there is less in the deal than meets the eye. A number of major issues that threaten the shared currency have not been addressed in the deal. They have not been resolved. The agreement does not tackle the core of the crisis. It does not give certainty to the marketplace. Can the Taoiseach say he is confident that the deal that has been worked out will give certainty to the marketplace? I do not think he can. Many top economists would agree with me. The deal fails to specify where the money will come from next year. It is possible that another bond crisis is imminent. The deal does not mention what will happen in such circumstances. Where will the money come from?
The agreement is being guided by a limited and narrow-minded belief that the problems of the euro area stem from excessive levels of debt and default. I suggest the lack of growth and the inability of countries to generate sufficient nominal income and service their debts are equally as important. Those matters are not dealt with in the deal. I would say much more about this if I had time. Given that we are signing up to an agreement that rules out debt forgiveness, is it not the case that the recovery must instead come from rapid economic growth? If the Government continues to pursue austerity measures, where is the growth supposed to come from? The Taoiseach should listen to what economists and real people are saying. There has been a reduction in spending levels. People recognise there is a serious economic problem. They are beginning to get wise about how an economy runs and works. To put it simplistically, I agree with the many people who are saying that if we continue to reduce spending in the economy, there is no chance on earth that our economy will grow.

Note the wriggling here…

The Taoiseach:  The political agreement was reached in the early hours of last weekend. Each country and its representatives will examine how this can be translated into a text which will be the basis for a decision by each country as to how it is to be implemented.
It means that at constitutional or equivalent level, what is involved will depend on the combined effect of national and European law. This is an issue that needs to be examined by legal experts both here and everywhere else. I am not qualified as a constitutional lawyer to give the formula here. However, what is necessary is that this political agreement must be teased out, analysed and understood so that the text that finally emerges can be put to the people of each of the member states by whatever facility they use. If that requires a referendum here, then that is what will happen as already outlined.
Regarding the implications of the commitment to structural deficits lower than 0.5%, the agreement states:

General government budgets shall be balanced or in surplus; this principle shall be deemed respected if, as a rule, the annual structural deficit does not exceed 0.5% of nominal GDP.

This has been discussed in the context of the Stability and Growth Pact for some time. The 0.5% figure will be taken as a rule while providing for important and necessary flexibility. It uses the phrase “as a rule”, so it is not a rigid interpretation. Clearly, the language is intended to allow for exceptions. Again, this will be an all-important issue to be teased out in the complex work that lies ahead. Until that is finalised, it is too early to say what the precise long-term implications will be for Ireland, or for any other country for that matter.
And what of the local franchise of the Socialist International?
Deputy Eamon Gilmore:  We have not signed up to an international agreement that has not been concluded yet. We have signed up to a political statement that emerged from the summit, which has been misrepresented in the House on a number of occasions. For example, assertions have been made here that it is an austerity agreement. Deputies should read it. It states that it will rest on an enhanced governance to foster fiscal discipline and deeper integration in the Internal Market as well as stronger growth, enhanced competitiveness and social cohesion.
Second, it has been asserted by a number of Members that there is no intervention here but there is a significant intervention here. There is an additional €500 billion for the EFSF in addition to what has been drawn down—–
…
Deputy Eamon Gilmore:That may well be the case and that is all the more reason that we pull back from the political exchanges in this Chamber that are, frankly, going on in a bit of a bubble—–

Deputy Eamon Gilmore: —–because the people are more worried about—–

Deputy Eamon Gilmore:  —–the state of the euro, where it is going and stability for the euro.
Deputy Eamon Gilmore:  For Members to come into the House, as one did, to say it is only about “a bloody currency”. Let me tell the House about “a bloody currency”. People are worried about the value of the euro in their pocket.
Deputy Eamon Gilmore:  The Government is committed to working to ensure stability and security is brought to the currency that we share.
Deputy Eamon Gilmore: The importance of that is, if we want to attract and secure investment in Europe, including investment in this country, and job creation, we have to deal with the problem in the eurozone. There is no point in anybody drifting away from that core mission, which has to be undertaken. That is objective No. 1.
Objective No. 2 is that we get within that context the best deal for this country.
Deputy Eamon Gilmore:  That is why the Taoiseach wrote a letter to President van Rompuy and that is why he made it clear, given at the time the bank restructuring and bank recapitalisation was undertaken here, the instruments being provided for in this agreement were not available to us, we want access to them. I hear the scepticism being expressed about this but the same scepticism was expressed from the same people when we said we would not negotiate the reduction in the interest rate, which we did to the value of €10 billion to the taxpayer.

Deputy Eamon Gilmore:  First, this is a hugely important issue. That is why we had a debate about it last week. That is why the Taoiseach came into the House before the summit and spoke about it.
We have had a long debate and discussion here during the course of today. There are two committees of the House, both of which have a key role to play in this area. There is the Joint Committee on European Union Affairs, of which Deputy Costello is the Chairman, and that has a role to play. Clearly, the Joint Committee on Finance, Public Expenditure and Reform can discuss it. As far as Ministers are concerned, we are prepared to attend these committees and to have these issues teased out. We can make more time available here on the floor of the House, if that is required.
This is an issue which is hugely important for people in their everyday life. We are talking about the stability of the euro and all of the implications that flow from that for investment, for jobs and for the future of the European economy.
I will make one observation on the tone of this debate. One would think that Europe is somehow not us at all. We are part of Europe. We do not talk about this as though there is Europe and there is us. We have national interests to pursue within Europe and those were outlined—–

Deputy Eamon Gilmore:     —–in the letter the Taoiseach sent to President Van Rompuy and reiterated by him at the summit meeting. It is in the national interest to ensure that the euro is secure and succeeds and that the measures agreed at the summit meeting succeed. These are issues to which we can return in future debates and discussions.
When we return to those, it would be interesting to hear where Sinn Féin stands on the euro, which we have not heard today. Is it in favour of the euro or not? Where would those here who have expressed views on the proposal to go further in terms of the fiscal arrangements borrow the money, particularly if they are not going to repay the money already borrowed? At what interest rate will they borrow it? If they cannot borrow the money, what level of cuts in public services and pay, and in social welfare rates, must they have imposed on the people of this country?