‘The treaty is about more than stability. It is also about solidarity and trust between the peoples and governments of Europe.’
April 24, 2012 § Leave a comment
Last week, the Dail debated the Fiscal Stability Treaty and I told the House that solidarity is the key to recovery. Below is a transcript of my speech. The website for the Stability Treaty is now live and available on www.stabilitytreaty.ie
I have found colleagues’ contributions to the debate this evening both interesting and informative. I was not aware, for example, that it was the view of Deputy Luke ‘Ming’ Flanagan that we should leave the euro.
Deputy Luke ‘Ming’ Flanagan: I have expressed that view on previous occasions in the House.
Deputy Alex White: I respect his view although I disagree with it. I would be interested to hear Deputies Flanagan and Joan Collins say whether they would consider us to have a better chance of running our own affairs if the treaty is accepted or if it is rejected. Does Deputy Collins believe we will have more or less austerity if it is defeated? Many articles have been quoted from colleagues on that side of the House to support their case. Mr. Krugman’s ears must be very red. In an article of his on 11 March to which rather less reference was made, Mr. Krugman said: “You may ask what alternatives countries like Greece and Ireland had, and the answer is that they had and have no good alternatives”. In other words, while he has offered a major critique of the strategy in the eurozone, he has formed the view that Ireland, among others, has little choice in regard to where it finds itself. I do not accept that we are without choices, but I am strongly of the view that if this referendum is defeated, we will have more austerity, not less. We have a deficit of €15 billion and nobody willing to lend to us. Were we to decide, as Deputy Flanagan advocates, to just leave the currency, we would simply isolate ourselves from any prospect of recovery.
I acknowledge that the treaty is not perfect. In fact, I do not accept it is the solution to the problems in the eurozone. Moreover, I very much agree with some of the points made by Deputy Mick Wallace and others in regard to the huge economic imbalances that exist across the eurozone countries. That is a major issue that must be addressed. It may even be more at the heart of the collapse in Ireland than fiscal indiscipline ever was. I agree with Deputy Pádraig Mac Lochlainn that if the rules set out in the stability treaty had been observed for the past ten years they would not, on their own, have addressed or solved the problems that have arisen. They would not have tracked the bubble which was, in fact, an indirect or perhaps even a direct result of the imbalances to which I referred. The explosion of credit that emerged in the core of Europe after 2000 and the introduction of the euro was bound to have a differential impact on different countries given their varying economic circumstances. Our economy simply was not in a position to withstand and should never have been exposed to that type of influx of credit in the uncontrolled manner in which it occurred. I absolutely agree that fiscal rules alone would not have prevented the crisis. However, that is not an argument against fiscal rules. Rather, it is an argument that fiscal rules are not enough, that the fiscal discipline that is advocated is necessary but not sufficient. It is certainly not a case for throwing out the rules as if they were not required at all.
It is not difficult to ascertain the impetus behind this treaty. The design of the euro currency in the early part of the last decade was incomplete and arguably flawed. Member states thought they could have monetary union without any type of fiscal co-ordination, but there is no currency in history that ever could survive in those types of circumstances. Rules were set out in the Stability and Growth Pact, but they were ignored by many countries, not so much those on the so-called periphery but by France and Germany, among others. What is now being proposed is, first, to take the rules from the shelf, dust them down and strengthen them, which is what was done last year. The provisions contained in the treaty are the strengthened rules that were reintroduced last year. Indeed, they are largely the same rules that have been in place since 1997, which have merely been dusted off and strengthened. In addition, a decision was made to introduce corrective mechanisms where the rules are not applied.
This is the main response the European Union has had to the crisis in the eurozone. To reiterate, while I am of the view that it is necessary, it is not sufficient because we have not yet addressed the macroeconomic imbalances that continue to exist. Europe made a start on addressing those imbalances in the six-pack last year and made additional progress in this new two-pack set of regulations, but it has not done enough to address the risk that the same type of explosion of asset price bubbles could recur in periphery countries. It is moving in the direction of addressing the issue, but it should be given just as much attention as is being given to fiscal discipline. Unfortunately, that is not being done. Nor is sufficient attention being given to the necessity for a growth strategy in Europe. It will probably never be possible, despite what colleagues have argued, for a Keynesian, stimulus-type approach to be taken in isolation in one country within the eurozone. It will however be possible for it to be done in the eurozone as a whole, and I support that, but given the configuration of a system where there is monetary union and fiscal co-ordination, no single country will be in a position to stimulate its own economy without the co-ordination and co-operation of other member states.
That is not to say that Keynes is dead, as some have claimed. Nor does it necessarily mean that neoliberalism has finally triumphed, as Deputy Clare Daly claimed, or that there is no room for any other politics. I strongly disagree with her on that. However, when we have 22 or 23 essentially right-wing or centre-right Governments out of 27 in the European Union, there is a large political job to do. One will not do that political job by cutting oneself loose from the currency or choosing not to engage in politics in Europe. One will not succeed by abandoning any interest in whether the elections in France at the weekend, for example, will change the Government in that country. We will not achieve our objectives by deciding not to make common cause with other Governments, whether on the left or centre-left, in other member states. Instead we should be in Europe arguing with people, co-operating with people and making common cause with people.
There are many people elsewhere in Europe who are interested in hearing the type of debate that is taking place in this Chamber. However, Deputy Flanagan and others are arguing that we should just look after ourselves. He claims that is not a nationalistic position to adopt but I would contend, with respect, that he is being the very essence of a little Irelander.
There is no future for this country on its own. I have made the point to Sinn Féin Deputies in the past that sinn féin as a concept – ourselves alone – is ludicrous in the modern world. We cannot solve all the major problems in the world, economic, financial and environmental, ourselves alone. Deputy Flanagan might believe it can be done but that does not make it so. What we must do is, for example, mutualise debt and deal with the necessity for restructuring it where countries have an overhang of debt. I am strongly of the view that the debt must be restructured in some considerable respect. That is a political fight in Europe. It is a political fight with countries and institutions that do not want to see it happen. If one believes in eurobonds and the mutualising of debt, let us go and argue for them. Let us go and fight for them, talk to other people who might agree with us and talk to other countries in similar positions. However, my colleagues across the House do not want that. Instead they say we should just forget about it all on the basis that it is neoliberalism, and that we should turn our backs and paddle our own canoe. That will not work. Let us be serious politicians, as I am sure my colleagues on that side of the House are. As I said, I accept that fiscal discipline is necessary but I do not agree it is sufficient. We must employ other economic instruments that promote growth. The European Union has not, despite some welcome initiatives recently, been anything like as forthcoming or robust on the growth side as it has been on the fiscal discipline side. Therefore, it is a considerable challenge to build a new strategy in Europe in that regard. « Read the rest of this entry »
November 17, 2010 § Leave a comment
From today’s Order of Business…
I respectfully disagree with the suggestion that criticism of what the Government has done in the past is an entirely separate matter from what we have to deal with now. The two are intimately bound up for two reasons. First, the Minister for Finance and others on the Government side have spent a number of weeks trying to persuade us that the budgetary crisis and the banking crisis are entirely separate. This effort has been made repeatedly in this debate in the past two to three weeks. We have been asked to stop talking about the banks and just talk about the budget when we know that the banking crisis and the central policy failures in regard to banking, and at the top of which failures I would put the blanket guarantee given more than two years ago, are inextricably and intimately bound up with where we are at the moment in regard to the crisis the country is in. We cannot see our way to analysing and debating this issue in any kind of credible way without having regard to these central policy failures, the legacy of which we are facing day in, day out.
The second reason we cannot separate the two things is the issue of trust. Can we trust the Government? We can disagree with those in government and that is fine. We all know that we disagree with them but can we trust them or believe what they say? The problem is that trust and legitimacy immediately flow out of any government, leaving aside whether one agrees or disagrees with those in government, if one cannot believe what that government says. One cannot possibly have any trust in that government. The people cannot have trust in a government, some of whose members at the weekend described as fiction that there were ongoing discussions on bailouts or related matters.
Another Minister, Deputy Dempsey, who was standing beside the Minister in question shook his head and indicated he did not know anything. Either the Ministers knew what the position was and misrepresented it or they did not know what it was, in which case what are they doing in the Government? What is going on in the Government in relation to policy?
My brothers who live in the United States are as well informed about what appears to be taking place as are the people here who are being informed by the Government. This morning’s interview by the Minister for Finance hit rock bottom in that respect. There is no frankness or honesty, without which one cannot have trust and-or legitimacy.
November 9, 2010 § Leave a comment
In seeking consensus on a particular course of action one would have to know the proposed course of action before answering the question as to whether one agreed with it. That is a first principle.
For example, if consensus is being sought on a four-year plan, we will have to see the plan before we can decide whether we agree with it. Is that not straightforward? Anyone can see that that is agreeable.
From the brief reports I have heard on the meetings which took place with the Commissioner this morning, I do not know whether matters have changed specifically. However, there appears to be less certainty about the figure of €15 billion in the four-year adjustment period. The three main parties are agreed on the need to make an adjustment in order that we can get to the figure of 3% by 2014. There should be no question about that target, but what will it actually mean? We know that up to three weeks ago the Government believed the adjustment figure would be €7.5 billion which quickly became €15 billion. Three scenarios were presented by the Government for the budget to be announced in December. On 22 October The Irish Times reported Government sources as saying the Department of Finance was seeking an adjustment of €4.5 billion. Only two and a half weeks ago the figure was €4.5 billion, it is now €6 billion. Anyone may look to the Opposition for consensus or certainty, but we must look to the Government in the first place for a sense of what is going to happen. I agree and accept that the situation is fluid. The Government must examine the growth predictions for next year and where we will be this time next year with the unemployment figures and so on. I accept that matters are in a state of flux, but Senators on the other side of the House should not demand certainty from the Opposition, a demand they do not make of the Government. This is simply not logical.
It is the principal objective of the Government to prepare a budget, present and have it passed by the Dáil. There is a lot of talk about whether the Opposition parties will help to get the Government over the line. The Government must get the budget over the line. If it cannot do so, it will lose not just the confidence of the people, it will also lose the confidence of Parliament and have to go. That is the way our democratic system works. It does not mean, however, that we are against adopting a co-operative approach. We will do everything we can, for example, concerning the adjustment to be made in the budget. The Labour Party will come forward not just with a clear and specific set of objectives, it will also show how they can be achieved. When we talk about consensus, let us be clear about what we mean. Let it be understood that, in the first instance, this is the job of the Government.
May 21, 2010 § Leave a comment
Some two weeks ago when the Euro loan facility was first introduced, it was suggested it was a godsend that the Government could lend to Greece at a higher rate than the rate it would have to borrow the money. I was glad this argument did not feature in the Dáil. I was beginning to wonder if that were the case, why were we not borrowing money from the international markets to lend to countries in difficulty all the time and, accordingly, solving many of our own problems. I am glad this argument was abandoned, as no one in his or her right mind would argue this is some process in which we want to be involved.
This loan facility is about showing solidarity among members of the eurozone. It is not the solidarity we had in mind when we joined the euro or the European Union. None of us expected solidarity would require us to dig deep in our own pockets for others. However, that is what has occurred. This solidarity is predicated mainly on a sense of “There but for the grace of God go we”. There is a certain vested interest in this solidarity, as we might face the same fate as the Greeks in the future.
This so-called bailout for Greece could be transformative for the entire eurozone. However, we should rise above that particular level of discussion and argument, true and all as it may be, and start to contemplate and consider the real transformation this will likely bring, ultimately, to the whole nature of the European project, to the eurozone and to the mechanisms that have been deployed to date through the Stability and Growth Pact and elsewhere. It appears as if the Stability and Growth Pact is finished as a real mechanism or as a mechanism with credibility in any sense or one which can be restored to any level of credibility. A more complex set of measures must be agreed and imposed throughout the eurozone to achieve the type of convergence and economic co-operation or cohabitation among different economies within what is, essentially, a single currency, but also a unified economic system. There is no doubt that the mechanisms put in place at the beginning have been found wanting and that they appear to have collapsed. A meeting tomorrow of the ECOFIN Ministers takes place today to examine the implications for the future of what has occurred and to begin to ask questions about what new mechanisms should be put in place. This must be considered. It should lead to a broader political debate in this country as well regarding what we can expect in future.
Last week, there was a skirmish about sovereignty. People got very excited on the Government side at the point made by the leader of the Fine Gael Party to the effect that there was a threat to Irish sovereignty in respect of several instruments such as corporation tax. We must see beyond a reactive debate when someone makes such a remark. We must all understand there is no question but that the character of the relationship between an individual country and the eurozone will change and there will be a great political battle about this in the coming years. « Read the rest of this entry »
April 29, 2010 § Leave a comment
On Tuesday evening, the Seanad held a debate on banking. You can read what the Minister of State, Martin Mansergh said by clicking here. Following contributions from both government and opposition sides, I rose to speak…
I listened carefully to the speakers on the government side who started their speeches by telling us how they are satisfied or pleased that matters are starting to turn around and the position is changing. The phrase from the Minister for Finance, Deputy Brian Lenihan, in the budget was that we were “turning the corner”. All these phrases are used. I waited to hear examples of concrete achievement.
The claim is that action is beginning to bear fruit but no example is ever given. The only instance I have heard repeated is what the Minister for Finance said on radio yesterday morning about the people who Richie Boucher met when he went to Europe last week being very happy with us. The people Mr. Boucher had dinner with in Europe, or wherever he was, appear to be happy, and the Minister for Finance said he was perplexed that everybody abroad seemed to be happy but nobody in Ireland is happy. That is because the people in Ireland are facing the brunt of what is occurring.
The Minister has spoken about finance ministers and other colleagues in European governments being supportive of what the Irish Government is doing. Forgive me if I am wrong but I do not think I have ever seen a minister in the European Union criticising a colleague from another country. What is this business about with people getting a pat on their back when they go abroad? They seem to think that is the approval rating needed. Of course, there is only one approval test and set of criteria by which we can meaningfully assess anything the Government is doing. That is the kind of delivery that some of the government speakers, when they come to their senses, would apply to the debate; it concerns when there will be real lending available to businesses and people in the Irish economy. There is no evidence that it has happened yet. I am sure if the Minister could find a morsel of evidence for it he would tell us about it all the time. There is no evidence.
I want to respond to some of the Minister of State’s comments. It is almost laughable for him to come to this House speaking about the “honest and full disclosure by the Government and its agencies of the appalling mess within our banks”. I cannot believe the term “honest and full disclosure by the Government”. I did not know whether to laugh or cry when I heard him saying that. What disclosure has occurred, whether honest or full? « Read the rest of this entry »
December 16, 2008 § Leave a comment
The Report of the Sub-Committee on Ireland’s Future in European Union provides and interesting and timely opportunity for us to revisit the issues we have previously discussed in the House. Like others, I do not want to repeat all the arguments in which we have engaged on the various occasions we have discussed the Lisbon treaty.
I welcome the report and congratulate Senator Pascal Donohoe on this extremely detailed and readable document. It begins by placing this debate and the moment we are at in true terms. We cannot shirk from those terms, as they point to a choice that must be made by the Irish that is of enormous importance. It cannot be shirked by people on either side of the argument. Those of us who supported the “Yes” vote did not do so on the basis that we would not have liked to change some elements of the treaty. Anybody engaged in a political activity knows that an international treaty involving 27 governments will require compromise and elements that are not liked.
Those of us who argued for a “Yes” vote now have a choice as to how and in what circumstances we might revisit the question. It is a difficult choice because we know and respect the decision of the Irish people, which is the right action. Is it being suggested that we let the issue go? Those on the “No” side also have a choice to make, as I have repeatedly heard people almost pleading that they are as European as the next person. They believe in a strong Europe with Ireland at its heart but they do not like the treaty.
It is incumbent on all of us, including those who argued and voted against the treaty, to come forward not just with repetition and a rehashing of those aspects of the treaty they do not like but to help us point the way. The people should advocate how we can ensure that we are at the heart of Europe in future, particularly through a method other than what I term ‘Lisbon Plus’. There should be some genuine accommodation of the obvious concerns that many Irish people have and had with the Lisbon treaty.
There are 26 other countries that propose to proceed on the substantial basis of what is in the Lisbon treaty. When this point was made before the referendum, it was referred to practically all the time as bullying. It is now a simple fact. There is a choice to be made. If the other 26 countries take the view that they are not prepared to slow progress to the pace Ireland might advocate following our decision in June, what can we say? We should be absolutely blunt. This is a choice between some form of real accommodation post-Lisbon treaty or, at a minimum, a semi-detached status for Ireland in the European Union. If I am wrong and there is a third realistic option, I would like to hear what it is. I do not just mean a theoretical option that someone might advocate. The debate has been put in true terms by the sub-committee. It is no exaggeration for it to say, as it does in its report in paragraph 4 on page 3:
Ireland’s standing and influence in the European Union have diminished following the people’s decision not to ratify the Lisbon Treaty. In immediate terms, this inhibits Ireland’s ability to promote and defend its national interests at a European level. This is likely to affect Ireland’s ability to influence key upcoming policy discussions within the Union. These include, but are not limited to, the development of the EU’s climate change package [by which we mean the future of the planet and our ability to influence it through being involved in discussions]; the negotiations on the future shape of the EU budget beyond 2013 including provision of adequate resources for the Common Agricultural Policy; and responses to the global financial crisis.
November 12, 2008 § Leave a comment
I disagree profoundly with the position of the President of the Czech Republic in relation to the European Union but an issue arises in respect of the maturity of the debate we have.
If the President of the Czech Republic states his position in Ireland, surely the way to counter that is through the strength of the arguments against what he is saying rather than suggesting he does not have the right to speak. It has been suggested that it is outrageous that a foreign leader should come to Ireland and make such points. It is not deemed outrageous, however, if foreign leaders who hold the opposite view come here and make their case.
I disagree with the position taken by the President but we have more strength in us to deal with these arguments than to simply suggest that every time somebody such as Mr. Klaus opens his mouth, it constitutes interference in our process. The lesson of the Lisbon treaty debate, be it in the media or the political fora, is that those in favour of the treaty missed the opportunity to demonstrate a much more robust and self-confident approach and instead often seemed to want to exclude views with which they disagreed.