European Communities (Amendment) Bill 2012

We are all aware of the grave crisis facing Europe such that the future of the Eurozone project is now in question. We can also see how joined at the hip we all are in terms of our financial and economic futures. The availability of a rescue mechanism for Spain, Estonia, Greece or any other member state is as important to Ireland as the availability of such a mechanism for us. Given the relative size of Spain’s economy, it is probably even more important. After more than four years of successive financial crises, we are finally at the end game. That which was heretofore unmentionable – whether one calls it the spectre in the corner, the elephant in the room or the thing of which we are all afraid – is now being openly discussed, namely, the potential collapse of the euro, with a growing view that such an outcome is moving from a possibility to a probability. Parliamentarians across Europe have a role in ensuring that does not happen.
If we thought we were grappling with disaster heretofore, there is now a realisation across the Eurozone that we have seen nothing compared with what would befall us were the euro to fail. This would be a disaster not only for Ireland, Spain, Greece or any other individual state, but a cataclysmic disaster for all 17 Eurozone countries, including Germany. It would be only slightly less of a disaster for the other EU member states and for the countries with which Europe trades. This is an enormously challenging time for European leaders, unlike any outside wartime in Europe. The time for pussyfooting is over, as is the time for timid and tentative half measures. We need decisive political leadership in addressing a comprehensive solution not only to the immediate crisis with the euro in Spain but also in ensuring the euro is placed on a sustainable footing if it is to survive. That is the leadership required.
Spain is talking about a bailout requirement of approximately €40 billion, but the reality is – this is widely accepted – that it is only now external experts have been called in to validate its banks’ exposure. God knows what the exposure of its banks will ultimately be, but it is widely accepted that it will be considerably in excess of the €40 billion mentioned. Whatever the figure is, Spain must be rescued. If it goes down, we all will. Right now it is more important to our future that it is rescued than any Irish bank deal or renegotiation of a bank deal. That is not to say we do not need a better deal on our bailout programme – we certainly do. That is precisely why the Taoiseach, the Tánaiste and every Minister raise this issue at every opportunity and will continue to do so.
The ratification of the treaty on fiscal prudence and agreeing to these new rules will help by proving our commitment to engaging in sensible fiscal behaviour. So too would a better deal for Spain, especially if the deal shifts the burden from the sovereign to the banks. Currently, that is not permitted. Under existing rules, neither the current EFSF nor the soon to be permanent facility, the ESM, is allowed to make direct injections into banks. However, I am sure it is not beyond the ingenuity of our leaders to find some mechanism to allow the rescue of the banks in Spain which, at the same time, will not drive the sovereign over the edge.
I certainly hope a more favourable deal for Spain which may be negotiated will be reflected in a reopening and restructuring of the bailout deal and conditions for Ireland. On the night prior to the bailout in Ireland when many welcomed the rescue and the funding assured by the bailout, I spoke in near desperation about the need for the Government of the day to resist being bounced into a bailout. I knew then, even if it was unavoidable in the long term, that once the bailout was negotiated and it was a fait accompli, our fate was sealed. The minute we accepted the deal all of our leverage and all possibility of negotiations were gone and we were immediately bounced into a position of mendicant which we still hold to this day. Whatever way we like to dress it up, we are dependent on others and subservient to their demands in respect of every penny we spend. By accepting the deal and the conditions of the bailout, we also accepted responsibility for all bank liabilities. This protected other countries’ banks, prevented the spread of contagion and protected the euro which benefited all of Europe.
For us, it meant that overnight our debt-to-GDP ratio reached monstrous proportions and it is still climbing. This kind of bailout is the last thing Spain needs and it is the last thing Ireland needs for Spain. Europe is out of time and talking about vetoes and postponing decisions is no longer an option. We need to be honest with ourselves and accept that it may mean a move towards a more federal Europe and Eurobonds. When I talk about honesty, I do not mean honesty among us in Ireland. We must be honest with others also and move the debate on from a point where we simply talk about who among us is most opposed to austerity. This Bill is a necessary step towards restoring Ireland’s and Europe’s economic fortunes. As it is a perilous time for Europe, it is a step we must take. As I said, we are at the end game and will not get a second chance.