Contribution to the Debate on European Communities (Amendment) Bill 2012: Second Stage

June 8th, 2012 - Pat Breen

Deputy Pat Breen: I welcome the opportunity to contribute to the debate. The Bill amends Article 136 of the Treaty on the Functioning of the European Union to allow for the setting up of the ESM. It also facilitates the protocol on the temporary adjustment of the number of MEPs, which will apply to the current European Parliament the additional seats provided under the Lisbon treaty.

The Bill is an important step in moving forward and building on last week’s referendum result. I commend the Minister of State with responsibility for European affairs on her work during the campaign. She sent out a positive message. It was not negative. She has done excellent work for us in her role and I expect she will continue to do so in future.

I welcome the result overall and especially the result in my constituency of Clare, where there was a 65.73% “Yes” vote, above the national average of 60.2%. This is the sixth highest “Yes” vote in the country. From speaking to people during the campaign, it is clear they were aware of the importance of passing the fiscal treaty in terms of Ireland’s future role in the European Union. The strong message they delivered last week was that they want to remain at the very heart of Europe and to see stability restored to the eurozone. I reject the argument made by a sizeable number of campaigners against the treaty that people made their decision on the basis of fear. Such nonsense does our intelligence and informed electorate a disservice. Voters weighed up the pros and cons of the treaty before casting their votes and set aside their financial suffering and pain for the greater good of the country. Their decision is to be commended. While they recognised that the treaty is not a quick fix for our economic ills, they wanted the Government to have a strong hand and they recognised that economic recovery hinges on events internationally, particularly the outcome of the general election in Greece on 17 June, elections in France later this month and the banking crisis in Spain, which is dominating news coverage this week and may dominate the headlines next week. The situation is highly volatile. People were also conscious of the important role of foreign direct investment in creating jobs. In voting for the treaty they sought to ensure that no damage was inflicted on Ireland’s international credibility now that international confidence in the country is at an all time high.

The resounding “Yes” vote has been greeted positively throughout the world. I have received a number of calls from people in Europe and in the United States congratulating us on the result. Deputy Kelleher’s statement that we do not have a strong voice in Europe is incorrect. Our voice is heard in Europe and we have a strong team of diplomats working abroad.

When people went to the polls last week they considered how the international markets would react to a “No” vote and where we would obtain finance in the event that the country is unable to return to the markets at the end of the bailout programme. International commentary on the referendum outcome reveals the extent to which the markets and European leaders were holding their breath as they awaited the result. According to the French newspaper, Le Monde, the vote meant the fiscal treaty overcame a “perilous obstacle”. The German magazine, Der Spiegel, described the result as “a rare piece of good news for European Leaders”, while The Wall Street Journal argued that the outcome strengthened the country’s European credentials. The Washington Post stated the treaty “won a decisive and much-needed victory in Ireland in a closely watched referendum”. It was important, therefore, that Ireland sent out the right signals to Europe and to the world, especially given our strong dependence on foreign direct investment.

The President of the European Council, Mr. Herman Van Rompuy, described the outcome of the referendum as an “important step towards recovery and stability”. In light of the international response to the result, there is no doubt rejection of the treaty in the referendum would have sent shockwaves through the financial markets and we would have been denied access to funding on the markets. The question as to whether we will be able to return to the markets at the conclusion of the bailout programme, as hoped, will be determined by the financial markets. For this reason, stability and a resolution to the euro crisis will be critical.

The economy is performing well and Ireland is on track to meet all the requirements of the European Union and International Monetary Fund bailout programme. Our exports are performing well, with the latest figures from the Central Statistics Office showing that industrial production increased by 1.3% in April, a clear signal that the economy is recovering. Yesterday’s Exchequer returns were also highly encouraging. If they continue on their current trajectory, the country will be in a strong position next year.

The main problem facing the economy is the slump in the eurozone. It is important to expand our markets, particularly in countries outside the European Union, including emerging economies. I was recently asked to open a conference organised by the Shannon Chamber of Commerce to discuss opportunities for enhancing our economic and tourism ties with China. The event, which was held at Shannon Airport, built on last February’s highly successful visit of the Vice President of China, Mr. Xi Jinping, during which he visited Lynch’s farm in Sixmilebridge where a new born calf was named in his honour. The Vice President’s visit has placed Irish agricultural exports on the map in China. For the past two years, food exports have expanded by 25%, with food and drink exports to China worth nearly €200 million in 2011.

The potential for export growth to emerging markets is significant and we must have a presence in these countries. I pay tribute to the IDA and Enterprise Ireland whose representatives continue to work closely with high profile trade delegations and missions. Trade missions, of which there have been a number recently led by the Taoiseach and the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, and the Minister for Agriculture, Food and the Marine, Deputy Coveney, are very important. I understand the Minister of State, Deputy Costello, will lead a mission to Russia in the near future. A direct air link between China and Ireland would advance ties between our two countries and I hope the new board of Shannon Airport will examine this possibility.

G7 finance ministers met yesterday to discuss the ongoing crisis, particularly developments in Spain, and vowed to continue to monitor financial developments ahead of the G20 summit in Mexico on 18 and 19 June. A move to address the banking crisis in the European Union is on everybody’s lips amid intense speculation that the Spanish banks will need a bailout. At its meeting in Frankfurt today, the board of the European Central Bank announced it would maintain interest rates at their current record low of 1%. While this is a welcome decision, all eyes are focused on how the European Union and European Central Bank will address developments in Spain.

While the vote of confidence in the fiscal treaty has strengthened the Government’s hand in negotiations at EU level, as the Taoiseach noted this morning, there are no simple or quick fix solutions. Buoyed up by the outcome of the referendum, the Taoiseach and Minister for Finance are now in a stronger position to make the case that the issue of banking debt must be addressed and there must be a quid pro quo for Ireland in any resolution.

It is also important that Europe brings clarity to the issue of banking because failure to do so would dampen prospects for the introduction of a growth package. A reduction in our debt ratio and the introduction of further growth measures will be critical if we are to make a significant dent in our unemployment figures. This is a major challenge.

By voting “Yes” last week, the electorate demonstrated it is well aware of the challenges that lie ahead for the economy. Voters knew they were voting to have an insurance policy which would ensure the country has access to the European Stability Mechanism. It still may be possible to return to the markets by 2013, as planned. The enactment of the European Stability Mechanism Bill will mark an important step in ensuring Irish people’s wishes are adhered to and the bailout fund is put in place.