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Statement on the Treaty on Stability, Coordination and Governance in Economic and Monetary Union

European Union, Tánaiste Eamon Gilmore, Speech, Europe, 2012

Treaty on Stability, Coordination and Governance in Economic and Monetary Union,

Statement by the Tánaiste, Eamon Gilmore, Dáil Éireann,

29 February 2012

(Check against delivery)

A Ceann Comhairle,

This country has come a long way in the past twelve months.

Through the hard work and sacrifice of the Irish people, we have re-established political and financial stability, and we have laid the foundations for economic recovery.

The choice facing us now, in the Referendum on the European Stability Treaty, is whether we build on what we have achieved, or whether we go backwards.

No-one is trying to pretend that this Treaty is the solution to our problems or Europe’s problems.  But it is an important part of the solution.  It is an essential building block in our economic recovery.

Ireland is a small and very open economy.  Our jobs and our living standards depend on what we make and sell to others.  Our prosperity depends on the stability and prosperity of others – in particular the stability and prosperity of the Euro countries. 

The Euro is not an abstract concept.  It is the very money in our pockets.  It is a simple fact that what is good for stability in Europe, is good for us.

Twelve months ago, Ireland was stuck in a profound economic and political crisis.  This Government has taken a grip of the problem.  We have brought about far greater stability.  We have worked hard to restore Ireland’s reputation abroad.  We are succeeding. 

But to more forward now, we need the instability in the Euro area to end. 

Time and again, as Minister for Foreign affairs and trade, I see that what is holding back confidence in Ireland and investment in Ireland, is not uncertainty about Ireland, but uncertainty about Europe.  Uncertainty about the Euro. We have to get past that problem, and this Treaty is an essential part of achieving that objective.

It is fair to say that, looked at from the outside, Europe as a whole has often seemed to be slow in responding to the crisis.  There is some truth in that analysis.  Europe has been deeply affected by the crisis of recent year, with institutions and leaders having to navigate through uncharted waters.  But it is also true to say that a lot more has been achieved that is often appreciated, and that we are now making tangible progress.

When the crisis broke, Europe simply lacked the tools it needed to deal with an unprecedented set of circumstances. Step by step it has put a response in place.  It has moved to address the immediate crisis, learning lessons as events unfolded.

It was improvising when the first package of support for Greece was put in place, but has since put in place the temporary mechanism, the EFSF, under which Ireland has drawn down some of its funding. And, building on the experience since, a permanent mechanism, the ESM, will come into being in the middle of this year.

The Union has also taken steps to strengthen the rules on which economic on monetary union is built.

At the end of last year, six legislative measures were adopted and another two are currently in the pipeline, with a shared commitment to their early adoption.

Taken together, these measures enhance our capacity to see what is really happening in each other’s economies. For example, it will now be easier to spot the imbalances  - the property bubble and the over-reliance on unsustainable taxes - that contributed to Ireland’s downfall.

They enhance our ability to enforce the rules, ensuring that all Member States, big and small, live up to the responsibilities that come with a shared currency. 

In the European Semester and Europe2020 processes, Europe now has systems in place to ensure that the structural reforms vital to a sustainable return to growth are delivered. These will be at the heart of the discussions that will take place at the European Council tomorrow and on Friday.

Throughout, Ireland has strongly supported this work as vital to our national recovery and an investment in our future.

The Stability Treaty is another part of the solution that Europe is putting in place.

The new Treaty has to be seen as a part – an important part – of this overall picture.

It responds, in particular, to a desire on the part of the countries of the euro area to deepen their commitments to each other in recognition of the responsibilities and obligations they share.

It is a signal to the wider world that the problems that have undermined confidence in the currency cannot be repeated, and that the necessary lessons have been learned.

It is simple logic that, if you are asking people to fix a problem, part of that is making sure the same mistakes that created it don’t happen again.

Other elements of the picture are the measures that the ECB is taking to provide liquidity to the European banking system, and the new firewalls that have been put in place to protect countries from the effects of contagion in financial markets.

Financial discipline is part of the solution, but so is growth.

As a Government, we have also pressed consistently and hard for the drive for discipline and reform to be matched by an equal commitment to growth and job creation.  

We have argued that any other approach is lop-sided and is doomed to fail. It is clear that this analysis is being taken on board.

The Government is working with like-minded colleagues to drive the agenda forward. At the end of January, the European Council identified priority areas for action. Tomorrow’s meeting will build on this and in June the European Council will return to the matter again to ensure that commitments made are being honoured. The Taoiseach and I have engaged with our colleagues and are helping to shape the agenda in Europe.

Things are moving forward and the work of repair is underway.

What will it mean for Ireland to ratify the Treaty?

In a narrow sense, it will commit us to implementing budgetary rules and procedures to which we are already substantially committed.  But voting for the Treaty also has far wider implications.

It will send a message to our partners that we recognize and accept the fact – and it is a fact – that our fates are, and will continue to be, locked together. We are ready to shoulder the responsibilities this brings.

It will send a message to those looking to invest in Ireland that we are deeply serious about restoring the stability and security of our currency, helping to ensure the certainty that investors look for before they can commit their money with confidence.

It will enable us to hold our partners to account in a way that has not been possible before. The larger Member States, in particular, will no longer be able to use their weight to escape the rigours they apply to others.  

It also puts in place a set of rules about how future Governments will manage the public finances.  Of course, the Government was already committed to this approach, whether or not our partners in Europe were minded to do so also.

We were already committed to a Fiscal Responsibility Bill containing many of the provisions now set out in the new Treaty.   As a small open economy, we have to learn the lessons of this crisis, and ensure in the future that our national finances can endure the buffeting of shifts and changes in the global economy.

Ratification of the Treaty will also mean that Ireland will continue to have access to emergency funding under the ESM, should it ever be required in the future.

We have made plain our determination to exit our EU/IMF Programme of support as quickly as we can and without resort to the ESM.

That remains the Government’s steadfast intention.

But we should also recognize that having the ESM available as a backstop is a sensible and prudent precaution that will further enhance international confidence in Ireland.

I have absolutely no doubt that there will be some people who will seek to distort the truth about this Treaty for their own ends.  They are already doing so.  I believe that the Irish people will see beyond their self-interested arguments and will recognise the Treaty for what it is, part of a package of measures at national and European level to restore stability, underpin confidence and to support a return to growth and job creation.

It is absolutely in our national interests to ratify it, as a step towards a more secure and sustainable future.

In seeking that support, we are asking the people to cast their vote for Economic and Financial Stability.  In the end, this Treaty is about providing a foundation of stability, on which we can build a sustainable and real economic recovery.

As I said to the House yesterday, this Government was elected to office in the face of the most grave political, economic and financial crisis the country has faced.

Before that, the Irish people had looked on in horror as the economy went into a nosedive, and as the economic crisis was followed by a political crisis. 

In the last year, this Government has taken a grip of the problem and we have been successful in restoring stability.  Political stability, economic stability and financial stability.

We have worked diligently in the slow and pain-staking task of restoring our reputation as a country and our standing among the Member States of the European Union.

Our efforts have been widely recognized, and they are showing results.

As a country we are making progress together, step by step.

Our cost of borrowing has fallen. We have improved the terms of our EU/IMF Programme – saving the country €10 billion in interest payments. 

We are once again, as we were in the past, held in high regard internationally.   

Our credibility is being reestablished. Confidence in Ireland is growing. Investment is returning, and with it jobs.

We know where we are going, and we have shown that we have what it takes to get there.

Thanks to the hard work and sacrifice of the Irish people, we are now in a far better position than we were a year ago.  What we have to do now, is to  build on that Stability, to achieve economic recovery.  To create jobs, and make existing jobs more secure.

But we cannot take that stability for granted, and we must also recognize that we can only do so much for ourselves.  We are part of the Euro currency union.  For Ireland to succeed, Europe must also succeed.  For there to be stability in Ireland, we also need stability in the Euro area.

People should not listen to those who try to make cynical use of the debate to advance narrow partisan interests to the detriment of the interests of the Irish people.

The situation is too serious and the issues involved are too important.

In the face of the worst crisis we have weathered together, the Irish people have shown their mettle. In doing so, they have gained the respect and confidence of our partners in Europe and beyond.

We now have an important opportunity to take a decision that will help to secure all that we have worked hard to achieve. A positive step towards our national recovery. A vote of confidence in our capacity to recover and to regain control of our own affairs.

As I have said, I look forward to a full and respectful debate; to a clear and positive outcome; and to moving forward together.

There is a great deal of work to be done.