THE EUROPEAN Union was standing by the people of Ireland, who had shown in the past their ability to overcome adversity, European commissioner for economic and monetary affairs Olli Rehn has said.
In an address to the Institute for International and European Affairs in Dublin yesterday, Mr Rehn said medium-term programmes such as the four-year plan should become a permanent feature of Irish policymaking.
He acknowledged that Europe’s Stability and Growth Pact had failed to ensure fiscal policy in individual member states would not endanger the financial and economic stability of other EU countries and the euro zone as a whole.
The large attendance included former taoiseach Dr Garret FitzGerald, former president of the European Parliament Pat Cox, former European commissioners Richard Burke and David Byrne, former government ministers Nora Owen, Prof Martin O’Donoghue and Alan Dukes, British ambassador Julian King and Bulgarian ambassador Emil Yalnazov.
“I believe that the Irish and the Finns share a rather similar proverb that was used back home during the 1990s recession which hit Finland particularly hard,” Mr Rehn said.
“‘Even the longest night will be followed by a new dawn,’ the Finnish prime minister Esko Aho used to say at the time. I’m told by an Irish friend of mine that the Irish version says, ‘the darkest hour is just before the dawn’.
“It might feel a small consolation at times like these, but I have no doubt that Ireland, too, will overcome this crisis. You are smart and stubborn people.
“Time and again you have proved you can overcome adversity. And this time you do not face the challenges alone. Europe stands by you.” Looking forward to the publication of the Government’s four-year plan, he said: “These medium-term budgetary objectives and their concrete implementation with expenditure ceilings by policy area should become a permanent feature of fiscal policymaking in Ireland.”
Acknowledging the shortcomings in the Stability and Growth Pact and its implementation, he said it “was created to ensure that no country would pursue fiscal policy that would endanger the financial and economic stability of the other member-states and the euro area as a whole. It has not done that, and mainly for two reasons.
“First, simply because it was not applied as rigorously as intended. Second, because the Stability and Growth Pact was not broad enough in scope, since it left non-fiscal economic imbalances outside the scope of surveillance. Ireland and also Spain are unfortunate examples of this,” he said.
Asked from the floor if the four-year plan and the budget would require prior approval by the commission, he said it was the responsibility of the Government.
“Following the recommendation of the commission, the Council of Ministers of the member states takes a decision on the common economic and fiscal policy stance of the European Union,” he said. In that context, he added: “It is expected that the member states will plan and decide their budgets and mid-term fiscal plans according to this common stance, which they have themselves been part of agreeing.
“Every member state is part of the council and the council decisions should bind every member-State of the European Union. And our task is to conduct surveillance and assess compliance with these common rules and joint decisions of the council.
“So in that sense, yes, we are following very closely the preparations but it is the responsibility of the Government of Ireland to decide on the draft budget for next year as well as on the four-year fiscal plan and once we see the result of that work we will then hopefully be able to endorse this plan,” he said.