THE EURO is no longer Ireland’s “safety net” but has become its “straitjacket”, Independent Ireland West MEP Marian Harkin has said in the Dáil. She warned that Ireland needed to assess its future within the euro zone.

Addressing a special Dáil meeting of the European affairs committee to mark Europe Day, she said everyone was listening to economist Morgan Kelly, but they should be listening to Britain’s chancellor, George Osborne.

“He could not see the UK writing further cheques for Greece or Portugal. He did say Ireland was a special case but the bailout was designed so that the countries could go back to the bond markets by 2012 and that is not happening for Greece, Portugal or Ireland.”

The former TD, who said she had supported the Nice and Lisbon treaties, said there had been “no real political commitment” to deal with the currency issue but “Europe dithers and Ireland suffers”. Hitting out at the European Central Bank, she said it was “in a Pontius Pilate-like fashion washing its hands of any responsibility as if it was a mere bystander”.

Ms Harkin said when the crisis started she thought the euro was Ireland’s safety net, “but I was wrong. It has now become our straitjacket. We are in a currency that is inherently fragile and not to recognise it, debate it and reassess our future within the currency unit is putting our heads in the sand and doing a disservice to our citizens.”

Fine Gael MEP Gay Mitchell said the European Commission and the ECB “support a reduction in the interest rate given to Ireland and they charge 1.35 per cent interest on the €130 to €160 billion which they currently provide in liquidity funds for our banks.

“I would like to see some of that on a longer or medium-termed basis rather than turned over every 14 days and I’m very hopeful that will happen,” he said. “The deal we need now is that the ECB recapitalise the banks and that the State address the public finances. In time we will both get a dividend.”

Labour MEP Proinsias De Rossa warned some of the decisions being made “are threatening the creeping death of the EU”, which was “losing the confidence of the people across its member states”.