Micheál Martin tells Trinity Europa society: full bondholder repayment “ridiculous”

Rónán Burtenshaw


Amidst digs at government and coy responses to his party’s recent poll success, Fianna Fáil leader sets out what he sees as the problems and solutions in the European project.

The continued full repayment of unsecured, unguaranteed bondholders by the Irish state is “ridiculous” and Ireland’s debt needs to be restructured, said the Fianna Fáil leader, Micheál Martin, to a crowd in Trinity last Wednesday. But, he said when addressing Trinity’s Europa Society, despite “serious failures” in how it has dealt with the economic crisis, Europe remains “central to Ireland’s foreign agenda”.

The speech coincided with two sets of positive poll results for his party in a week, indicating that Fianna Fáil is now the second most popular party in the state again after falling to third in last year’s general election. Despite this, the leader of the opposition said that he was “not thinking about” the position of taoiseach and preferred to concentrate on rebuilding a party that suffered the largest defeat in Irish electoral history in the early days of his stewardship.

Speaking on the question of a debt deal for Ireland, he said that the crisis was caused by structural flaws in the European Union that had allowed “cheap wads of cash to flow to the periphery”. But Martin did reaffirm the “moral responsibility” to repay our debts. This moral argument could also be applied to the size of the debt burden placed on Ireland, he said, and this case needed to be made more strongly.

He continued by criticising the current government for missing an “historic”, “once-in-a-lifetime opportunity” to push through reform during the crisis, saying that the Irish state’s political and financial institutions which had failed in the lead up to 2008 remained largely unchanged.

“Parliament,” he said, “should be separated from government and ministers should resign their seats once they take up position. We need to look at bringing in outside expertise for taoisigh as well, because the current arrangement isn’t satisfactory.”

But, in a speech focusing on Europe, the former minister for foreign affairs was keen to play up his party’s pro-European outlook. He pledged continued engagement with Brussels on financial and institutional integration and characterised his own politics as “pro-Union” but more critical than those of “europhiles”.

Martin acknowledged that Europe could often be “arrogant and disconnected”, also criticising its welfare-statist “centralised” and “dead heavy” economic outlook by praising Ireland’s historical emphasis on the free market.

In his address, Martin also played up Europe’s advantages for Ireland, saying that it was “our best bet” for energy security and to tackle climate change in an increasingly volatile geopolitical climate. He noted its “key role” in agricultural policy and said that Fianna Fáil MEP Pat “the Cope” Gallagher’s influence had risen to such a degree that he was known as “Mr Fisheries”.

Fianna Fáil, he said, “had spent European money very well” when it was in government, using it to “invest in human and social capital” and to “develop Ireland’s economy into a knowledge economy”.

The party believes that the European Central Bank (ECB) should be the lender of last resort for the Eurozone, and Martin criticised the former ECB president Jean-Claude Trichet for being “too conservative and orthodox, and very slow to buy bonds”. By contrast, he said, his successor Mario Draghi was “more radical” and had “almost single-handedly calmed markets with bond-buying”.

“There was a long phase of Europe trying to inch its way out of crisis that didn’t work and, thankfully, now seems to be changing. You can scare the markets one too many times and lose credibility forever … There is uncertainty again now about retroactive recapitalisation, with different states genuinely interpreting June’s agreement differently. This needs to be resolved.”

Martin continued by affirming his party’s support of a “European-wide framework of regulation” and “a supervisory mechanism that could prevent this happening again”. He rejected Germany’s preference that a banking union include only 20 core banks, saying that Europe’s financial sector was “too interdependent” to exclude banks considered more peripheral.

He acknowledged that crisis fighting mechanisms at home and in Europe were themselves in crisis, adding that “nothing had changed”. “In Ireland people signed on for change but it didn’t happen.”

He also criticised Franco-Germany hegemony in the European Union, saying that the “community method of consensus decision-making” had been weakened. He said the tendency was for the French president and German chancellor to be more concerned with their local politics and not enough with maintaining the viability of the European project, not properly appreciating the “catastrophic results for everyone … if the euro went down”.

The crisis had led to structural problems and increased tensions in Brussels, he argued, with bureaucrats no longer able to resolve the predominance of issues before ministers arrived meaning that fractious encounters were more likely.

The president of the European commission, José Manuel Barroso, had also had his position undermined by his reliance on the support of Nicolas Sarkozy and Angela Merkel for re-election, which was particularly problematic for smaller nations who “had historically been protected by the commission”. This was regrettable also because of the way former commission presidents like Jacques Delors had embodied “the best of the European ideal”.

Martin encouraged the European Union to maintain a “critical relationship” with the globalised economy, referencing Gordon Brown’s assertion that the post-2008 crash was the “first crisis of globalisation”.

“We are a developed country with a safety net but those we are now competing with aren’t. We haven’t thought through that properly – we’re talking about 35 hour weeks while China is paying €1 an hour to some workers.”

He ruled out the possibility of Ireland leaving the euro in the foreseeable future, saying that the results for Greece of leaving would be “horrific”. “When the euro was created, there was no exit mechanism written into the programme. It could happen unilaterally, but I’ve seen papers describing the reality of leaving the euro, and it’s scary stuff.”

Responding to questions from the audience, Martin said that he accepted that Europe was left with a long-term decision between matching its unified monetary policy with similar uniformity in fiscal issues, or facing a break-up. “The middle ground options,” he said, “simply haven’t worked”.

Rejecting a common military policy, Martin explained his vision of the development of the EU project: “Europe is going to move towards wanting to see budgets before they are published and a broader integration agenda … but I don’t foresee them becoming involved in consular issues like passports or visas.”