Last week I opened my newspaper and saw Greeks burning the German flag.  Yesterday, I opened the paper and saw a Police Officer in Athens comforting a very distressed relative upset at a woman who was threatening to jump from her office window.  The woman’s wages had been cut and she and her husband had been threatened with layoffs.  The state body inAthensfor which she worked was due to close under the bailout agreement. 

A few weeks earlier I was interviewed by a Greek television journalist.  One of his producers who lives inIrelandthanked me after the interview for resisting the temptation to criticize the Greeks’ management of their economy.  She had tired of the endless criticism Greek citizens have endured from European politicians — some who like to blame Greeks for the economic situation in which they now find themselves. 

Closer to home we have witnessed protests albeit not on the same scale.  There is an increasingly hostile attitude to the European Union inIreland.  Fuelled in part by the growing strength of the British media who are traditionally Euro-Sceptical but also I suspect because Irish citizens feel they are being asked to shoulder too great a share of the bill for the financial crash. 

This change in the attitude of some of our citizens is striking – particularly for someone of my age.  Many of my generation look favourably on the European Union.  When we joined the EU, we saw participation as a way of breaking free from British dominance; as a way of expanding the definition of being Irish; as a place to which we could export our goods and services; as a good neighbour which extended us support in the form of structural funds so that our economy could catch up with Europe.  When we joined the Eurozone we were able to attract many American Multinationals toIrelandas they wanted to locate in an English speaking country while also enjoying the benefits of a single currency and access to the European Market.  

Now the mood is far more questioning of the European project.  It isn’t just the ordinary citizen who is asking questions.  This time last year John Bruton, a former Taoiseach, a committed Europhile and the former EU Ambassador toWashington, pointed out that there was a European as well as an Irish dimension toIreland’s problems.

I agree that the main responsibility forIreland’s plight rests with Irish institutions – the bankers, the developers, the estate agents and the regulators and the former Fianna Fail led Government.  But I also agree with the former EU Ambassador that if we are to overcome this crisis and avoid a new one everybody must be self critical including the ECB.  For the reality is that ECB monetary policy also played a role in causing the crisis fuelling a credit bubble inIrelandand other peripheral countries. 

Of course we appreciate the support that we have been extended by the ECB, the EC and the IMF. However, we do not feel that citizens in the peripheral countries should carry an undue burden. The ugly scenes we have seen inAthensare a far cry from the dream of the European Union’s founding fathers who wanted to uniteEuropein a common economic community.

I often speak to people from abroad and they ask me howIrelandis doing?  My response is thatIrelandis coping.  Ordinary people are being forced to bear the cost of a decade of overspending and unregulated banking and a lack of fiscal responsibility that the previous Government can and should be held responsible for. 

Excessive mortgage and personal debt is stifling growth and a cause of great concern for people.  The recently introduced Personal Insolvency legislation will be the first step to addressing some of these issues and hopefully will help relieve people of their increasing debt burden but we have a long way to go from here.

Our response inEuropehas to be multi-faceted, building on the steps have already been taken and based on mutual responsibility. We need to ensure that the firewalls to guard against negative developments in the eurozone are robust enough to fulfil their purpose. We have established the EFSF, from which Ireland and others currently draw funding; its permanent successor, the ESM has now been put in place and is due to enter into force in the middle of this year, a year ahead of schedule. We have also seen the ECB play a helpful role in providing the banking system with three-year money on an unprecedented scale. This policy, begun in December, is having positive effects in the markets.

In addition to strengthened discipline and stronger firewalls – has to be structural reform and prioritising of growth and job generating policies.

Growth and Jobs

Structural reform is now being driven forward with a sense of purpose that has been absent in the past.

Growth and jobs have also moved right to the top of the agenda. And let us be honest about this, without growth, there will not be recovery. And it has to be the type of growth that puts our people back to work and that provides a sustainable foundation for the future. No more boom and bust.

I very much welcome the focus that was brought to this agenda at last week’s meeting of the European Council. They focussed in particular on stimulating employment, especially among young people, completing the Single Market and boosting the financing available to the Small and Medium-sized Enterprise (SME) sector. The Taoiseach set out the extensive range of steps we are taking at home to create the right environment to support and nurture our SME sector. He also looked forward to the jobs action plan announced by the Government earlier this week.

Of course,Irelandis a strong supporter of the community method and we want to see theUnion’s institutions play a full and active part in driving this agenda forward – though Member States must, of course, take full ownership of what needs to be done.

The Commission’s Annual Growth Survey published in November suggested 5 priorities were:

• pursuing differentiated, growth-friendly fiscal consolidation;
• restoring normal lending to the economy;
• promoting growth and competitiveness for today and tomorrow;
• tackling unemployment and the social consequences of the crisis;
• and modernising public administration.

These are consistent with the Europe 2020 Strategy for growth that is smart, sustainable, and inclusive. And they align well with the national priorities established by our own Programme for Government.

The key message is that, faced with a deteriorating economic and social situation, more efforts are needed to putEuropeback on track and sustain growth and jobs. 

We recognise that our membership of the European Union – and playing a full, active and influential part at its heart – is an essential part of the work that needs to be done ifIrelandis to get back to where it wants to be.

We want to develop a much stronger relationship between the growth and jobs agendas at national and EU levels.  This is again consistent with the emphasis of our Programme for Government.

Public confidence in, and support for, the euro, and indeed the European Union, will ultimately be determined by how well we deliver on growth and jobs, rather than on institutional wrangling and complex legal or technical negotiations. That must remain the ultimate focus: more growth, more jobs, more prosperity.

But let no one doubt that the problems of the periphery can be confined to the periphery. The financial crisis that began in the US in 2007 and crashed against our shores with a vengeance culminating in the intervention of the IMF in late 2010 has now truly moved from the periphery of the Eurozone to the centre. The very existence of the euro is being openly questioned in a manner that would have been unthinkable until recently.

In this way,Ireland’s problems are now the shared problems of all Eurozone and EU member states. We are living in historical times; some might even go so far as to suggest that we are cursed to live in interesting times. 

And while we all watch with anxiety and react to the latest dramatic developments in the Eurozone crisis, we also need to stand back and think about the broader macro trends and historical forces that are behind the multiple crises of the past four years.

When we do this, we see that the unifying factor is change: change in the balance of power in the world economy from West to East; change in the relationship between markets and states and change in the speed at which events unfold.

The question for politicians and citizens in all European countries is how to preserve the European way of life, our cradle to grave welfare state and the inherent decency and democracy of our nations and our union in the face of such world historical changes.

For truly the onus is on all politicians and citizens inEuropeto accept that in order to preserve and protect our way of life, everything will have to change. And now is the time to start changing for the better.

ThroughoutEuropeneed an entirely new approach to economic development, innovation, competitiveness and how the welfare state is funded and delivered to our citizens. We will all have to work harder, longer and contribute more in order to achieve this. And while this message may not be popular or palatable to governments or citizens, surely the alternative of a drift into long-term economic decline and the accompanying social unrest is a far worse option?

We need to change the relationship between states and markets. If the events of the past few years have taught us anything it is that markets have become too powerful relative to states. Markets are supranational, while regulation remains national. We need to reset this.

However we need to go further than this and fundamentally change the nature of finance so that it ceases to be “socially useless” as pointed out by the chairman of the UK FSA, Adair Turner and becomes instead a catalyst for the development of the real economy, technology, small business and infrastructure. 

Part of this will also require greater funding for public investment at EU-level and I am very happy to see the recent positive statements of the European Council on growth and investment as a first step in this regard. However we need to go much further and create opportunities for private money, particularly pension funds, to invest in public infrastructure.

We need to radically change the nature of political decision-making. Time and again the current crisis has exposed the variable speed of democracy and markets. Even if we succeed in restraining the velocity of market activity, we still need a fundamentally more efficient and certain method of political action. And given the spectre of Franco-German leadership, I would argue strongly that any Treaty changes should give a far greater role to EU community action.

InIreland, the Government sees this crisis as an opportunity to bring about the reform and transformation of our country that did not take place in the good times. We are changing for the better, and no individual, group or sector can argue that they should not be affected. We must all join together in the common purpose of rebuilding our society and economy. And the government will not deviate from this path in the midst of an economic emergency and a battle for the survival of our way of life.