Opening Remarks by the Tánaiste to the Ambassadors' Conference01 June 2011
Fáilte ar ais abhaile.
Ba mhaith liom aitheantas a thabhairt don obair go léir - idir obair eacnamaíoch, tráchtála agus polaitiúl - a dhéanann sibh cheana féin; agus mo bhuíochas a ghabháil libh as ucht an achair fhada thaistil a bhí ag cuid agaibh chun a bheith anseo.
We gather here today, at a critical moment in our country’s history. I have invited you to return here to Dublin, to discuss the part that I, and the Government, are asking you to play in it.
Ireland has already experienced three years of recession. Behind the newspaper headlines, the graphs and the statistics, are the hundreds and thousands of our fellow men and women who have lost their jobs; lost their livelihoods; seen their incomes fall; their children emigrate.
We are recovering. It will take time. And it will take hard graft, every single day. But we will do it. We must do it.
After all, that is why we are here. That is why I am here. Why my Government colleagues are here. And it is why you are here. I do not need to tell the Irish diplomatic service about patriotism.
Irish ambassadors, and their missions, have been the face of the Irish government abroad at a time when Ireland’s international reputation has taken a severe battering. That cannot have been easy. We also know that friends and allies had fallen away, just when we most needed them. Relationships matter, and only hubris would imply otherwise.
Restoring Ireland’s international reputation is a key priority for this Government. It is a priority for every Government Minister, whether they are at home or representing Ireland abroad. And we expect it to be a priority for every state agency abroad, and every diplomatic mission.
You, as heads of mission, are absolutely critical to that objective. You are the first point of contact between the Irish Government, and our partners and allies abroad. You provide an essential flow of information, not just back to Ireland, but to officials, institutions and businesses abroad. Not simply Ireland’s official representatives, you are our trade envoys; our cultural champions; our peace brokers and our peace builders.
Today marks the beginning of a major diplomatic initiative to restore, in the words of Robert Emmet, Ireland’s place among the nations of the earth. More than that: to prove that Ireland’s strengths; its dynamism; its capacity for entrepreneurship and for innovation; its cultural richness, make it an attractive place to do business; an exciting place to visit; and a rewarding ally in building the kind of world we want to pass on to future generations.
Because, for all our difficulties, Ireland does have a very positive story to tell, and it is up to all of us to communicate it effectively.
After three successive years of contraction, the economy is projected to return to growth, albeit modest growth, this year. A number of forecasters expect growth to accelerate next year and to become self-sustained. The public finances are stabilising and we will record a balance of payments surplus for 2011.
Strenuous efforts are being made to close the gap between revenues and expenditure.
Corrective measures totalling €14.6 billion were implemented over the last three years. This is a huge adjustment by any standards, amounting to over 9% of GDP, and it was followed by an additional €6 billion in cutbacks in the budget for this year with further adjustments totalling €3.6 billion envisaged for next year. We are committed to the 3% deficit target by 2015.
A comprehensive spending review will be completed by the end of September. This will help the Government meet its overall fiscal objectives by shifting the emphasis from financial inputs to outputs in next year’s budget. It will help us ensure that fiscal consolidation is under-pinned by the most effective use of resources.
Stabilising the public finances is a vital pre-requisite, because we cannot achieve sustainable recovery without doing so. Export-led recovery is underway, but it is clear that the domestic economy needs to be restarted. With that in mind, we gave a firm commitment when we entered Government that we would get the economy moving, restore confidence, fix our banking system and support the protection and creation of jobs.
The Government’s response to the stress tests on the banks in March was, therefore, crafted with a view to re-starting the domestic economy. Much of the focus on these tests has been on the large sums of money required to recapitalise the banks. But our restructuring plan includes significant growth-enhancing measures. It is a carefully thought out plan which will deliver a smaller banking sector fit for the needs of the real economy, creating capacity for the pillar banks to lend in excess of €30 billion over the next three years.
Encouraging domestic demand was also at the heart of the jobs initiative, with an emphasis on reinvigorating the economy, within the limited resources available to us, and on giving employers the confidence they need to start recruiting again.
At this stage, therefore, we can point to:
unprecedented levels of fiscal adjustment, achieved with some considerable sacrifice by the Irish people
- capital levels for the banks which will be well above internationally accepted targets
- a package of measures, albeit limited, designed to get the domestic economy moving again
- and the opinion of the Troika that Ireland is “making good progress in overcoming the worst economic crisis in recent history”, and that it is implementing the agreed programme.
We are doing all the right things but why, then, are our bond spreads at record levels today?
We greatly appreciate the financial assistance of our funding partners. The euro-zone has made great strides in recent months to put in place effective measures to strengthen the surveillance of national macro-economic policies and to strengthen the zone’s financial supervisory architecture.
The European Stability Mechanism (ESM) will become the euro-zone’s permanent crisis mechanism when it comes into effect in 2013. It is an important step in addressing weaknesses evident in the euro-zone but the markets have already begun factoring the ESM’s preferred creditor status in the bond yields of countries they believe might avail of it as an instrument. Hence, the high bond yields Ireland faces today.
But the aim of the EU/IMF programme is to ensure that countries like Ireland can return to the markets for funding and we intend doing so. Unfortunately, the ESM’s preferred creditor status is complicating that objective. We will honour our commitments under the current programme but we need to look again, in a constructive manner, at the euro area framework to make sure we have the right measures in place to generate confidence and credibility.
As you will all be aware, we also have an issue with the interest set on the loans provided by the European Financial Stability Facility, the euro-zone’s temporary crisis mechanism.
Both the Department of Finance and the NTMA are predicting that our general government debt will peak in 2013 at 118% of GDP; the IMF is forecasting a slightly higher peak in the same year of 120%. If we take our figures, interest re-payments are set to reach 21% of tax revenue by 2015. This is undoubtedly a high percentage but still compares favourably with the figure of 32% of tax revenue which prevailed in 1985.
You will recall that the Eurogroup Summit in March agreed that the rates for EFSF loans should be reduced to better take into account debt sustainability of recipient countries and, as agreed at the European Council in March, the Minister for Finance is now working on the interest rate issue with his counterparts with a view to Finance Ministers being able to sign off on it.
Last month the IMF noted that “the combination of slower growth and higher unemployment rates, together with higher bond spreads and rating downgrades, have increased downside risks, especially risks to regaining market access.” The IMF recognizes the decisive action we are taking but is urging that it “should be supported by a more comprehensive European plan,” if we are to overcome market doubts, regain market access and restore growth.
The OECD indicated just last week that, globally speaking, interest rates will rise and that, as a consequence, growth could be slower and, specifically on Ireland, it advised that we should “seek to minimize the harmful effects of fiscal consolidation on longer-term growth.”
Everyone agrees that Ireland needs to grow its way out of its current difficulties and it is clear that the case for a reduction in our EFSF interest rate is compelling and that we are not alone in saying that this would help us meet our targets.
I know that you have been working hard across the globe on economic and commercial issues, making the case for Ireland. This Department’s new enhanced role in trade promotion is, in part, recognition of the valuable contribution you have been making to our economic recovery and I want to ensure that the new arrangements coming into effect today will facilitate Irish businesses in plugging into your considerable experience and expertise.
Jan O’Sullivan T.D., the Minister for Trade and Development, will go into greater detail tomorrow on the new arrangements coming into effect. Responsibility for the implementation of the Government’s trade strategy is transferring to this Department and I will chair the new Export Trade Council, announced in the programme for government. The Council will strengthen cooperation across all key departments and agencies involved in the promotion and development of trade and exports and its membership will include representation from the private sector, drawing on the experience of those involved in growing export-orientated businesses.
The positive feedback I have received from Irish exporters on the valuable assistance provided by our Embassy network is confirmation, if we need it, of the wisdom of these new arrangements and an encouraging sign of the benefits likely to flow from closer links between our exporters and our diplomats. Indeed, I look forward to working with you on a variety of economic issues, not least on trade missions in new markets in search of the growth the economy needs.
Our diplomatic service has a proven track record in networking. It was crucial to the success of the Northern Ireland peace process and it has been the salient feature of our experience in the European Union and the United Nations. Our focus now is on bringing these skills to bear on the economic challenges we face today. Our priority, therefore, is to contribute to renewed and sustainable growth by promoting Ireland’s economic and trading interests, cultural and scientific profile and reputation internationally, in close co-operation with other Departments and Agencies.
This, of course, is a collective task. It involves colleagues based at home and all colleagues based abroad, in all Embassies, large and small, bilateral and multilateral.
Our Embassies and Consulates have a vital role to play in our economic recovery. But they do not operate alone. Tomorrow morning we will be joined by a number of the key players who share our mission of promoting Ireland abroad, namely Enterprise Ireland, IDA Ireland, Bord Bia, Tourism Ireland, Culture Ireland and Science Foundation Ireland. They are working with us, together with our colleagues in the Departments of the Taoiseach, of Finance, Public Expenditure and Reform and Enterprise, Jobs and Innovation to get the word out that Ireland is open for business.
That message, of course, would be meaningless without business itself being in a position to deliver and I am delighted, therefore, that a number of representative companies – Glanbia, the PM Group and Valentia Technologies – have agreed to talk to us today from their perspective and about the role this Department and the Embassy network can play in opening doors for them abroad. Repairing our reputation is not just a matter of pride; it also makes good business sense. Umbrella organisations such as IBEC and the Irish Exporters Association recognise this and the work they do - often hand in glove with Ambassadors in key capitals, reassuring investors and selling our strengths – is appreciated here and, no doubt, by the numerous businesses and entrepreneurs they represent.
In the short time that I have been in office I have already seen at first hand in Brussels, Budapest, London, Luxembourg, New York, Oslo, Paris and Washington the remarkable networks created by each Embassy with business leaders and commentators. Key members of the diaspora are often involved and the Global Irish Network is an important partner in our ongoing efforts to restore our international reputation. I am looking forward, therefore, to discussing the Government’s priorities for economic renewal at the second Global Irish Economic Forum in Dublin Castle in October.
I have also been able to follow reports from Ambassadors in numerous capitals on their discussions on economic issues with key opinion formers in Governments, industry, think-tanks and the international media. In recent months, Embassies have facilitated the placing of articles in key business newspapers such as the Frankfurter Allgemeine Zeitung, the Nikkei, El Pais, Les Echos and the Financial Times; newspapers with a combined circulation of seven million and a readership on-line and in print twice or even three times as large.
Our message is the same, whether it is delivered in Chinese, in Japanese, in French, in Spanish or in German and the message is:
- that we are meeting our targets;
- that we have drawn a line under our banking problems;
- that the fundamentals of the Irish economy are strong;
- that we will record a balance of payments surplus this year;
- that we are returning to growth;
- that Ireland recorded the second highest trade surplus in the European Union after Germany last year;
- that Ireland is an innovation hub where hard-working people turn smart ideas into world-class goods and services;
- that Ireland is in the top 20 nations for quality of scientific research;
- that we continue to produce some of the greatest writers, musicians and artists the world has ever known;
- that prices and rents have fallen;
- that our corporation tax rate of 12.5% will not change; and
- that we are removing barriers to growth, boosting competitiveness and restoring order to our public finances.
Our theme today is “promoting Ireland abroad.” The best way to restore fully our reputation is to put in place strong policies on issues of national concern and to sell them vigorously to the community and to the wider world. The decisions we have taken on the banking sector demonstrate that strong, decisive moves can have a positive impact, and I am confident that if we can make similar courageous moves in other domains, we will over time win back the respect and esteem which were lost in recent years.
Our task at home is to put in place the right mix of strong, credible and effective policies, and we look to you to engage with the key opinion formers in your countries and international organisations of accreditation and to sell those policies abroad.
The immaculately prepared visits to Ireland last month by Queen Elizabeth II and President Obama showed us how our country can look when we put our best face to the world. I have no doubt that they will play a part in restoring our national confidence and self-belief. The royal visit, in particular, was the culmination of a process which has often appeared intractable, but on which this Department and our diplomatic service persevered at all times, no matter how bleak the prospects occasionally looked.
We need that same sense of determination and inventiveness today to deal with the economic difficulties we now face. Of course, the challenges facing the Irish people go well beyond fixing the banks and balancing the budget, which is why the new Government has set out a wide range of legislative and constitutional reforms. Indeed, our goal is that, by the end of our term, Ireland will be recognised as a modern, fair, socially inclusive and equal society, supported by a productive and prosperous economy.
Ireland’s chairmanship next year of the Organisation for Security and Co-operation in Europe (OSCE) will provide us with a significant opportunity to contribute to international conflict resolution, drawing in the process on our own values and historical experiences. Our campaign for election next year to the UN Human Rights Council will highlight those same values, emphasising our commitment to building bridges, finding common ground and promoting consensus. Preparations for our presidency of the European Union in 2013 are already underway and the presidency will serve as another useful platform on which to enhance our reputation and highlight our European credentials.
Much has been said and written lately about the fine work of the late Garret Fitzgerald in this Department and throughout his career in pursuing peace in these islands and on forging a role for Ireland in Europe. But, perhaps, history will record that his finest legacy was our overseas bilateral aid programme which he established 35 years ago and which continues, thanks to the good work of numerous members of this Department, to transform the lives of millions of vulnerable people in the poorest countries of the world.
Recent research by the Development Research Institute at New York University looked closely at the difference between rhetoric and reality when it comes to aid programmes around the globe, and ranked Ireland fifth in the world for best practice. This is a fitting testament to Garret but also a timely reminder of the impact a small foreign service can have on global issues.
Our small, but effective, Foreign Service has been at the heart of this country’s history and at each stage it has had to handle the major issues of the day affecting our national sovereignty.
When independence was established, our fledgling Foreign Service worked hard to secure recognition for our sovereignty.
When war broke out across Europe and our neutrality was challenged, they lobbied hard to protect our sovereignty.
When we joined the United Nations, they asserted it and when we entered the European Union, our diplomats negotiated the terms for sharing it.
During the Northern Ireland peace process, many of you were involved in re-defining our sovereignty to promote peace and reconciliation on this island.
Today, ladies and gentlemen, our economic sovereignty is in question and the country is looking to us to restore it.