EU aid of €500bn are loans and ‘must be paid back,’ says Taoiseach

European Union supports to deal with coronavirus pandemic are not nearly enough for what is required, Fianna Fail leader Micheál Martin has warned.

“Other than the outbreak of a war there has never before been such a dramatic and rapid public health and economic shock,” he said.

Like other EU countries “Ireland does not yet really know the scale of the recovery challenge we face.

“If the member states of the union continue to block measures to develop new direct funding mechanisms, then the union’s contribution will continue to be economically marginal.”

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During a debate on the EU response to the pandemic, he warned that “the European Central Bank, the one institution willing to act with true urgency and ambition, is under assault” and its powers could be affected by a “remarkable judgment from the German constitutional court”.

Earlier Taoiseach Leo Varadkar praised EU agreement on an aid package of measures worth €500 billion for member states but warned “these are all loans and guarantees and are not grants and that borrowed money must be paid back”.

He said the Government favoured the use of shared managing of debt, the use of “coronabonds” but said it would have taken a long time to agree such a structure and might have required referendums in a number of countries, including Ireland.

‘Historic’

He said the three measures in the half a trillion euro package were “a historic-level deployment of resources to respond to an emergency of unprecedented levels”.

They were “a much greater and more appropriate response from the European Union that we saw during the financial crisis ten or 12 years ago when the European Union acted in a way that was too little and too late”.

Mr Varadkar said the coronavirus crisis had resulted in deep, sharp economic and social impacts and in the early stages the EU response was poorly co-ordinated.

But the measures agreed included the easing of state aid rules but he warned that members states should not use this to give unfair advantage to their companies competing against companies in other EU member states. This would be “closely monitored” he said.

Recession

Sinn Féin leader Mary Lou McDonald warned against a return to austerity as she reminded the Dáil that the EU “was no great friend to Ireland or our people” and there are huge concerns now among workers and families that there could be a re-run of that scenario.

Ms McDonald warned that following the pandemic “we cannot perpetuate an economic system of winners and losers.”

Green Party TD Roderic O’Gorman said Ireland would not be going it alone on a target of reducing carbon emissions by 7 per cent a year. It was part of an EU response to signing up to Paris Accord.

Labour TD Duncan Smith said the EU funds must include grants as well as loans. “We need the fund to be financed at EU-level, not by piling on unsustainable debt onto member state’s already over-stretched national debts.”