FIANNA FÁIL Leader Micheál Martin said the rift opened with Britain at the European summit last week could seriously threaten the survival of the European Union itself.
Mr Martin also said that the outcome of negotiations on Thursday night and Friday represented almost the “worst-case scenario” for Ireland.
If the euro is to be saved, he added, it was not on the basis of anything agreed last Friday.
In a detailed written response to the summit, Mr Martin argued the deal had failed to deal with the underlying causes of the sovereign debt crisis.
“The split it has caused may lead to another crisis, this time impacting on the future of the union itself rather than just the euro. The result is close to a worst-case scenario for Ireland as the Government’s negotiating tactics having been flawed from the start,” he asserted.
The reason for calling the summit, said the Fianna Fáil leader, was to find a final and decisive answer to the sovereign debt crisis in the euro zone.
That should have resulted in an all-encompassing agreement and an adequate firewall to prevent contagion.
Instead, he said, leaders had “steamrolled” through a solution for up to 26 member states but without thinking how issues would be handled in the absence of Britain at the table.
“Even in the unlikely event that the other 26 states all sign up to the new fiscal pact, the union’s fundamental workings will be in question for the first time in its history.
“The institutions of the union have a legal obligation to work in the interests of all citizens. How can that happen when some are in and some are out of an agreement which is central to everything the union does?”
According to Mr Martin, if the agreement was looked at from an Irish perspective, the absence of Britain from key discussions and regulations represented “a huge threat to our long-term economic prospects.
“They are both our largest trading partner and our biggest competitor. The tens of thousands of jobs dependent on the financial services sector are only part of the areas for concern.”
Mr Martin contended that the focus of the talks on fiscal governance and compliance was misplaced. He said they should have been ensuring adequate funding to prevent further bailouts.
“Countries such as the USA and the UK with much worse debt and deficit problems than the euro zone have had no problem borrowing from the markets.
“The reason is because they have what the euro zone does not, central banks which are willing to step in and guarantee a market for issuing new sovereign debt.
“What has actually happened is that all of the effort of the union has gone into providing funds for bailout rather than providing funds to prevent bailouts being necessary.
“The ECB is now in the perverse situation of actually encouraging investors to flee European debt.”
Another major contention of the response was that if the many billions at the disposal of the ECB were to be turned to the primary bond market rather than the secondary market, the crisis would be ended overnight.
“There are many ways this could be done either through a change of the EU treaties or within them, but on Friday it was decided not to do this. It was a case of carry on regardless of the mounting evidence.
“It very much reminds of Einstein’s definition of insanity: the tendency to keep doing the same thing while expecting a different result.” In specific criticisms of the Government, Mr Martin claimed it had largely sat on the sidelines and had only begun forwarding its negotiation position very late in the day.
“It has signed up to the flawed agenda that new budget controls are the main solution.
“At no stage has the Taoiseach been willing to admit the fact now acknowledged throughout Europe that Ireland and Portugal were forced into bailouts in the name of a flawed policy.
“He has finally been willing to state in Brussels what he will not say here, that Ireland borrowed billions for bank debt because of commitments to Europe.”
His comments were also being taken as a retrospective defence of the previous government’s much-criticised decision to recapitalise banks in the face of widespread public and political opposition.
“The case for Ireland’s bank debts being made more sustainable is stronger all the time and I believe it will be conceded if the Government puts aside domestic politics and is more forceful in stating Ireland’s case.”