With your permission, a Cheann Comhairle, I would like to make a statement.
On 7 December 1978 I said in this House that I told the European Council, at its conclusion, that I could not at that stage indicate to them that I would recommend joining the new European Monetary System but that I would consider the matter further in consultation with my Government, particularly to see whether there could be any further basis on which I could contemplate a positive response.
My reservations related, in part, to the uses to which the proposed resource transfers could be put and their inadequacy. I am glad to be able to say now that I have an assurance as to the interpretation of the Council resolution which is satisfactory in so far as uses to which the resources may be put. They will not be wholly restricted to infrastructure. I have also been assured that there will be sufficient flexibility as to the manner in which the interest subsidies operate to enable us to benefit fully from these arrangements early in the new year.
Further, a number of the more prosperous countries, with whom we have since been discussing the problem, are satisfied as to the unique difficulties of Ireland arising particularly from the nature of its currency arrangements, and have agreed to make available, bilaterally, over a period of two years, resources substantially in excess of the amounts provided for in the Council resolution of 5 December 1978. The principle and amount of these transfers has been agreed but details remain to be settled. The agreement will be worked out and managed by the appropriate banks and institutions in all these countries with all necessary backing of our respective Governments. The grant element in these arrangements together with the EEC measures will mean that the total amount available over each of the next two years would amount to about £70 million a year, with an additional £45 million a year for a further three years. A full account of the scheme will be announced as soon as the discussions are complete I would like to take this opportunity to place on record here the appreciation of the Irish Government for the support and understanding shown by these countries in this difficult and complex negotiation.
My second reservation in Brussels related to the attitude of other countries to the new system. That difficulty has now been resolved. The United Kingdom has stated that it will not be participating in the exchange rate mechanism when it begins to function but that it intends to work for a continuation of the exchange rate stability sterling has enjoyed for nearly two years. Italy has signified its intention of joining the new system at the outset. In effect, therefore, there will be seven members in this system and one definitely outside it on 1 January. I would like to avail of this opportunity to congratulate the Italian Government on their decision which demonstrates their commitment to the ideals which underline the formation of the EMS, a decision which has a major role to play in the successful operation of this system.
At this point I am satisfied that the new package provides sufficient additional resource transfers to help us overcome the critical initial two-year period. I would like to add that the whole operation of the EMS arrangements will be the subject of a comprehensive review at the end of the two-year transitional period.
In these circumstances, the Government have decided that Ireland should also participate in this system, with her partners in the Community as from 1 January.
The reasons for the decision are, first, that we believe in the objectives of the system which is the basis of a broadly based strategy aimed at improving the prospects of economic development, based on symmetrical rights and obligations of all participants. We believe in the desirability of creating a zone of monetary stability. This, by enhancing the prospects for trade and investment, will, in the ultimate, improve conditions in Ireland and make it easier to attain the Government's aims of faster economic growth, lower inflation and full employment. Government strategy for the attainment of these objectives under the new monetary regime will be outlined in detail in the White Paper on National Development which will be published shortly, and in the budget which we will be introducing early in the new year.
Next, we have always seen the Community as a grouping of partners in which each country acts according to the procedures and mechanisms laid down in the Rome Treaty. We have pursued policies aimed at the full and enthusiastic participation of Ireland in the development of Europe. In particular we have tried to avoid the creation of a two-tier or two-speed Community. Nonparticipation in the present system, which is a step in the direction of monetary union in Europe, would, we believe, lead to the creation of just such divisions.
The Government pointed out in the recent White Paper that the fact that the UK had decided not to join the EMS for the present meant that a decision by Ireland should take account of the implications for the relationship between the Irish £ and the £ sterling. It is the Government's hope, and indeed expectation, that our membership of the EMS without the UK will not, in practice, involve a divergence from parity with sterling for some time at least.
In its short life as a nation, this country has followed policies involving both opportunity and challenge. In the 1930s protectionism was pursued as a deliberate strategy. This gave way a generation later to the Anglo-Irish Free Trade Area Agreement. A short time afterwards the people of Ireland voted overwhelmingly to join the European Economic Community.
The decision we have taken today is of a similar magnitude. It involves risks. It will add a further dimension to partition, although the ultimate benefits of membership of the system could outweigh the problems. The benefits for agriculture are clear. Fears have, however, been expressed on the part of certain service and manufacturing industries. Let me say here that there is nothing inherent in our decision which need have a destabilising effect on employment in the short run. So far as any significant short term difficulties do arise, the Government will help in a positive and sympathetic way. In the longer term, the benefits of adherence will be great.
The attainment of these benefits will require a matching discipline. The decision we have taken today is an act of trust. It is trust in the European Community but above all it is trust in the intelligence, integrity and commitment of the Irish people and their faith in themselves.
