Dáil Éireann debate -
Tuesday, 4 Dec 1979

Vol. 317 No. 4

European Council Meeting: Statement by Taoiseach.

The Taoiseach

With your permission, a Cheann Comhairle, I propose to make a statement for the information of the House on the European Council held in Dublin on 29 and 30 November.

By virtue of Ireland's Presidency for the six months ending 31 December, it was my privilege to chair the meeting at which I was accompanied by the Minister for Foreign Affairs. The subjects for discussion included:

First Day

1. Economic and Social Situation.

2. Convergence and the Budget.

Second Day

3. Energy.

4. Agriculture.

5. Telematics/Europe 1990.

6. Report of the Three Wise Men.

7. European Union.

8. Other Business.

On Thursday night, the Heads of State and of Government and the Foreign Ministers dined separately. At these meetings a number of political co-operation items were discussed, including, in particular, East-West relations and the situation in Iran and in Cambodia. I arranged yesterday for a copy of the Presidency Conclusions to be laid before the House. These texts summarise the work of the Council.

Economic and Social Situation

Commission forecasts show economic growth in the Community declining from an average of about 3 per cent in 1979 to 2 per cent in 1980, price inflation rising to 9 per cent on average, with a swing in the balance of payments on current account from surplus in 1978 to deficits both in 1979 and 1980 and a renewed rise in unemployment in 1980.

The debate on the economic and social situation took these forecasts into account. It was dominated by the uncertainties caused by the very real threat of energy shortages in the short and medium term, political uncertainties of the type with which the world is now becoming only too familiar, and the resurgence of inflation.

The necessity for Community solidarity in dealing with these problems was emphasised, together with the importance of avoiding decisions to deal with immediate problems which run counter to longer-term trends.

The Council agreed that the solution of the current difficulties demands the implementation of effective counter inflationary measures, the maintenance of investment for industrial adaptation and modernisation and finally, an improved co-ordination of economic and monetary policies. The Council agreed as to the need for a recognition that income increases cannot be sought to offset the transfer of purchasing power to the oil producing countries resulting from increases in oil prices.

To underline the importance of improved co-ordination of economic and monetary policies the Council confirmed the decision taken at their Bremen meeting to set up the European Monetary Fund, as part of the European Monetary System. The Council requested the Commission to submit proposals on specific measures to promote more incisive Community action on unemployment, which was the principal concern of the European Trade Union Confederation when they met me on 27 November, and also to continue their consultations with the social partners on the re-organisation of working time. In relation to telematics, the Council asked the Council of Ministers to study proposals from the Commission. The follow-up action in these fields is thus for the Commission in the first place and I do not envisage any further meeting with the European Trade Union Confederation.

Energy

It was said that consumption of oil this year is down in comparison with last year and supply is higher. Yet contrary to what one would expect if the ordinary economic rules applied, price increases continue. The fragility of the market was emphasised strongly as was the extent of Europe's dependence on external sources for energy which is vital not only for economic growth but for survival. There was repeated and emphatic reference to the extent to which the whole energy market is in disorder and is dominated by uncertainty—and to the serious implications this has for economic growth, employment and inflation.

As a tangible contribution towards introducing an element of greater stability by consuming countries in general and by the member states of the Community in particular, the European Council have requested energy Ministers to take a final decision on the breakdown of oil import objectives for 1980 for each member state. The Council also emphasised the need for a common energy policy in the Community based on: (1) conservation; (2) the use of indigenous resources particularly coal and nuclear power, paying particular attention to safety factors. This need had been the main point emphasised by the Union of European Industries when I received them before the meeting.

The Council re-affirmed the Community's wish to promote discussion with oil producing countries so as to develop policies in both consuming and producing countries which would allow transition to better equilibrium in the market.

Three Wise Men

The Council warmly thanked the Three Wise Men for their report and asked the Foreign Ministers to examine it so as to prepare its discussion at the next meeting of the Council. Copies of the report have been laid before both Houses.

European Union

Under this heading, the establishment of the European Monetary System, the preparations for the accession of Greece to the Community and the direct elections to the European Parliament were noted.

Agriculture

In relation to agriculture, I should make it clear that the recent proposals of the Commission were not formally before the meeting. However, the Commission had presented us with a report on the need for a better equilibrium on the CAP. The Council had a brief exchange of views in the context of this paper and decided to refer it for examination to the Councils for Agriculture and Finance.

Convergence and the Budget

The discussions under this head were by far the most difficult and protracted I have experienced at a European Council. They continued, with intermissions during which we dealt with the other matters I have mentioned, over the full two days of the Council. The essential position is clear.

The Treaties establishing the Community speak of the necessity to reduce economic imbalances as between the different regions. This aim is reiterated in the Accession Treaties and again formed a prominent part of the EMS arrangements. There can, I think, be no doubt as to the fundamental nature of this aim of Community policy. It is under this head that the question of the size of the British contribution to the Community budget was taken.

On this issue, the Presidency spared no effort to reach an accord at ministerial and official level. In addition, over the past two or three months, I have had discussions, devoted significantly or exclusively to the problems, with the British Prime Minister, the German Chancellor and the Prime Ministers of Italy, the Netherlands and Belgium and the President of the Commission. I think many persons at the Council were disappointed that these efforts and those made by the Commission and other states did not enable the meeting to come up with a definitive answer which satisfies all members of the Community.

An essential part of the difficulty lies in the way in which Community "own resources" are regarded. These are taxes or levies collected by the different member states on behalf of the Community. They are not national taxes or revenues but belong wholly to the Community for which the national government simply act as collecting agent. That is a fundamental Community principle.

The United Kingdom, however, take another view. They regard the money paid over to the Community as a British contribution, which imposes certain disabilities on the British economy. While there was some sympathy with this argument and a certain willingness to go along with arrangements to give more time for adjustment, it proved impossible in the two days to reconcile the different approaches. In fact, on a number of occasions, complete breakdown was only narrowly averted. The Council decided that the Commission should be asked to make proposals which will enable the Council of Ministers to pursue the search for appropriate solutions to be reached at the next meeting of the European Council which will be convened by the Italian Presidency as soon as the conditions for such a meeting have been fulfilled. The Dublin Council recognised the need to reach rapid Community solutions for the problems in relation to fisheries, energy and sheepmeat within the framework of the Treaty.

There was more or less agreement on certain essential principles. These were that in any solution:

(1) the principle of Community own resources must be maintained;

(2) there must be no question of juste retour;

(3) any solution must be financed from the Community budget;

(4) the VAT ceiling of 1 per cent must not be breached.

There was also considerable support for the view that any solution must be for a limited period and must preserve existing Community policies intact. A solution must not operate against the objective of convergence. It is against this background that I expect the discussions over the next few months to continue. The Irish Presidency will be making necessary initial contacts, at whatever levels seem suitable, in conjunction with the incoming Italian Presidency, as appropriate.

It will be our objective in these discussions to try to achieve a solution which will not damage the Community or seriously affect the vital interests of Ireland.

Dr. FitzGerald

The House and the country have sympathised with the Taoiseach in the difficult task he has had in presiding over this European meeting at which there has been such a direct confrontation of attitudes between one member state and the rest of the Community. We all recognise that the success of such a meeting, or of any meeting or series of meetings of the Council of Ministers of the Community, is not necessarily within the control of the country holding the Presidency or the person presiding at the meeting. Success requires good luck and goodwill from all our partners as well as good judgment on the part of the person presiding. I have noticed that no-one in other countries, at least so far as reports indicate, even the most jingoistic of publications in the country most directly involved, has sought to put any blame on us for the failure of this meeting. At the same time, I was a little concerned at the tone of some press comments abroad, in particular one comment in the UK press suggesting that there have been contradictions in Irish briefings. This may, of course, have affected national pride, although the tone of that comment did not indicate this, but I do not recall similar criticisms on previous occasions and I hope that we were not at fault in that respect.

The Taoiseach's role in this Council was an especially delicate one. As guardian of the Community's interests the Presidency must be concerned to ensure that no solution of problems of this kind is arrived at which weakens the acquis Communitaire including the CAP structure, or which damages the Community's system of receipts and payments. As Taoiseach of this country he has also responsibility to maintain a constructive relationship with the UK and in our national interest to ensure the maintenance of the CAP structure. I will develop that last point in a minute or two because it is crucial to the way we approach the solution to this British problem and the Taoiseach has continuing responsibility in that respect.

In this country we have paid the price of membership of the Community on the industrial side with the replacement of 75,000 of the 200,000 jobs in manufacturing during the transitional period. This, together with the world economic crisis from 1973 to 1976, prevented us during this period of additional industrial investment from reaping the benefits in terms of a net increase in industrial employment. We are now entitled to secure the benefits of our comparative advantage in the agricultural sphere, having paid the price of other countries' comparative advantage in the industrial sphere. We paid that price in terms of free trade with Britain from 1965 onwards. Britain was the main beneficiary of 1972 and our other Continental partners have been the main beneficiaries since then. These benefits of free trade in agriculture in the CAP area can be secured by this country only in the long term, unlike the industrial losses which are essentially short-term. It will take a full generation or more to build up the potential of our land after centuries of direct and indirect exploitation and British colonial or post-colonial cheap food policies. The output of our agriculture can be doubled or even trebled over a time when we see the productivity from the land achieved long since by other countries which did not experience colonisation and its consequences. We are permitted to achieve this in return for opening our markets to manufactured goods and any attempt to pre-empt our agricultural advance by freezing the existing uneconomic production patterns within the Community which are the result of an historic anomaly of different past experiences of market considerations would be totally contrary to the basic free trade principles upon which this Community is built. This must be our message, standing firm on the principles on which this Community is founded. We must not adopt a defensive stance seeking particular privileges but rather the right to trade freely in farm products within the CAP area, a right which, if maintained, will over time lead to a vast expansion of our output and our share of the market at the expense of the uneconomic or inefficient farmers in other countries or of farmers who may be efficient but who face adverse soil or climatic conditions for pastural agriculture, such as in Germany and France. On the basis of the most fundamental principles of the Community we have a right to resist any proposals to introduce quota restrictions on the output of products such as dairy produce and beef or any equivalent measures using financial mechanisms to choke off production increases in this country and to preserve less economic production elsewhere.

This legitimate objective is threatened currently partly by the cost of financing the surplus by the inefficient producers in other countries who must in time be squeezed out. It is now being threatened also by fresh pressure from the British Government. In their somewhat desperate effort to pursue a line popular in Britain of seeking to reduce the UK's net payments to the Community, the British Government are now putting fresh pressure on the CAP. If fresh resources have to be found for a new range of Community expenditure schemes such as coal, transport infrastructure and so on designed to benefit Britain, these schemes must, on Community principles, be available on an equitable basis to all countries. The additional pressures from that on the Community budget could be very great, and this at a time when, as the Taoiseach said, we are already approaching the limit of EEC taxation under existing arrangements through levies, duties and 1 per cent VAT. My party and I agree strongly with the Community's view on own resources. There can be no question of Britain or any other country getting its own money back. That concept has to be resisted and if we have to mount an eight-country educational campaign in the UK, which somebody should have mounted long ago, we ought to do that to try to get that message across. Is it correct, as has been reported, that the Taoiseach in these discussions gave the example of the port of Rotterdam and suggested that the Netherlands could scarcely get away with claiming that the levies and duties paid on arrivals at that port are part of their money and they want that money back when these goods are coming in, in many cases in transit to another part of the Community? If so, I congratulate him because that point needs to be made frequently in order to get this message across to the people of Britain.

The Taoiseach

It was intended to be made privately but apparently it is public now.

Dr. FitzGerald

It is no harm because one of the problems has been——

The Taoiseach

I also did it at the briefing stage.

Dr. FitzGerald

——that we, and by we I mean the Eight, not just Ireland, have not really succeeded in penetrating the paper wall in Britain in this respect. There is a real difficulty in communicating with British public opinion, given that the British press show such an extraordinary patriotic loyalty to their country's own prejudices, with some notable and honourable exceptions. That, on this and other occasions, has prevented the British people from understanding why what seems to them reasonable is unreasonable. It is a pity that the media cannot fulfil their most basic function of communicating to each country the feelings and ideas of other countries instead of adopting a somewhat jingoistic view.

From our point of view it would be preferable if a solution were found which would be most specifically helpful to the UK and, therefore, less expensive than solutions which would have to be generalised throughout the Community as a whole. If such a solution could be found, pressure on the CAP arising from the impending approach of the 1 per cent VAT limit could be reduced. This consideration prompts me to ask the Taoiseach whether, in his discussions with the Commission and with other governments before this European Council, he raised the possibility of a deal which would assist the UK finances through participation by the UK in the EMS, bringing in its train subsidised loans to the UK on the lines of the loans that Italy and ourselves receive with significant net subsidies in terms of the interest payments, in return for a UK agreement to accept the removal of the 1 per cent VAT ceiling and to end her campaign against the CAP. Incidentally, I am very disturbed at the reference in the Taoiseach's statement to an agreement to maintain the 1 per cent VAT limit. I take that to be a very short-term agreement and that we have not agreed to this being anything other than an element in the equation now being arrived at with Britain for the year ahead.

The Taoiseach

It is just one aspect of budgeting for most of our partners in respect of this issue in the year ahead. That is the reality.

Dr. FitzGerald

If we do not budget in this regard in 1981, the 1981 budget will present serious difficulties as will the CAP. It is important that we should be pressing the need to move past that limit because otherwise the whole development of the Community will be constricted and the CAP could be very rapidly undermined. If we cannot secure agreement in that regard, those who are resisting such a change could be endangering the survival of the Community and that is the point we must make, not only in our own interest but in the interest of the Community.

I am wondering whether this idea of British participation in the EMS and of Britain securing financial benefts as has been the case in respect of ourselves—subsidies which the Italians are also enjoying and which by agreement with the Community go to the less privileged countries—would be much less costly than inventing new schemes to spend money which is needed but money which we have not got because of the 1 per cent VAT limit on transport, on coal and things of that kind but which necessarily being Community expenditure schemes would have to be available also to other countries and not merely to Britain. I wonder if this question of EMS membership and of its being a way out of the British difficulty has been raised and, if not, would the Taoiseach consider putting forward a proposal on these lines. Such a proposal would have a number of advantages. First, it could resolve the UK problem and avoid the danger of confrontation next year, a danger which remains real despite the softening in tone of the British Prime Minister since her return home. Secondly, it would put Britain into the EMS thereby giving us currency stability again with sterling and, perhaps, the rather remote possibility of parity. However, even stability with sterling would be something. Thirdly, it would be less expensive to the Community budget thereby taking pressure off in terms of expenditure that is needed for the CAP and, lastly, it could remove the threat to the CAP and the general threat to the continuing development of Community activities arising from the approaching 1 per cent VAT limit about which the Taoiseach has just expressed such alarming pessimism. I should be interested in the Taoiseach finding an opportunity to indicate his reaction to this proposal which is offered in a constructive spirit.

I note that the assessment by the Heads of Government of the European economic situation is a depressing one. There is a fall in growth in the Community from 3 per cent to 2 per cent, a situation that could be very serious for us in view of our very grave balance of payments situation and our external reserves situation about which I was speaking last night. These are the problems which render it essential for us to get back on to the growth path of 1977 as soon as possible, that growth path of almost 6 per cent which the Taoiseach described in this House in December 1977 as the kind of foundation on which we could build but a foundation which has been undermined since as growth has declined to an estimated 2½ per cent for the current year.

I am disturbed also at the prospect of higher unemployment in the Community, a situation which seems to be accepted almost fatalistically by the Heads of Government. I find unconvincing the reference to the need for more incisive Community action on unemployment. Every communiqué from every Heads of Government meeting during the past five years has contained some words on this subject but this is the first time that the word "incisive" has been used. A different cliche is used each time but no action follows. It would be difficult for us to avoid being involved in any increase in unemployment, A situation that could reverse the favourable trend in unemployment that we have been experiencing since mid-1976 and a trend which the Government have succeeded up to now in maintaining but which could be threatened if unemployment increases generally in the Community.

I am not satisfied that a real will exists to co-ordinate economic policies on the scale of intensity necessary to secure a return to a growth path by the Community as a whole. The weakness of Community economic co-ordination and the unwillingness of the Commission to be tough enough in the line they take with member countries and of member countries to accept any common discipline have been major factors in preventing the Community from coming successfully through the crisis of the past five years.

The references in the Taoiseach's statement to energy conservation highlight the weakness of our Government in this area, an area in which there has been extraordinary failure to take adequate measures. I do not know offhand of any country whose attempts at energy conservation have been as feeble as those of this country under this Government. In addition there is the deplorable inadequacy of the government's so-called White Paper on Energy which the Taoiseach must be aware is regarded as a joke not only here but in Brussels.

I wonder whether I am right in thinking from the words the Taoiseach used that there was less pressure at this European Council on the nuclear front than apparently was the case on the last occasion. Is it the case, perhaps, that even those hard line countries which make a large part of their living from the sale of nuclear reactors and which have spare ones to sell after the Iranian debacle, may be rethinking some of their attitudes in the light of more recent developments? It is evident that the full dimensions of the Three Mile Island disaster which are only now emerging—it was only yesterday we read that those responsible do not know how to cope with the result of that disaster, that they cannot get inside the reactor to deal with what remains and that what is going on inside may destroy the seals and release massive radio activity in the period ahead—that countries producing nuclear reactors would need to produce a blueprint showing, first, how to prevent disasters and, secondly, what to do after a disaster has occurred before they try to sell them to unsuspecting customers such as ourselves. If there has been some reduction in the pressure on this front pending a rethink of the approach to nuclear energy, I should be glad but, perhaps, I am reading too much into the words used by the Taoiseach.

I find the report of the Three Wise Men somewhat disappointing, though it seems to have helped to head off a formalisation of the directives of the larger powers which have emerged as a de facto feature of European Councils since their establishment. I should like the Taoiseach to allow time to debate this report in the House early in the new year. I shall not add to the ludicrous situation in which we find ourselves by suggesting that the matter be debated before Christmas having regard to the amount of business which the Government have discovered suddenly must be dealt with in the next couple of weeks. However, we ought to have an opportunity early in the new year to debate that report, a report in which the future of the Community is considered.

Early in the new year, too, we must put through urgently the legislation concerning Greek accession to the Community. I trust this matter is receiving some priority from the Government because we should not be in default in relation to our obligation in this regard.

I note that there was discussion, though I wonder how much time was given to such discussion, at the European Council of the problems in Iran and Cambodia. I am glad that we in the Presidency have been able to make some attempt to ease the situation in Iran, though I do not think anybody can hope to resolve the present situation there. However, we have been playing our role in that regard as best we can. We must be concerned for Irish people in that country where there seems to be an almost total breakdown of order.

The European Council and the Council of Ministers should be giving a very high priority to this. I know how difficult it is to find a solution but the dangers the whole world faces as a result of that situation are such that it should be having a very high priority. However, the Taoiseach's remarks do not suggest it received that at the European Council nor do the press reports, and this is somewhat disturbing.

The same situation appears to apply with regard to Cambodia, the references to which are somewhat cursory. I do not fault the Government on this. I know they have increased the amount of aid originally granted to Cambodia, and from discussions in the House I know they would give more if it were possible to ensure that the aid could get through to those who need it. This has immense support from Irish people. One of the very heartening features of the past few months is that in the midst of our own difficulties—we face domestic difficulties that are worrying people—has been the immense fund of concern and goodwill for the people of Cambodia. There has been a great desire to help coupled with a sense of frustration at the fact that it is so difficult to help. The Government will have the full support of the political parties and the Irish people in anything they can do during the remaining weeks of the Presidency to overcome the problems that seem to stand in the way of relieving the plight of the people of Cambodia. I hope this will be given some priority in the closing weeks of the Presidency, even if the problem does not seem to have secured the priority it might have secured at the European Council meeting.

Mr. Cluskey

I wish to thank the Taoiseach for his report and for giving the House this opportunity of commenting on it today.

It is appropriate, at the outset, to offer to the Taoiseach, to his colleagues in the Government and to the officials of all Departments concerned, a word of appreciation for the technical efficiency with which the meetings have been conducted. This appreciation must also extend to the technical work associated with the Irish Presidency in general which has brought considerable credit to our country.

The periodic exercise of the Presidency is, perhaps, the most obvious public expression of the political responsibility involved in membership of the European Community. It is a responsibility which should be recognised and understood by everyone. If there is to be a real future for the Community, the balance between responsibility and self-interest must be achieved and supported in all the member states.

It is clear that the European Council was a non-event and, as such, it was a dangerous and disturbing affair. I make that statement deliberately. I have on a number of occasions stated the view of the Labour Party that the convening of regular meetings of Heads of Government is undesirable. The more recent introduction of a yearly programme of such meetings is producing nothing more or less than a series of costly public relations exercises of little real substance. In the past few years the only meeting that produced anything was the Bremen meeting, which for good or ill produced the EMS agreement. Little worthwhile has been achieved. I do not think these meetings do the Community any good. They do little to advance the Community and indeed may be casting a dark shadow over its future.

The Heads of Government should meet only to consider long-term political orientation and they should do this occasionally and informally. They should not be a court of final appeal for decisions shirked by their own Ministers, nor should they become a post-box for miscellaneous reports. Certainly they should not be used as Commissioner Gundelach attempted to use them last week. The credibility of the highest level of political leadership in the Nine is called into question by the futility of so many of these over-publicised summits.

Looking at the communique and statements emerging from Dublin Castle the results are meagre in the extreme. Apart from the worthy statements on Iran and Cambodia, which unfortunately say nothing original, what do we have?

Policy on energy is repeated in general terms and decisions passed on elsewhere. The discussions of the report of the so-called Three Wise Men is deferred. The unemployment crisis is yet again reduced to a passing reference to work-sharing and a pathetic request to the Commission "to submit proposals on specific measures for more incisive Community action". Not a single specific guideline is suggested except for the ritual call for cuts in workers' living standards and for increased reliance on monetary policy. Everything else—fish, sheepmeat and so on—got a single sentence at the end.

There did not appear to be a word about the deep-seated social problems of the people of the Community. Yet, on the day before the opening of the Dublin Castle Summit, a Commission report was published in Dublin which very clearly underlined these problems. I refer to the Second Report of the European Programme of Pilot Schemes and Studies to Combat Poverty. This report states that poverty "is a continuing reality for substantial sectors of the population" and that "the problem of poverty is a problem of inequality and social injustice".

The Commission makes it clear that solutions to the problem of poverty must be sought by the Community as a mattere of urgency. The failure to make any reference to this vital area of human concern is yet another indication of the fact that the Community has lost its social momentum and turned its back on the most needy of its citizens.

We all know the British budgetary contribution dominated the European Council. Mrs. Thatcher's approach to this complex issue was entirely unhelpful and typical of the attitude of the United Kingdom to the Community. Britain has still to make the fundamental decision that it is committed to membership and to all that such a commitment will entail. While it is obvious that the budgetary situation must be settled in an equitable manner at some future date, there can be no settlement on the basis of the current British demands. What is necessary is a complete review of the Community's financing, which has got out of hand and which fails utterly to meet the overall needs of the people and of the member states.

I believe that we need to debate the future budgetary development of the Community on the basis of a political orientation which faces up to the facts. Unless there is a realistic balance between the main elements of Community policy—giving adequate financial resources to the regional, social and energy areas, as well as to agriculture—there will be no solution to the present difficulties. The present adverse trends, which are now heading towards financial stalemate and crisis, will continue unless there is a definite new approach. This will come about either through the enlightened action of the nine member governments acting together as they should, or—as I now feel to be the truth—through the action of the directly—elected Parliament relying on the strength of its popular mandate. Change there must be in the very near future, or the Community will reach a serious crisis point and will be forced in the direction of a loose free trade area in which the weaker regions will go to the wall.

After more than 20 years of existence the Community must advance towards a new phase of development in which the emphasis—in policy and in action—will be changed from the dictates of competitive interest to the pursuit of cooperative goals. Only in this way can the concrete priorities for policies be defined. With massive unemployment, especially among the younger and older members of the workforce, and with such far-reaching structural economic difficulties, it is obvious that lasting solutions cannot lie in the traditional areas of fiscal and monetary policy.

These have been tried again and again and they had very little, if any, impact. Meaningful proposals must relate directly to the eradication of the fundamental causes of the problems, including the maldistribution of resources and undemocratic control of the key centres of the economic system.

Above all, there must be a practical recognition of the failure of the Community to provide adequate policies and resource-transfers in the areas of regional and social development. In this connection we in the Labour Party can only deplore the performance of the Minister for Economic Planning and Development in failing to stand firmly behind the Commission's proposals for the financing of the regional fund in 1980. The principled stand of the Parliament merited the full support of the Irish Government, but unfortunately did not get it.

Central to all discussion of the future of the Community is the question of the common agricultural policy. It is the only comprehensive Community policy and it has brought significant benefits to sections of the Irish farming population and the economy in general. But it has also contributed to price inflation, to the production of scandalous food surpluses an to the relative impoverishment of small farmers. It has created a serious imbalance in the financing of the Community and this has led inevitably to negative public attitudes which are now widespread and growing.

No one can doubt that a fundamental review of the common agricultural policy has begun within the institutions of the Community. In the context of that review, the Irish Government's approach must be skilful and creative. A totally negative attitude to reform could prove exceptionally disadvantageous to this country. Rather what we must seek to ensure is that any measures adopted to deal with the question of surplus food are balanced by increased aid to smaller farmers and employment creation.

Our approach must be to seek to ensure that the net advantage of the CAP to this country is maintained in any new arrangements which follow from the present budgetary crisis. For this reason it was right that the Government should have rejected Mr. Gundelach's recent discriminatory and arbitrary package, because it does not tackle the real problems, and because it deliberately sets out to penalise those—like Irish sugar producers—who did not cause the Community's problems in the first place.

The Government will face an extremely difficult test of their diplomatic and negotiating skills in the period ahead on the question of the CAP. There are many in the Community who are prepared to throw out the baby with the bath water. The Government's task is to see to it that this does not happen.

I have referred to the fact that the Heads of Government spoke on the political issues of Iran and Cambodia, even if only in general terms. This is a reflection of the Community's growing element of political co-operation. We should be very careful about our activity in this area.

There is a danger that political co-operation can lead this country into a situation of quasi-alliance with other member states in areas where our stance should reflect a totally independent line. I am thinking, for example, of Community relations with South Africa to which the Heads of Government made no reference at all. We should be advocating a total boycottt of South Africa, and enforcing such a boycott for ourselves, and not allowing this country to be even marginally allied to interests which regard profit made through collaboration with apartheid as acceptable. This House should keep a very close watch over our involvement in political co-operation.

This Summit was of no positive value. It did nothing to secure the course of a Community committed to the interests of the ordinary men and women of Europe. It showed no social concern. It called even further into question the value of such publicised meetings. I do not for a moment suggest that these negative results reflect upon the competence of the Irish Presidency. They arise from the nature of these Summit events which have been grafted uneasily onto the Community framework. There is a need for serious re-examination here if further damage to the Community's image among the European electorate is to be avoided.