Vol. 397 No. 1
11 Mr. Sherlock asked the Minister for Finance if he will outline the present position in regard to the development of proposed monetary and economic union within the EC; if the Government propose to publish any study of the implications of the current proposals for this country; and if he will make a statement on the matter.
73 Mr. Barry asked the Minister for Finance the steps which the Government are taking to bring about European monetary union.
I propose to take Questions Nos. 11 and 73 together.
Work on the various aspects of EMU is proceeding under the aegis of the ECOFIN and General Affairs Councils.
On 12 March, the ECOFIN Council adopted two important decisions necessary to the success of stage I of Economic and Monetary Union which is to start on 1 July 1990. These relate to the attainment of progressive convergence of economic policies and performance during stage I and to co-operation between the Central Banks of the member states.
Ireland, as Presidency, is also ensuring that preparations for stages II and III of EMU proceed according to schedule. The European Council at Strasbourg in December 1989 decided that an intergovernmental conference should be convened before the end of 1990 with a view to the final stages of Economic and Monetary Union. The Government have initiated the procedures required under Article 236 of the Treaty of Rome to have that conference convened.
As there are no specific proposals on the later stages of EMU before Council at present, the question of a study of their implications does not arise.
Surely a study of the implications of EMU generally for the Irish economy and business does not have to wait for specific proposals to be placed on the table? It is in that context that I raised my question. We need to know what impact economic and monetary union will have. The Minister will have to address himself to the impact which German monetary union might have on the plans for European economic and monetary union.
The recent NESC report on Ireland and the European Community focused on what our strategic approach should be to economic and monetary union. Within the different institutions and fora of the European Community, especially under our Presidency, we are keeping in contact with what is happening. The first real papers for discussion on the implications of economic and monetary union will be available in the next couple of weeks for discussion at the informal ECOFIN meeting in Ashford Castle in the last days of March. That will be the first indepth study by the Commission of the implications of economic and monetary union. NESC have provided us with a strategic approach to it.
Our approach can be described as one of welcoming it in principle on the basis that social and economic cohesion is a fundamental part of it and that as we move along we do so in parallel with social and economic cohesion. The first study papers will be available to us after the end of March. The Deputy asked me what effect German monetary union will have and the best I can do for him is to repeat what the German Finance Minister told us last Monday: that the Federal Government of West Germany are totally and absolutely committed to continue towards the achievement of economic and monetary union within the Community. They are in no way less committed than they were. They want to ensure that economic integration, apart from the political integration that is likely to take place between the two Germanys, reunification will be done with the least possible impact on the Community and its financial arrangements under the EMU.
The German Minister would say that.
That is what I said.
Let us hear the Minister's reply.
Nobody is in a position to speculate at this stage on what the results may or may not be. We have to wait until the elections are out of the way and until there is a Government to negotiate on behalf of East Germany, whether they will accept the offer on the table from the West German Government and what changes may emanate from those discussions. We will have to wait for a democratically elected Government to respond to those areas and it may be some time before anybody is in a position to speculate on what the impact may be in relation to it. There is a large balance of payments surplus in the West German economy that can absorb a considerable amount of the funds required for the development of East Germany, remembering that East Germany representing less than 16 million people is even smaller than the land of Hesse.
I am glad the Government have finally pinpointed at least one part of the NESC report with which they agree. Their statements to date have been that they agree with some but do not agree with other parts but they have never specified what they agree or disagree with. The NESC strategy is based on the fact that the economic and monetary union would be expected to ensure a continued transfer of resources to the least developed countries, of which Ireland is one, and that German monetary union, the source of much of the resources which would be expected to be transferred, would have a bearing on that and, therefore, it is essential that there is a discussion of some kind in Ireland about the future of economic and monetary union as it will affect this country. It is not enough simply to say——
Please, Deputies, I want to dissuade Members from the notion that we may debate this matter now. It is not open for debate now. This is question time.
It is not a question of waiting or otherwise. The NESC report was here for a full debate in the House. The Structural Funds, to which Deputy De Rossa seems to refer, are legally in place by the Single European Act and are there until 1992 and whatever happens in East and West Germany will not take away one farthing from the amount of the Structural Funds which are in place.
I did not say it would.
If the Deputy does not know that and the length of time he has been in Europe I cannot educate him any more.
Why did the Minister not answer the question instead of trying to dodge the issue?
(Limerick East): I take it from the Minister's reply that the strategy advocated by the NESC report is now Government policy in so far as European monetary union is concerned. Arising from that, when will the Minister be in a position to specify the pro-active approach advocated by NESC and the advice that we should propose rather than react on the European stage and that we should seek, by our proposals, to have an arrangement that would fulfil our needs rather than trying to modify the proposals of other people? When will we hear that if NESC is now the policy of the Government?
What I said was that NESC pointed to the need for part and parcel of the economic and monetary union to take place and the need for social and economic cohesion to protect the less developed areas of the Community. That is part and parcel of the Delors report which is the basic document along with the proposals that emanated from the British Government. The papers on that subject are down for discussion at the ECOFIN meeting in Ashford Castle at the end of the month. The Taoiseach has called a special informal meeting of the heads of the members of the Community for April to discuss the implications of German monetary union by which time the elections will be out of the way and some judgment can begin to be formed on the negotiations as they take place between the Governments of East and West Germany.
A number of Deputies are still offering. I sought to dissuade Deputies from debating this matter. It has got to come to finality. I am not prepared to dwell unduly long on any one question; I have dwelt too long on this one already.
(Limerick East): I have a short supplementary question.
I am aware of whose names these questions are in. I will hear questions from the three Deputies who offered if they will be brief, otherwise I am going on to another question.
(Limerick East): I would like to ask the Minister if the NESC approach is now Government policy and, if so, when will the Minister be in a position to outline the specific proposals which we as a Government will be putting forward on European monetary union which was the central aspect?
I am insisting on brevity and relevance.
The NESC report is a contribution to the debate on the strategy the Government will adopt——
(Limerick East): Is it Government policy?
——towards economic and monetary union.
A brief question, Deputy Taylor, please.
Would the Minister not agree that by reason of the recent developments in Eastern Europe, in Germany and in East Germany in particular, the parameters set in the NESC report have now largely been by-passed and superseded by those events? Would it not be more appropriate for the Minister to say that he will think beyond the NESC report rather than saying he has adopted its policies based on conditions which are now largely out of date?
The Deputy must not be listening to what I am saying. I said the NESC report is a contribution to the debate on economic and monetary policy.
(Limerick East): So is everything else that is said.
You fellows are there to make a contribution.
(Limerick East): The Minister said in his reply that it was Government policy——
Question No. 12, please.
(Limerick East): The Minister must lead the House. It is not Government policy at all.
The events of East and West Germany changed everything.
Question No. 12 has been called.
The Deputy should take the cotton wool out of his ears and listen to the response.
Cotton wool is what we are getting from the Minister.
