Ceisteanna—Questions. Oral Answers. - Birmingham European Council.

Ruairí Quinn

Question:

1 Mr. Quinn asked the Taoiseach if he intends to have bilateral meetings with Heads of Government within the European Community in addition to the British Prime Minister, Mr. Major, to discuss the present difficulties within the Exchange Rate Mechanism; and if he will make a statement on the matter.

John Bruton

Question:

2 Mr. J. Bruton asked the Taoiseach the steps he has taken to ensure that at the Birmingham European Council there will not be a decision to apply the concept of subsidiarity in such a manner as to weaken the role of the Commission in advancing and protecting the interests of the more peripheral States which are at an earlier stage of economic development; and whether he is in a position to assure Dáil Éireann that there is no truth in reports that the Government agreed in COREPER to a proposal that a group of member states be empowered on grounds of an alleged breach of subsidiarity to halt the Commission preparation of, and thus prevent presentation of, proposals to the Council of Ministers.

I propose to take Questions Nos. 1 and 2 together.

As those two questions bear no relationship to one another they should not be taken together.

It has always been the prerogative of the Taoiseach or the Minister to enjoin questions.

They are not related.

Let us take them together as announced.

The British Presidency indicated that the Birmingham European Council will deal with the Danish situation, the EMS and making the Community more open to its citizens.

On a point of order, I find it very difficult to hear the Taoiseach.

In preparation for the meeting and to get across the Irish viewpoint I have met the British and Spanish Prime Ministers and there have been ministerial and diplomatic contacts with Germany, the Netherlands and France. In all these contacts, I have stressed that recent events underline the need for the strengthened integration in the monetary, economic and political spheres for which the entry into force of the Maastricht Treaty can pave the way; and that Ireland does not favour a two-speed Community in the monetary or any other sphere, but that if such a Community did come about, Ireland would wish to be with the central core.

The continuing debate on the Maastricht Treaty in the member states has revealed a range of activities and concerns, which the Government recognise would suggest that more needs to be done to bring the Community closer to its citizens.

The Government are prepared to cooperate to this end and to consider the appropriate application of the principle of subsidiarity set out in Article 3B of the Treaty but this cannot involve calling into question fundamental aspects of the Treaty of Rome, particularly in regard to the right of initiative of the Commission. The Government are exercising vigilance to ensure that subsidiarity is not used as a cover for rolling back Community achievements or heading off further integration in areas where this is desirable. Our viewpoint on this matter was clearly set out at the General Affairs Council last week and by me in replying to Prime Minister Major's message about the Birmingham European Council and there was also full agreement on these points when I met Prime Minister Gonzalez in Madrid.

There is no basis for the suggestion that the Government agreed that one or more member states would be able to veto, on the grounds of subsidiarity, a Commission initiative even before it was formally tabled. Any such idea was unambiguously rejected by the Minister of State, Deputy Kitt, at the Council meeting, where we had the support of the vast majority of member states, and by me. We believe that COREPER acted wisely in rejecting such ideas when drawing up its report on procedural aspects of subsidiarity for that Council meeting. It also seems clear that no such proposal will arise at Birmingham, certainly not from the Presidency.

I would like to ask the Taoiseach a question in relation to my question which I suggest is not related to Question No. 2.

Hear, hear.

I asked the Taoiseach specifically if he intends to have bilateral meetings with Heads of Government in addition to the meeting with the British Prime Minister and that he had on his visit to Seville with the Spanish Prime Minister. Would the Taoiseach like to answer that question?

As the Deputy said, I met the Spanish Prime Minister and I am due to have a meeting with the German Chancellor later. If I feel ministerial representations need further backing from me that will be seen to.

Would the Taoiseach agree that there is now more than ever a need for a concerted and sophisticated diplomatic effort to be undertaken by the Government in respect of all Heads of Government having regard to the chaos which exists within the EMS and the ERM and the vulnerability of the economy? What is the reason the Taoiseach has not undertaken such an initiative?

First, I do not think it is necessary to do so because this matter will be discussed at Birmingham next Friday, as the Deputy would be aware if he had listened to my reply. Second, at this stage the Irish economy is one of the few if not the only economy which complies fully with the criteria which have been laid down for inclusion in the economic and monetary union. While we would oppose any suggestion that there should be a two speed Europe, if such a move were to be made by the core currencies, which would be undesirable, we would certainly want to be included in the first tier.

Will the definition of the concept of subsidiarity be discussed at Birmingham? Would the Taoiseach agree that there are some grounds for concern about the wording of his reply in which, in regard to the defence of the powers of the Commission, he only referred specifically to the preservation of the right of initiative of the Commision? Would he agree that it is extremely important to protect other aspects of the powers of the Commission, namely, the ability of the Commission to enforce within member states fair rules relating to competition, industrial subsidy in which Ireland has a major interest because we cannot compete on that field, and environmental standards in that we do not want countries which have lesser environmental standards to outsell us on the market because they have cheaper costs as a result of applying lesser environmental standards? The only way that can be dealt with is by ensuring that the Commission has adequate powers of enforcement as well as powers of initiative.

I agree with what the Deputy said that, apart from the areas I mentioned, there are other areas in which Ireland, and other small countries, has a fundamental interest. In relation to the powers of enforcement, particularly in the area of competition policy, there is no question of us subscribing to any view that they should be rolled back. There is a need to provide more information to the ordinary citizen in Europe and to have less regulation but not in the areas to which Deputy Bruton and I have referred. Indeed, the large nations which complain so much about the principle of subsidiarity and refer to the need for it at times ask the Commission to introduce various regulations and directives. For example, the British Government requested the Commission to look at the concept of timeshare and to deal with it in a directive while the French Government asked the Commission to introduce a directive which would stipulate the point at which one should cut off the legs of a chicken. In my view EC directives are not required in relation to either of those issues. It would be better if those matters were dealt with by national governments. That is what the concept of subsidiarity is all about.

What about the Progressive Democrats' legs?

(Interruptions.)

Let us have no fouls, please.

Would the Taoiseach care to answer my question?

What I am saying is that the Commission is being burdened with requests from some member states. This can lead to opposition from the ordinary citizen and the Commission. We want the Commission to retain all its powers in relation to competition policy and the other areas that have been mentioned. We want to ensure that industrial subsidies do not run riot within the Community because we would suffer as a result. The issue of environmental standards transcends national boundaries and should call for directives. As the House is aware, we would not support anything that would lead to the powers of the Commission being rolled back. It is important that the Commission has these powers to retain the balance in the institutional framework within the EC.

Would the Taoiseach agree that he gave an impression, which was unfortunate from an Irish point of view, when he referred to his concern about the Commission legislating for "every fiddle faddle", that the Commission was going beyond its powers and appropriate responsibilities and that he should take this opportunity to withdraw that remark?

I do not have to withdraw such an unfortunate remark. The international press reads: "Irish Warn Major Not To Attack EC Powers", "Reynolds Against Commission Curbs", "Irish Pre-Summit Talks in London", all of which make our position clear.

That was after I warned the Taoiseach to stop.

We wrote to the Presidency of the Commission making clear what our position is.

Does the Taoiseach regret the remark?

If somebody wants to misinterpret what I said, so be it.

Does the Taoiseach regret the remark?

The record is clear.

On Question No. 1, which relates to the ERM, may I ask the Taoiseach if he intends to make proposals or if he has taken any initiative with other member states to restrict or end what have been referred to as currency raiders, who have to a large extent precipitated the current crisis here, in Britain and elsewhere?

Ours was the first of the Twelve Governments to raise the question of predators, currency speculators and raiders and the vulnerability of small member states in particular and, indeed, some larger member states in that situation. There is an urgent need in Birmingham to send out a very clear signal to international money speculators that the ERM is solid, that the members are fully committed to it and that they would use their total pooled resources. It would take that strength to resist some of the money speculation that has gone on in recent weeks. Happily it seems to be coming to an end.

May I ask the Taoiseach whether the reports are correct that prior to the last Council meeting a proposal was put forward in COREPER that a group of member states — not one or two — could prevent the presentation of proposals to the Council of Ministers? Can the Taoiseach confirm that that proposal was rejected? There were reports in newspapers in other countries to the effect that the proposal had been adopted in COREPER, although it was subsequently rejected at the Council of Ministers. I would like to know whether that proposal was adopted and, if so, how did our representative think that was the Government's policy? Second, can the Taoiseach state whether there are proposals from the Germans in regard to subsidiarity which would have the effect that obligations would continue to be imposed on countries for new Community policies, but the financing of them would have to be borne by the countries themselves with no Community assistance? Are there proposals that could be interpreted in that light and, if so, what position does the Taoiseach propose to adopt in regard to that matter in Birmingham?

I made clear in my reply Ireland's position on subsidiarity. There is no question of our supporting or having supported anything like that in the past. It is time everybody realised what Government policy has been consistently in this regard. I do not think I have to comment further on that matter. Can the Deputy repeat the second part of his question?

It relates to the suggestion in British papers that the German Government have put forward proposals under which the Community would continue to adopt new policies imposing obligations on member states but the states would have to finance them themselves without Community assistance which is given in such cases when obligations are imposed beyond the means of certain member states?

I am not aware of such proposals. However, if there are any such proposals the Deputy can be certain about what my position and the position of the Irish Government will be in relation to them.

Would the Taoiseach answer the question I put to him about the meeting in COREPER. Was agreement reached on such a proposal?

Therefore these press reports are incorrect?

That is correct.

May I ask the Taoiseach whether there are proposals for consideration at Birmingham in regard to a definition of subsidiarity and, if so, from whom did they emanate? Would the Taoiseach not agree that there is an inherent danger in dealing with matters of this complexity at a summit meeting in that that is the one instance where the European Community makes decisions whereby the power of initiative does not rest exclusively with the Commission? The Taoiseach should resist the taking of any binding decisions in regard to subsidiarity at this Council because to do so would run directly counter to the principle of the Commission initiative, which he has said he wishes to preserve.

I will take that stand and I am totally in favour of what Deputy Bruton has advised in relation to the question of rolling back the powers of initiative.

I thank the Taoiseach very much.

The Taoiseach should listen to Deputy Bruton on other matters also.

I have dwelt at length on these two questions. I see two Deputies who are anxious to intervene. I will hear them and I hope they will be brief.

May I ask the Taoiseach with regard to his reply on the ERM, to indicate if he intends to make proposals to the Birmingham summit other than on the question of pooling the resources of the various central banks to fight currency speculation? Does the Taoiseach have any fiscal proposals with regard to the taxing of profits arising from such speculation? Does he have any proposals with regard to assistance to peripheral economies, such as our own, with regard to moving on a much faster road towards European Monetary Union generally?

I am sure the Deputy understands quite clearly that the question of financial help on the road to European Monetary Union is what the Delors II package is all about. It is hoped that agreement will be reached on the level of funding and the future financing of the Community budget in Edinburgh at the end of December. Proposals in that regard have been put forward and let us hope that between now and the Edinburgh summit we will make sufficient progress to ensure that decisions can be taken at Edinburgh. In relation to the whole question of ERM, that is a matter of discussion. One would not shout from the rooftops what one might or might not do at this stage. The Twelve member states have signalled very clearly and determinedly to the outside world that they will support and protect the ERM and they will see what other measures can be taken to ensure that the level of speculation and the success of speculators in recent times is not repeated.

I am aware that a deliberate decision was made that, for obvious reasons, Finance Ministers will not attend the Council meeting to be held at the end of this week. May I ask the Taoiseach if it is his intention to bring to the attention of that Council the fact that our currency has been revalued upwards as against that of 80 per cent of our trading partners and that there is a need to restore the ERM to its original status — a semi-fixed mechanism of exchange rates? Finally, in view of the urgency of this matter and its critical impact on strategic thinking within the Irish economy, can the Taoiseach give an indication at this stage that he will report back at the earliest possible opportunity — next Tuesday — to this House from that European Council meeting?

I will report back in the normal and appropriate way. It is dangerous to start about realignments of ERM in advance of any meeting. That is not the way business is done. I have no intention of adding to anxieties which could result in the markets taking a jaundiced view as to people's intentions. I reject the suggestion that our currency has been revalued upwards by 20 per cent. Yesterday and this morning we saw the position of sterling relative to the punt. Everybody is very clear on our exchange rate policy and we are determined to maintain that policy.