Dáil Éireann debate -
Friday, 23 Oct 1992

Vol. 424 No. 3

Birmingham Summit: Statements.

The Taoiseach

A Cheann Comhairle, I attended the special meeting of the European Council in Birmingham on 16 October, together with the Minister for Foreign Affairs, Deputy David Andrews. The Minister of State for European Affairs, Deputy Tom Kitt, also attended. I had the Presidency Conclusions of the meeting laid before both Houses of the Oireachtas at the beginning of this week.

The meeting was prepared in the normal way by the General Affairs Council, but in addition, I held meetings with the British and Spanish Prime Ministers on 25 September and 5 October, and Minister of State Kitt met his British and French counterparts on 12 and 13 October. We also had numerous other Ministerial and diplomatic contacts on such matters as subsidiarity, rumours of a two-speed approach to integration and the GATT talks.

This special meeting was convened in the wake of the monetary turbulence and the French referendum on the Maastricht Treaty. I was among those who urged the Presidency to convene such a meeting, so that the Heads of State or Government could, collectively, give fresh impetus to the process of European integration and thus help restore confidence and stability. My overriding objective, shared by other participants, was that the European Council should give a strong signal of momentum and of confidence in regard to European integration, that our solidarity is unimpaired by recent events, a message that we are moving forward together, as Twelve, to ratify the Maastricht Treaty on European Union. That objective was achieved. We reaffirmed the importance of concluding this process as soon as possible, without reopening the present text, on the timing foreseen in Article R of the Treaty: that Article refers to entry into force on 1 January next, but it makes provision for later entry into force if unavoidable.

The Treaty is alive and well. Some member states have already ratified, and procedures will be completed in at least ten member states by the end of the year. That said, realistically, entry into force will be some time in 1993, the earlier the better.

The indication given before the meeting by the British Prime Minister that his Government would bring the Treaty back to the House of Commons and would complete the ratification process in the present parliamentary session helped the atmosphere of the Birmingham meeting.

That leaves Denmark. We agreed in Birmingham that the Community must develop together, as Twelve, on the basis of the Maastricht Treaty, while respecting the identity and diversity of member states. I said here on 7 October, in reply to parliamentary questions:

we are indeed anxious that the whole community should move forward together, as Twelve, and we are prepared to co-operate in any steps that will help to facilitate ratification in Denmark or any other member state, so long as such steps uphold the Community achievements and do not impede the dynamic of integration.

On the same occasion, I indicated that any changes in the Treaty or in the Protocols annexed to it, which would require another constitutional referendum here, would be unacceptable to Ireland.

We want to help all our partners to ratify. We share important interests in the Community with Denmark, which, like Ireland, is a smaller member state with whom, for that reason also, we have a certain fellow-feeling. We are ready to examine the possibility of interpretative declarations or even provisions with legal effect. But, so that there may be no misunderstanding leading to wrongly based expectations on the part of any of our Danish friends, I want to reiterate that any such supplementary initiatives cannot involve any changes to the Treaty signed on 7 February last, to which reference is now made in our Constitution. Nor can they have implications for our Constitution in any other way. Naturally, we would also wish to ensure that any such additional agreements did not run counter to our interests or basic policy.

At Birmingham the European Council noted the White Paper which has been published by the Danish Government and welcomed their intention to present within the next few weeks ideas on the way forward. That is not done in the White Paper, which rather sets out eight structural options as to the possible future relations between Denmark and its Community partners and comments on four broad conceivable scenarios. The Danish Prime Minister told us that his Government were in discussion with all the political parties in Denmark with a view to reaching agreement on proposals to be put to us. The Birmingham meeting asked the Foreign Ministers to examine these ideas and to report on them to the Edinburgh European Council, with a view to agreement there on the framework for a solution. It was confirmed to us by Prime Minister Schluter that if agreement can be reached, in Denmark and with its partners, his Government will arrange for a second referendum in Denmark.

From the public discussions there it appears that the principal concerns could be met without changes in the Treaty. Let me again express the sincere hope that an acceptable way can be found to ensure that Denmark participates in the move forward provided for by the Maastricht Treaty. As was well brought out in NESC Report No. 88, it is not in Ireland's interest that European integration be stalled at the present stage. To adapt Parnell, we do not wish to lose a single European, but ultimately, every nation must pursue its own interests.

A second major objective I had for the Birmingham meeting was that it should demonstrate clearly that political leaders are taking charge of the political and monetary agenda and that the Community is addressing the matters that have an impact on people. In my main intervention I made the point that, in terms of bringing the community closer to its citizens, their concerns were not primarily with subsidiarity or transparency but with jobs, interest rates and standards of living. To a considerable degree subsidiarity is a distraction. Where people express unease or opposition to Maastricht it is not because they are concerned about the Commission peering into the nooks and crannies of national life; it is rather because their daughter or son cannot get a job, or because interest rate hikes are breaking the family budget or because of threats to their farming way of life. Their concern is not that the Community is doing too much but that it is not doing enough about these problems. I shall come back to this later.

The firm message from our meeting in regard to ratification of the Maastricht Treaty will help to steady the markets which, indeed, have settled down somewhat over the past two weeks. It was not appropriate for the European Council to consider detailed questions in regard to the operation of the exchange rate mechanism or the EMS generally. Indeed, it had been decided in advance that we should not do so for fear of fuelling speculation, but we did reiterate in our conclusions the European Council's commitment to the EMS as a key factor of economic stability and prosperity in Europe. This is in line with the Government's view that the system is basically sound and that recent developments underline the need to ensure that the economic policies followed are compatible with the exchange rates set under the system.

Both in our preparatory meetings and contacts and at the meeting itself, it was made abundantly clear that suggestions of Franco-German or Commission plans to proceed with European Monetary Union on a two-tier or two-speed basis were groundless. Chancellor Kohl said in the meeting that this should not even be mentioned. I and other leaders had also warned against such talk as calculated to damage the solidarity of the Community.

In intensive contacts with partners in the weeks before Birmingham we made clear our conviction that the way forward in monetary integration was as charted by the Maastricht Treaty; and that Ireland's sound economic fundamentals and fulfilment of the Treaty convergence criteria fully qualified us to proceed to the final stage of European Monetary Union from the outset.

Our support for the EMS and our view that the Maastricht design and timetable for European Monetary Union remain fully valid does not mean that they cannot or should not be improvements in the operation of the ERM and EMS. The European Council agreed that the recent financial turbulence calls for reflection and analysis in the light of the increasing size and sophistication of capital markets, greater capital liberalisation and of developments in the European and world monetary systems. We invited the Finance Ministers, assisted by the Monetary Committee, and the Commission, with the central bank governors to carry this work forward. We in Ireland have already made an input into this process of consideration and we will continue our active involvement.

The European Council expressed concern at lower growth and increasing unemployment. There was agreement on the need for strong co-ordination of economic policies at Community level which will hope to ensure that the economy of each member state is strengthened by success in others. Time did not allow us, in a restricted one-day special meeting with a particular background, to develop this theme much further; but the Government will continue to pursue the question of concerted action to help all our countries break out of the economic difficulties that currently prevail internationally. Even if we in Ireland have escaped the worst effects on growth, the current economic and monetary climate is extremely unfavourable, and there is insufficient international economic and monetary co-operation at a time of greater interdependence than ever. This has to be remedied in the community and in the wider world and must be tackled in the run-up to the Edinburgh meeting.

The Birmingham meeting was not an occasion for dealing with the Delors II package. The Lisbon Summit gave guidelines on a programme of work with a view to decisions at Edinburgh. Commission President Delors, in his speech to the European Parliament last week, emphasised that, as an integral part of tackling the unfavourable economic situation and boosting growth and employment, it is vital to reach agreement on the Commission's proposals for the Delors II package, particularly those on structural funding. He rightly made the essential point that, otherwise, the deflationary impact would be so great that European Union would be rejected.

Current economic difficulties have not eased the climate for the negotiations on the package, although they have increased its necessity. The Government will continue to aim for the objectives we have set and use every possible avenue and lever to achieve them. At Birmingham we secured the essential element that was attainable there: a renewed commitment to ratification of the Maastricht Treaty. Without the Maastricht Treaty major question marks would be put over the cohesion part of the Delors Package, which is in principle agreed. With the Maastricht Treaty on course, we go forward to reach decisions in Edinburgh.

The major part of the meeting was taken up with discussion of how to bring the Community closer to its citizens in order to respond to the preoccupations that had emerged in the public debates about the Maastricht Treaty in various member states. We in Ireland do not have major problems of alienation from the community stemming from any alleged lack of transparency or form any tendency for it to take over or intrude unnecessarily into areas best dealt with at national level, but there is certainly scope to improve the information flow about Community activities and to make these more readily understood.

In this spirit we were also prepared to consider how to make the Community more citizen-friendly and to address the appropriate application of what is known as the principle of subsidiarity inserted in the Maastricht Treaty. This article says that the Community shall act within the limits of the powers and the objectives set out in the Treaty, and in areas not within its exclusive competence it will act where the proposed action can be better achieved at Community level. The reference to objectives is important here: these include, of course, the objective of economic and social cohesion. The Lisbon European Council gave directions as to work to be undertaken to give effect to that Article. Certain tends and potential worries emerged in the course of the COREPER examination.

This was the background to my third major objective for the Birmingham meeting: to ensure that in any conclusion or declaration adopted there the principle of subsidiarity was not perverted so as to become a submarine torpedoing fundamental elements of the Community structure as set down in the Treaty of Rome. I had in mind here the balance between Community institutions, with particular reference to the role and prerogatives of the Commission, especially its exclusive and independent right of initiative. That objective was achieved. The European Council adopted a declaration on "A Community close to its Citizens." Our efforts at the meeting, with others, ensured that, in respect of subsidiarity, it is in line with the Treaties. The conclusions specifically note that the application of the principle is not to affect the balance between the institutions.

The Birmingham conclusions look forward to decisions at Edinburgh on the basis of reports to be submitted to that meeting. One of these is to come from Commission President Delors, who made a very comprehensive, balanced and reassuring presentation to the meeting. We shall have to remain vigilant, but there is very wide support across the member states for avoiding any steps that would unduly trammel the Commission or paralyse the decision-making machinery of the Community, which, as compared to other international organisations, has been its great and unique strength. I congratulate Deputies opposite, including Deputy Garret FitzGerald, on belatedly discovering the issue of subsidiarity. In the Intergovernmental Conferences on Political Union and on European Monetary Union, we were always particularly vigilant to ensure the right balance on this matter.

Mr. J. Bruton

Grotty, unworthy.

The Taoiseach

The Deputy should get his facts right. Among existing policies the control of national state aids was one that was very much in our minds. In this connection I am happy to report that in our discussions at Birmingham, Chancellor Kohl specifically said that subsidiarity cannot mean the renationalisation of existing Community policies or responsibilities.

In the discussions since Lisbon we have continued to be active in safeguarding the position on this area in bilateral contacts and meetings, such as that I held with Prime Minister Gonzalez. In responding to a pre-Summit letter from Prime Minister Major, I said:

We would have no difficulty in principle with the idea of a declaration to demonstrate that the Community is operating as closely as possible to the needs of its citizens. But, while there have been some excesses of regulation — often at the prompting of Member States — it is not our view that the Commission has generally been too intrusive. Frankly, our concerns are rather in the opposite direction — that the application of subsidiarity could be a pretext for rolling back existing Community achievements or heading off further integration in areas where we see this to be desirable. In particular, we could not, as was made clear at the General Affairs Council earlier this week, accept any suggestion that the Commission should be obliged to consult Member States before tabling a proposal or that one or more Member States would have the right to veto a proposal, on grounds of subsidiarity, before it was even tabled. We need to maintain the institutional balance that has enabled the Community to become the driving force of Europe today.

In the Birmingham Declaration, the European Council agreed that we must: demonstrate to our citizens the benefits of the Community and the Maastricht Treaty; make the Community more open, to ensure a better informed public debate on its activities; respect the history, culture and traditions of individual nations, with a clearer understanding of what member states should do and what needs to be done by the Community; make clear that citizenship of the Union brings our citizens additional rights and protection without in any way taking the place of their national citizenship.

As the result of successive referenda testify, the Irish people are already well aware of the benefits, both of our participation in the Community and of the Treaty on European Union. Nevertheless, taking this item together with ensuring a better informed public debate, the Government are examining how best to ensure that our people are well informed about and understand Community matters. The interdepartmental European Co-ordination Committee, chaired by the Minister of State, Deputy Kitt, have been reviewing this matter and consulting various interested parties with a view to developing proposals.

This week's Economist attributed our positive result in the June referendum to our decision to issue a guide in plain and simple language that people can understand rather than sending them copies of the Treaty as the French and the Danes did. That course of action was mischievously recommended by certain quarters in this House for the precise intention of confusing people. Our decisive referendum result led to President Mitterand describing us at the Birmingham meeting as “the political champions of Europe”.

I detect no particular concern or confusion in Ireland about citizenship of the European Union. Surveys show that Irish people are prouder of their nationality than any other nation in Europe, and yet we are also one of the most European of nations. There is no question of submerging our Irish citizenship, now or ever. Equally, I am sure that most people welcome the additional advantages of dual European Union citizenship, with the benefits it brings in political rights and consular assistance, especially for a people who travel and live abroad so extensively as we Irish.

The Community, and the Commission in particular, have fully respected the history, culture and tradition of the individual nations. I think of such things as its support for the Dublin-based European Bureau of Lesser-Used Languages and for numerous cultural and heritage activities.

The Birmingham conclusions welcome the commission's offer to consult more widely before proposing legislation, "which would include consultation with all the member States and a more systematic use of Green Papers". In fact, the Commission already consults very widely before bringing forward proposals with member states, the relevant social partner bodies, sectoral representative and industrial bodies and a very wide range of other bodies, including 180 advisory committees. There can be no objection to further extending the scope of consultation, so long as it does not interfere with the Commission's freedom to present proposals or does not otherwise lead to undue delay or hesitation in the Community taking necessary action.

The Birmingham Conclusions reaffirm that national parliaments should be more closely involved in the Community's activities. It is, therefore, happy timing that we are, finally, I hope, moving towards agreement on committee arrangements for the Oireachtas to deal with community and foreign affairs. I look forward to early definitive agreement on the arrangements and to the contribution they can make with the assistance of the media, towards improving public knowledge and understanding of EC and world affairs.

The European Council also welcomed the Commission's readiness to respond positively to requests from national parliaments for explanations of its proposals. This refers, inter alia, to a very interesting idea of Commission President Delors, which I welcomed, to have, for each member state, a member of the Commission, not of the same nationality, to be responsible for relations between the Commission and each national parliament.

In regard to the Uruguay Round of negotiations under the GATT, there have been further intensive efforts recently in talks between the Community and the US negotiators, to make a breakthrough, so far unsuccessful, in what have been very long drawn out discussions. The European Council heard a report from vice-President Andriessen of the Commission on the current talks, indicating that, while gaps remained, real progress has been made. We invited the Commission to work within its existing mandate for an early, comprehensive and balanced GATT agreement by the end of the year, in the interests of the Community and the world economy, as well as for an early settlement on oilseeds.

The Government and I recognised that, as the Birmingham Conclusions state, a fair and successful GATT agreement would give a valuable non-inflationary boost to the world economy. But to be acceptable, an agreement has to be balanced and global. Together with France, we have strong concerns in the agricultural area. The Common Agricultural Policy reform negotiations were difficult and demanding in the concessions they involved. It has always been central to our approach to avoid "paying twice". We have to insist that the compensatory measures associated with reform will be completely safeguarded in the "green box" in any agreement, so that they will be permanent and not subject to reduction under the GATT. The capacity to export our agricultural products is of major importance for Ireland. We have, therefore, a major difficulty with the imposition of a volume limitation on exports benefiting from community export refunds, which would reduce in an unacceptable way our potential to exploit world markets. We will continue to make every effort to ensure that these and our other concerns are dealt with satisfactorily.

Balance also requires substantial further progress in many other areas of the negotiations, for example, services. But we certainly encourage the continuation of contacts with a view to reaching agreement in line with the Community's mandate. The present conjunction of circumstances may hold opportunities for this, but we cannot, and will not, accept an unbalanced agreement.

Following a commendable initiative by the British Presidency, we adopted a very good declaration on the situation in the former Yugoslavia, especially on the question of humanitarian aid for refugees and for those under siege. As winter approaches, Sarajevo is a devastated city — fuel and food are lacking. The people there and in other parts of Bosnia-Hercegovina face average winter temperatures of minus five degrees centigrade and snow several feet deep which will close most roads and may close airports.

Against this background, the European Council agreed that immediate and decisive action was needed in the face of the impending major human tragedy which could involve 300,000 or more people. We underlined the importance of providing winter shelter and zones of safety for refugees, and of ensuring the delivery of relief supplies. We decided that the Community will speed up EC assistance, for which 213 mecu is ready for immediate disbursement on 120,000 tons of foodstuffs, and medicines, shelter and 40 trucks; member states will immediately provide further staff and resources, practical and financial, to strengthen the capacity of the United Nations High Commissioner for Refugees and the Community and its member states will immediately establish a task force to support the efforts of the UNHCR to deliver humanitarian aid to the former Yugoslav republics.

Each member of the European Council will appoint a personal representative to supervise this work.

We also condemned the continuing widespread violence and cruelty and the savage breaches of international humanitarian law in the former Yugoslavia which have caused this human suffering and are now the main constraint on the delivery of essential aid. We noted the unacceptable fact that commitments made at the London Conference had not been put into effect and expressed our full support for the efforts of Lord Owen and Mr. Vance to bring about an end to hostilities and a peaceful settlement.

At the instance of my colleague, the Minister for Foreign Affairs, Deputy Andrews, at a meeting on the eve of the summit, the European Council also adopted a strong declaration on Somalia, in which we expressed our deep concern over the appalling situation there and the continuing deaths and starvation. We condemned the renewed fighting and called on the parties involved to observe an immediate ceasefire to allow the rapid distribution of aid.

We expressed our full support for the efforts of Ambassador Sahnoun on behalf of the United Nations to achieve a national reconciliation as the basis for a peaceful solution. We called for the rapid deployment of UN troops to the areas in which they are needed. We welcomed the outcome of the UN Conference in Geneva on 12 and 13 October, and the creation of a 100-day programme to deliver aid to the worst affected areas. The European Council also noted the contribution being provided by the Community and its member states to relieve the crisis: in addition to other aid, over 100,000 tonnes of food aid has already been delivered and a similar quantity is being sent. Member states are also contributing some 100 mecu bilaterally.

The European Council called for the rapid deployment of UN troops to the areas in which they are needed. At our request, the European Council asked the Presidency to consult the UN Secretary-General on ways and means to expedite these deployments.

The Birmingham meeting was not an occasion for definite or very specific decisions. It was a necessary exercise of consolidation and confidence-building and an opportunity to facilitate the process in Denmark and in Britain of ratification of the Treaty on European Union. In these objectives, it was successful, due not least to the skilful and well-organised way in which it was conducted by Prime Minister Major.

It was a staging post on the road to the Edinburgh meeting, where major decisions will have to be taken, including on matters of great importance to Ireland. My colleagues and I will be undertaking the most careful possible preparation for that meeting, and I shall be meeting Chancellor Kohl in Bonn on 12 November. The Government are determined to achieve the best possible outcome for Ireland, one that will be recognised as fully comparable with the excellent results we achieved in 1987-88.

Mr. J. Bruton

Interest rates in Ireland must be brought down if jobs are to be created and the living standards of those on mortgages are to be restored. This can only be done if there is European leadership with sufficient authority, first, to force Germany to finance its budget deficit by taxation and not by borrowing; second, to accelerate the timetable for the establishment of the European central bank; third, to reach early agreement with the United States on world trade and, fourth, to persuade Britian to rejoin the exchange rate mechanism at a more realistic exchange rate than that at which it became a member. If those four measures were adopted — they could be adopted quickly — it would be possible, in my view, to knock at least five points off present Irish interest and mortgage rates almost overnight. All of these things could be done if there was proper political leadership in Europe. They cannot be done by bankers, economists or university professors; they can only be done by politicians.

This week the Coalition parties in this House defeated a Fine Gael proposal to protect mortgage holders' living standards and jobs. The Government in that decision seemed not to recognise that the present appalling level of interest rates, if it continues, will destroy the productive base of our economy. A total imbalance will develop between savings and investment with astronomical interest rates destroying the risk/reward ratio of any job creating venture. It will simply not be worthwhile investing in job creation if interest rates remain so high that money can yield a much better return if left on deposit, and if borrowings for job creation are so crippling as to render the job creation prospects null and void.

The interest rates in Europe and Ireland at the moment are truly absurd and there is no other word to describe them. They make no economic sense. There may be some sense in narrow currency terms but there is no economic justification whatever for the present level of interest rates. We have an excess of saving in Europe, not an insufficiency of saving. We have an under-supply of employment and investment in Europe, not too much of it. To have interest rates at present levels, therefore, encouraging even more saving, less investment and less job creastion makes no economic sense and the one place that something can be done about that is at meetings in Europe such as the one in Birmingham. While that Summit may have adopted what the Taoiseach described as "good declarations" on a variety of topics, it achieved nothing. If politicians meet and simply adopt "good declarations" without actually making any decisions, we will make no progress because when meetings of this kind take place, people expect things to happen and if nothing happens there is a further erosion of confidence in the political process. Given that nothing happened at Birmingham I must ask why the meeting took place. It only created a further sense that there was nobody actually in charge, because at a gathering of the Prime Ministers of Europe all we got were declarations, no decisions.

These absurd interest rates, which are the main crippling symptom of the lack of political and economic leadership in Europe at present, must be reduced. There must be a long term political strategy adopted both in Ireland and in Europe as a whole. In Ireland, our Government have no long term strategy to underpin the present sterling/punt exchange rate. Temporary subsidies for vulnerable firms are not a strategy, they are simply a means of masking the symptoms of the disease. They do not treat its cause. Meanwhile, facing this appalling interest rate situation which is gradually destroying the productive base of our economy, the Government, instead of concentrating public and Government attention on the preparation of a 1993 budget designed to rebuild confidence in a way that will bring down interest rates, are devoting their attention over the next two months to fighting a premature and ill thought out referendum on the abortion issue. The same lack of political leadership is being displayed at European level.

At European level, the Presidency of the Council of Ministers is occupied by Britain which demonstrably lacks the confidence to give genuine European leadership at this time, and when its term of office is completed the Presidency will be occupied for the following six months by Denmark, which has even more acute political problems on European issues than Britain. This is a truly bleak prospect for Europe and all Europeans. The political leadership in Europe should now be coming not from the Council of Ministers but from the European Commission, and far from contemplating a reduction in the powers of the European Commission we should be enhancing those powers.

However, if this is to happen we need a Commission not of people appointed in smoke-filled Cabinet rooms, but a Commission which has a genuine mandate from the people and which speaks for all of the people of Europe with one voice. One way in which this could be done would be if the Treaties were to provide that the President of the European Commission, as with the President of the United States of America, would be elected directly by all the people of Europe in a Continent-wide election. A measure as radical as this is necessary to demonstrate a clear willingness to give leadership at European level.

Europe is now so integrated as a result of the integration of the European market and the abolition of exchange controls that the concept of nation states in economic terms makes no further sense. That development in economic thinking and reality has not been matched by an equivalent political development. Therefore, we have a complete dissonance between movement at the economic level and movement at the political level and the present turbulance is a direct result of the fact that there has not been a sufficient level of political development in Europe to match the economic integration. One way in which that could be done would be to enhance the powers of the Commission and to provide that at least the President, if not other members of the Commission, is directly elected by all the people of Europe in one election held on the same day. That would create a situation in which everybody, from Palermo to Dingle, would feel a part of one election for one person who would symbolise their hopes and aspirations. It would transform the European landscape and it is something that must be done if there is to be genuine political authority and leadership in Europe. Otherwise, we will continue with the sort of turbulance we have at present, particularly in terms of high interest rates, economic instability and so forth.

If world disasters such as we have in Somalia and Bosnia, are to be averted Europe must campaign for more powers for the United Nations under its Charter to intervene directly in the internal affairs of member states. All the declarations that were adopted at the Birmingham Summit concerning Somalia and Bosnia mean nothing as long as Europe or some other multinational agency does not have the power to actually intervene in member states. Supplying more food to Somalia makes no sense if the food cannot be distributed because of the activities of warlords. At present the United Nations, under its Charter, cannot directly intervene in Somalia without consent because its Charter prevents intervention without the consent of the member state. That aspect of the Charter must be changed.

Since 1945 relative peace has been maintained in the world because there was a bi-polar system in operation. The Eastern bloc, the Warsaw Pact and NATO, one rotating around the Soviet Union and the other around the United States, were powerful enough to maintain a type of balance of terror which maintained peace in the world. The United States is losing economic power and the Soviet Union has, effectively, already disappeared as an economic power. There is, therefore, a power vacuum in the world and the world has become much more dangerous than ever before. If that vacuum is to be filled we must find a new mechanism and I believe that has got to be an enhanced United Nations with substantial powers to intervene in individual disputes, without the consent of the parties, but on a basis which has been agreed perhaps by the Security Council with the support of the General Assembly or some other mechanism to allow it to intervene promptly and effectively. Otherwise the lack of world leadership in security terms will lead to many more tragedies such as there have been in Bosnia, Somalia and Uganda.

Likewise, Europe needs to redefine its boundaries. The Taoiseach would be as well off leaving the House if he does not think it is worth listening to the debate. Not all states are ready to join the existing Community. The powers of the Council of Europe should therefore be enhanced to bring all European states into a common democratic home with real powers. The present Council of Europe is too weak for this role and its founding Treaty must therefore be expanded. On the basis of their economies it is not reasonable to expect that most of the countries of Eastern Europe will be ready to join the European Community until perhaps 2010 or later. However, these countries which are now democracies should not feel that they do not fully belong to Europe because they are not members of the European Community. Therefore we have to find another institution, an authority with sufficient prestige, of which they can be full members in order to give them a sense of belonging to this common European home.

The Council of Europe, founded in 1949 before the European Community, has that ability; but, unfortunately, it has been crippled by the fact that its Treaty requires total unanimity for virtually every act the Council takes. Even a Treaty that has been agreed by all states in the Council of Europe can be blocked by one country saying that, having agreed it, it will not implement it. That practice must be changed quickly, because many of the countries in Eastern Europe are going through such trauma that their democracy might not last very long. Let us not forget that democracy, once established, does not necessarily continue indefinitely. Greece was a democracy for many years, from 1949 onwards, but democracy disappeared during the coup led by the Colonels and did not exist for many years afterwards. The same can happen in most East European countries unless there is a sufficient system of bonding of European democracies to ensure that anybody contemplating a coup will feel that they will become international lepers. One way of doing that would be to give the Council of Europe, which can expel members for non-democratic systems of Government — as it did in the case of Greece — sufficient prestige that people will not want to be expelled. That is something that should not be left until next year; it should be done this year.

I would like to refer to a few points made by the Taoiseach. As regards the European Community, I share some of the concerns expressed, although subsequently disallowed, by Commissioner Bangemann. If we enlarge the European Community and have a system where one member state, such as Denmark, can hold up the whole process, we will end up with European Treaties which consist of a maze of exceptions and exemptions which amount to nothing. We have seen this very bad trend in the British exemptions in regard to the Social Charter and European Monetary Union. If that is not to become a pattern some arrangement will have to be made to enable other countries to go ahead when one country has a difficulty.

I know that all sorts of problems could arise with that system; but if we enlarge the European Comunity, as I think we will, to include at least four more countries within the next five or six years, the sort of difficulties that arose with Denmark will become even more common at the next attempt at Treaty making in Europe. Therefore some rebalancing is necessary to ensure that one country cannot hold up the whole process. I realise that there are dangers in that for Ireland, but we should debate them. Commissioner Bangemann's idea is not one that should be swept under the carpet. He put his finger on a real problem that should be addressed. I do not expect the Taoiseach to talk about it because of the office he holds, but it should be discussed in this House.

I was not very happy with the Taoiseach's quotation from Parnell — that we do not wish to lose a single European but ultimately every nation must pursue its own interests. As I see it, the relevant nation now is Europe. The idea that individual countries, given the level of integration that exists between us, are capable of pursuing their own interests independently is out of date. If the Taoiseach was looking for a historical parallel he would have been better off looking to Daniel O'Connell, who saw himself as a European leader seeking to restore religious tolerance and liberal ideas throughout Europe and who was as well regarded on the Continent of Europe as he was in Ireland and Britain. While I mean no disrespect to the former member from Meath, Charles Stewart Parnell, who originated from the other excellent county of Wicklow, there are probably other quotations from Parnell that the Taoiseach could have found that would be more appropriate to what is needed at this time. However, I heartily agree with the Taoiseach in putting the emphasis on jobs in his contribution to the summit. There is an air of unreality in many European discussions which ignores the ten million Europeans who have no work.

The Taoiseach's statement that the European monetary system is basically sound should be questioned. In practice it is virtually impossible to maintain the type of EMS that now exists — that is, variable exchange rates, semi-fixed exchange rates — as long as there is complete freedom of movement of capital without exchange controls. You must have either semi-fixed exchange rates with exchange controls or a single currency. The idea that there can be a halfway house between the two for three or four years is unreal. Rather than talking about moving gradually through this phase, with complete freedom of movement of capital but with the possibility of devaluation, is politically naïve — it is a politically naïve part of the Delors II package. What we should be looking for now is a much earlier introduction of a single European currency.

I was disappointed with the petty remark made by the Taoiseach about Deputy Garret FitzGerald in relation to discovering the issue of subsidiarity. That was quite unworthy of the Taoiseach.

The Taoiseach

Was the Deputy here for Question Time yesterday?

Mr. J. Bruton

I would have to remind the Taoiseach that Deputy Garret FitzGerald, throughout his long political career, has consistently argued for a stronger role for the European Commission and has consistently made the point that the European Commission is the guardian of the interests of small member states. This is no new discovery on his part. I would remind the Taoiseach that before the Maastricht Treaty was negotiated I raised in this House my fears that the subsidiarity clause proposed could lead to what it is now possibly leading to as a result of the misinterpretation of it by some member states who want to weaken the powers of the Commission. While I claim no prophetic powers for the Fine Gael Party in this matter, before the Taoiseach makes such petty remarks he should check the record. This party have been warning about this issue for quite some time.

The Taoiseach

Deputy FitzGerald should check the facts before he makes misstatements in this House. That is all I said.

Mr. J. Bruton

That is not what the Taoiseach said.

The Taoiseach

That is exactly what I said last week and again today.

Mr. J. Bruton

It is not what the Taoiseach said, but I will not waste my time arguing about it. What I am concerned about in terms of subsidiarity is that it will be used as a concept to prevent the European Commission from enforcing its rules in regard to competition policy. For example, I am concerned that it will be used by rich countries such as Germany and France to continue subsidising their industry to the disadvantage of Irish industry which cannot be subsidised because our Exchequer is not large enough, and the Commission will be prevented from taking enforcement action against these countries on the grounds of so-called subsidiarity. I am also concerned that it will be used to maintain the Telecom monopolies of large member states to the disadvantage of peripheral countries such as Ireland who need a single Telecom system for Europe with low charges. As a peripheral country, more than anybody else we need cheap transport and cheap telecommunications. I am afraid that this so-called doctrine of subsidiarity will be used to prevent the Commission introducing a genuine single market in these areas on the basis of fair rules.

I was also disappointed with the Taoiseach's reference to the reason for the success in June of the Maastricht referendum. He seemed to claim this was due to the fact that the guide produced by the Government was well designed; he did not have the grace to express any appreciation of the role played by the Irish Council of the European movement in campaigning for a "yes" vote, nor did he mention the unanimous support of the two main Opposition parties. It shows a particularly myopic view on the part of the Taoiseach——

The Taoiseach

Go back and read it again.

Mr. J. Bruton

If the Taoiseach referred to the success of the June campaign common sense would suggest that, in addition to taking credit for the design of the leaflet and so on, he should also have referred to the role of other parties in this House and other organisations who campaigned for a "yes" vote.

The Taoiseach

I did that very often.

Mr. J. Bruton

I now want to refer to the Birmingham conclusion that national parliaments should be more closely involved in the Community's activities. The enhanced role for the Joint European Secondary Legislation Committee will be a valuable addition in that regard as far as this House is concerned. However, it is important to hold regular debates in this House on the report of that committee, otherwise it will simply be an esoteric exercise involving a few members, which will not have any effect on public opinion and will be meaningless.

I want to refer to the prospects for a collapse in the world trade talks. No Member of this House should under-estimate the risk in this regard. We should remember that the 1929 Wall Street crash would not have led to a world recession lasting ten years if it has not been followed by a succession of protectionist measures by invidual member states. We now have a currency crisis in the world equivalent to the 1929 crash but that need not lead to a profound recession as long as we do not repeat the mistakes of the thirties and accompany it with protectionism. My worry is that if the United States introduces these retaliatory measures we will head down a road very similar to that which led to the hungry thirties and that, in retrospect, the nineties could be compared to that period if that error is made. It is not enough to say that the fast track authority in Congress continues until next June, that we wait for Bill Clinton to be elected and hope that everything will be all right. If an agreement is not agreed within the next two weeks it is possible that President Bush will introduce these retaliatory measures and if that happens it will be very hard to reverse them. I believe that, if the United States take retaliatory measures it will choose to injure in particular those member states in Europe which it feels are principally responsible for its problems. As a country which depends especially on subsidised exports of our agricultural products to third countries and on the compensatory supports which are being called into question, I am very fearful that our country could be singled out for the worst part of the United States retaliation. Therefore, I am disappointed that the Birmingham Summit did not do more to bring us closer to a world trade deal.

I am also very disappointed that the Taoiseach is so happy with what he called "a good declaration" in relation to the situation in the former Yugoslavia. Let us not forget that what is now happening in Yugoslavia is akin — though on a smaller scale — to the massive purges undertaken by Stalin and Hitler earlier this century; no systematic attack on civil rights on that scale has taken place in Europe since the war. The rest of Europe is sitting comfortably looking on without any power to do anything about it. I am not suggesting that it is within the compass of the European Community to intervene directly by military means; the European Community do not have that military authority. However, the United Nations does, through its military articles, and far more leadership should be given by Europe and the United States so that the United Nations will act definitively, use its military articles, if necessary, to bring this appalling attack on human rights and suffering in Bosnia to an end. The same applies to Somalia.

There are suggestions in the Danish White Paper — of which the Taoiseach is aware — that the meetings of the Council of Ministers should take place in future in semi-public. How does the Taoiseach regard those proposals? I have heard Chancellor Kohl dismiss them out of hand as totally impractical, and there is a lot of sense in what he said. On the other hand, the European Council of Ministers is the main decision-making body at present and one of the principles of democracy is that decisions of importance should be taken in public.

Perhaps we should look at the possibility of introducing a European Senate that would be directly elected by member states and in which individual member states would have equal representation. A bicameral system is more appropriate to a federation, the idea that democracy in Europe can be achieved simply by giving more powers to the existing parliament, given that the representation of small countries is much less than that of big countries, is not appropriate to the balance needed within a federation. Most successful federations throughout the world have been based on a bicameral system with an elected Senate which had equal representation for all states and an elected lower house which had equal representation for the population. If we want to democratise Europe we should be moving towards the idea of an elected Senate, a bicameral European Parliament instead of a unicameral system. That would get around the problem raised by those who seek to introduce cameras into all the proceedings of the European Council and the Council of Ministers.

I hope that the Maastricht Treaty is the last time that we ever see in a European Treaty an exception for a member state like that negotiated by Britain in regard to the Social Charter. It is impossible to proceed with the Social Charter as long as one member state is opting out. That particularly applies to this country, because we are in direct competition with Britain in most international markets, in their own market and in our markets. If they do not implement it, conditions will become very difficult for us. The appropriate approach at Maastricht would have been to come up with something on which everybody could agree. I believe that Britain is wrong in its attitude to the Social Charter and it must be brought around to a different point of view. It is not possible for 11 countries to go ahead and for Britain to stay out; it will create such an imbalance that jobs will transfer from here to Britain, which would be wrong and must be avoided. It is a mistake in which the Taoiseach did not have a direct part but I hope he will see that that kind of mistake, as far as he has influence on future thinking, will not be repeated.

Mr. Kavanagh

I profoundly disagree with one point made by Deputy Bruton, that the European Community discussions on GATT should be rushed through to facilitate one candidate in the American presidential election.

Mr. J. Bruton

I did not say that.

Mr. Kavanagh

I would agree with President Mitterand's statement that we should not rush our negotiations to the detriment, perhaps, of our farmers in Europe and then find that the elected American president felt that we had done so with the expectation of supporting another candidate.

Mr. J. Bruton

I did not say that at all.

Mr. Kavanagh

I hope that the Leader of the Fine Gael Party would not suggest something like that. The negotiations should move along at a pace at which an effort can be made to arrive at conclusions that will be to the benefit of the whole world and, of importance to us here in Ireland, to the benefit of the Irish community.

Mr. J. Bruton

I wish to raise a point of clarification. My concern was that America might introduce retaliatory measures that would plunge the world into a trade war. I have no interest in helping one candidate in the US presidential election.

An Leas-Cheann Comhairle

I call on Deputy Liam Kavanagh, without interruption.

Mr. Kavanagh

It is generally accepted that the Birmingham Summit was a grave disappointment. It failed to resolve the issues it set out to address and it demonstrated that a number of problems within the Community are closer to the surface than was perhaps realised. Indeed, it demonstrated clearly that there are major problems of leadership within the Community.

The Birmingham Summit should have been crucial. It was designed as an emergency response to a growing crisis within the Community. Outwardly, that crisis was caused by the flurry of speculation that had led to the departure of Britain from the ERM and had placed the ERM itself under considerable strain. Inwardly, and more importantly for the longer term, the crisis was one of morale — the growing feeling that the drive in the Community towards integration had stalled and that the danger of disintegration was not being faced up to and tackled.

For most of us there were two abiding memories of the summit. The first was the image of the British Prime Minister and President of the Council, John Major, being questioned at his press conference about virtually every issue under the sun except the central European issues. It brought home the point that leadership in the Community is really only possible for a Prime Minister who is in charge at home. The second abiding memory I have is of our Taoiseach, on his arrival home, admitting for the first time what most of the rest of us had known for a long time — that Ireland's target for support under the Structural Fund and the cohesion funds is now a great deal more difficult to achieve. This was an admission that should have been made a long time ago. Indeed, it should have been stressed throughout the Maastricht referendum campaign that the £6 billion, so blandly promised by Fianna Fáil then, was never more than a target we were setting ourselves, and a difficult target at that. If the Government had been more honest in the campaign the £6 billion promise would not return to haunt the Government as often as it undoubtedly will. I would venture to predict that it will be a long time again before the Irish people believe a promise as grand or as misleading as that one.

It is worth commenting at the outset of my remarks on the sequence of events that led directly to the Birmingham Summit and on what those events say to us about Europe. In all of the tumult about the exchange rate mechanism, which has occupied so much attention over the last few weeks, many of the other issues that surround the whole debate about European integration have been forgotten.

We have just witnessed an assault on national currencies tantamount to a kind of white-collar piracy. As the Governor of our Central Bank has pointed out, that piracy has cost national economies billions of pounds for no economic benefit. It has also caused untold damage in the wider economies of the member states. Only last week, for example, we had to vote through this House a fund of £50 million to protect businesses whose competitive margins had been damaged or destroyed by the collapse of sterling. We have no guarantee that that fund will be large enough, or that when it is exhausted there will not still be businesses who need help.

At the same time, we all know the damage that interest rate rises will do to our prospects of real economic recovery — not just in the "fundamentals" that the Government are so fond of talking about but in terms of the real fundamentals of employment and unemployment. Even though banks and building societies have generally agreed to withhold increases in repayments for six months, we have no guarantee that the rise in interest rates will have been rolled back by then. And even if it is, mortgage holders, for example, will still owe several months of extra repayments to their societies, leading in all probability to an extension of the term of thousands of mortgages.

All of this damage has happened as a direct result of the piracy I mentioned earlier, which made the Birmingham Summit necessary. And that piracy, as I also said, tells us a lot about the Europe we live in now and about the Europe that we need to build. In a properly integrated and co-operative Europe the white-collar piracy that dominated the financial markets over the last few weeks would not have been allowed to happen. This was not a war between a few greedy men and the financial exchanges. The so-called "speculators" included highly respected and powerful multinational banks and other financial institutions — like pension funds, for example, whose principal function is supposed to be to ensure security for working people in the first instance. British banks in all probability made huge profits from bringing sterling to its knees. British pension funds have contributed to the thousands of job losses that may well flow from the damage that has been done to the British economy. Irish Banks, German banks, American banks — they were all making a killing at the expense of national economies and at the expense of competitiveness throughout Europe.

Of course, the philosophy behind all this piracy and damage is the commitment to "free market forces". You cannot buck the markets, and if you try your economy will be brought to its knees. And that seems to be right and proper — even if the actions of the markets bring countries to the brink of financial humiliation. That is, in their eyes. And, of course, because free market values are so important, the Birmingham Summit was unable to face up to the pirates. Ordinary working people, their jobs threatened by the greed of the few, might have been watching and waiting for their leaders in Birmingham to take a firm position in relation to reckless and irresponsible speculation on the financial markets. If they were, they were waiting in vain. As far as the leaders of Europe are concerned, and even though they know, as everyone knows, that this kind of speculation has no economic benefit, they are afraid or unwilling to take the speculators on. That was one of the great failures of Birmingham — at a time when citizens are crying out for, and economies badly need, some form of control or discipline of avaricious and greedy speculation.

There are, or there ought to be, lessons in all of this. In the context of Europe the lesson surely is a simple one. The only kind of Europe that will work is a highly co-operative Europe that is prepared to act to protect its citizens from raiders and pirates, no matter how big they are. A Europe built exclusively on free market forces cannot survive indefinitely. A progressive Europe must by definition be a just and fair Europe as well as a highly dynamic and efficient one. It must be a Europe prepared to develop policies that will turn extra wealth into extra jobs, as well as to create wealth. That is the sort of integration that we have always campaigned for and that the Confederation of Socialist Parties in Europe seek and will continue to seek.

The model of integration is one thing, but the principle of integration cannot be lost sight of either in the midst of all these setbacks to the Maastricht Treaty. In many ways the treaty is less important than the spirit of integration, and the commitment to integration, and the real tragedy surrounding Birmingham was the apparent weakening of that spirit which characterised the atmosphere. The principle is a simple one: if we do not make progress on European integration the most likely alternative is disintegration. The spirit and the process must be rebuilt, even if that involves making the kind of changes that will make the present Treaty more accessible and meaningful to citizens. It will never be enough to build a Treaty supported by bankers and financiers.

In the pre-Maastricht campaign, we— the Labour Party — urged people to vote "yes". We did not do it in a spirit of trying to grab the £6 billion, but rather in the proper spirit of a commitment to the spirit and ideal of European integration. In fact, we went a lot further than just saying "Vote yes and hope for the best". Again and again we called for a substantial campaign by the Irish Government, backed up by the whole Community, to make Maastricht work for every citizen of Europe.

It is abundantly clear that Maastricht is unfinished business. If and when the Treaty is ratified by the Twelve—a proposition that is looking more and more doubtful, especially when one considers the mess that the British Government are in — the campaign for improvements must go on. Throughout the Masstricht campaign we heard suggestions from a number of people who ought to know better that the Maastricht Treaty offered us some sort of European heaven on earth. Government Ministers routinely accused those of us on the left who were critical of the whole Maastricht process of distorting reality. The question might easily be asked now: is it not fairly clear that it was the people offering Maastricht as if it were a pot of gold at the end of the rainbow who were really the ones distorting reality?

It was clear then, and it is even more clear today, that Ireland would face enormous challenges after we voted yes to Maastricht. It is clear today that an enormous amount remains to be done if extra prosperity arising from European integration is to be fairly spread throughout the regions of Europe. The danger has always been that Maastricht could enrich the few at the expense of the many; and when we see free market forces working the way they did in the last couple of months we can see what the real dangers are.

Even if the Treaty is ultimately ratified and takes effect, it must be remembered that there are many instruments in it that will enable wealth creation. The campaign must continue to add instruments to enable the fair distribution of extra wealth so that citizens and workers benefit.

Ireland's agenda in relation to the Maastricht process still has the same specific elements that it has always had. We have spelled them out before, and it is worthwhile setting down some specifics again. For example Ireland must lead a major campaign seeking the inclusion of full employment as a specific Community objective and demanding the adoption of policies based on State and Community involvement in working towards that objective. Talking about it is not enough, even though I was glad to see the Taoiseach raise the issue in Birmingham. As is now clear, we will have to redouble the fight, together with other less-developed regions of the Community, for proper funding for Structural and Cohesion Funds. The Government should stop trying to fool us that they are still holding out for the full amount when it is obvious that they have already lowered their sights somewhat.

The damage to our competitiveness that has been sustained by the collapse of sterling shows how much more we have to do to ensure that indigenous industry is enabled to compete effectively in the new environment. More than ever we are going to have to aim for an unprecedented emphasis on excellence, efficiency, high-quality marketing, and reliability. This will involve a major test of leadership and a united effort here at home.

The Social Chapter of the Treaty will need immediate strengthening. The Irish Government, no more than any other, must not be allowed to dodge the objective of the Social Chapter, which is to promote "employment, improved living and working conditions, proper social protection... the development of human resources with a view to lasting high employment and the combating of exclusion". The original Social Charter, with its commitment to children, the elderly, and other citizens apart from those at work, must be got back on the European agenda.

We should not forget either, in the middle of all the economic and fiscal trauma, that a common defence policy for Europe is on a future European agenda, and decisions on the issue will face us in 1996. We must be ready for the debate about militarism, and that means we must be ready to work hand in hand with the other neutral countries that have applied to join the Community. Our task will be to work with the other neutrals to develop policies for peaceful security.

The extent to which we succeed will be judged by the people in another European referendum, which already, it has to be said, is not too far away.

One of the issues that has been highlighted again and again — in Denmark and France for example and in the dawning realisation among Europe's leadership — is that the European institutions remain insufficiently democratic and accountable. The proceedings of the various Councils of Ministers are going to have to be open to more public scrutiny and understanding. The balance of powers between the directly-elected Parliament and the different levels of the European executive are going to have to be taken much more seriously. What all this boils down to, and the real lesson of Birmingham and the tumult that proceeded it, is that European integration must not, and cannot, be built around the notion of a two-speed or a three-speed Europe.

There are incipient moves already taking place in that direction, despite the protestations to the contrary — we all know that. Our Government seem to want to adopt a macho kind of posture and keep insisting that we are going to stay in the first division. At the same time, of course, we want to stay in the second or third division when it comes to hand-outs. There must be no first division, second division, or third division. It is long past time our Government stopped pretending that we want to be in with the big boys and started insisting that every member state is equal, with an equal right to support when they need it and an equal degree of interest in the future of a just and fair Europe.

The only correct position for us is to keep insisting that it would be a major mistake on the part of any EC member state to fail to recognise that the exclusion of Britain, Italy, Spain, Portugal and Greece as well as Ireland, which between them account for 50 per cent of Community output, from any monetary union would undermine, perhaps fatally, the whole Community. We did not vote on the Maastricht Treaty on any kind of pick-and-choose basis, neither has anyone else. We supported them on the basis that they would fall unless they applied equally to everyone. That still remains the position — and that still remains the objective that our Government should be fighting for.

Let us remember too that European Union will fail ultimately unless it addresses the needs of the 16 million unemployed in the Community, whose number is set to rise. For as long as we rely exclusively on an economic policy which has exchange rate stability and low inflation as its overriding priorities, irrespective of the consequences for the level of economic activity and employment, we are not doing any service for the Community as a whole.

Before concluding, I want to say a word about the interest rate crisis, which is central to the issue of growth. The Bundesbank, which in the interests of German unification was prepared to go along with parity between the East German currency and the Deutsche Mark, was not nearly so generous and open-minded when it was asked to reduce German interest rates to preserve sterling's position and to protect other currencies, including ours, in the ERM. For an institution which claims to be independent of politics, the Bundesbank has become fond of issuing statements and leaks and hints on a regular basis. Most of these, it seems, are a rejection in one form or another of both a European Central Bank and a single currency, as laid down in the Maastricht Treaty. Perhaps in the last couple of days, if I am interpreting things correctly, their tone has softened a little. If that turns out to be the case, it is to be welcomed.

A more open approach by the German authorities would have to be welcomed because it is damaging to those Governments, including our own, which are coping with the severe adjustments necessary to stay within the ERM in the face of persistent speculation.

The paradox for us here, of course, is that we have taken all the so-called "corrective action" to reduce inflation and our public sector deficit, which are now close to the Maastricht conditions for European Monetary Union. We have paid an extraordinarily heavy price in social terms for those corrective measures, as our health service, our education service, our social welfare system, and our housing crisis can testify. In return we find that interest rates are up 3 per cent and may rise further to stay with the Deutsche Mark. That is despite the fact that Germany's public deficit is well outside the 3 per cent target rate. The reality we are all aware of is that if Germany were to agree to finance some of its own objectives, notably the cost of unification, through increased German taxes rather than sucking money out of the community through high German interest rates, those rates could be reduced, thus helping other currencies to stabilise.

That is the real goal the Government should be pursuing between now and the Edinburgh Summit. I fully recognise that Ireland could hardly be expected to achieve such a development on its own. However, it is in the interests of all the countries whose economies are threatened by high German interest rates to strongly urge Germany to take account of the implications for Europe on German monetry policy. In so doing, we have to remember that Britain is still our main trading partner and it is in our interests that Britain should not be shunned but rather encouraged to come back into the ERM on reasonable terms. Unless this happens, I greatly fear that we too will have to face the issue of devaluation of the punt. There seems to be no political possibility of Mr. Major getting the Maastricht Bill through the House of Commons or of the UK rejoining the ERM without some movement in German interest rates.

Until the Danes and the UK pass the Treaty, the current uncertainty will persist, and sterling will remain outside the ERM and probably continue to fall. We cannot sustain a relationship indefinitely that leaves the punt worth £1.08 sterling or higher. That would force us to choose between devaluation or crippling interest rates and a long term lack of competitiveness in key sectors of our industry.

Interest rates at current levels are unsustainable for the whole of Europe and they have to be brought down. Germany has to be encouraged to give positive leadership on this question immediately; otherwise, the next summit in Edinburgh could mark the beginning of the break-up of the EC and not just the end of Maastricht.

If there is any lesson to be learned from the Birmingham Summit, it is surely this: Edinburgh has now become a potential "make-or-break". While I have never argued that the Maastricht Treaty is sufficient on its own to unify Europe, I would like to conclude by saying this: we have had a glimpse of what free market forces can do in the last few weeks. At the same time we have also seen what perverted ideas of economic nationalism can do in what was Yugoslavia and parts of East Germany. It is time the voice of the people of Europe was heard; it is time the leaders of Europe began to listen and to take heed. The disintegration of Europe, which is the main alternative to a revitalised integration of Europe, is the most dangerous option open.

Proinsias De Rossa

The Birmingham Summit was convened in the aftermath of the initial phase of chaos in the currency markets, presumably with the intention of agreeing measures to prevent a recurrence. To say that it failed would be misleading since it would carry the implication that an attempt had been made to do something about that crisis. The only beneficiaries seem to have been the newspaper sub-edidtors who had a field day enjoying themselves in devising pithy descriptions of this non-event. They ranged from "surreal" to "a damp squib", but the prize for accuracy would surely go to the Financial Times, headline which described it as “Not So Much A Summit As A Molehill”.

Having been intended as a vehicle to rescue the fading political fortunes of Prime Minister John Major and his Tory Party, it ended with a commitment to finalise the GATT negotiations at an early date in an effort to rescue the washed up re-election hopes of President George Bush. Both are doomed to failure because the effects of the "trickle-down" economics of the madhouse practised in the US and the UK for the past 13 years are inescapably apparent.

Europe's leaders gathered in Birmingham against a background of more than three million of its citizens homeless; 15 million of its labour force surplus to requirements; and almost 60 million people living below the poverty line. The more European voters have either cause or opportunity to think or learn more about the Maastricht Treaty, the more they are disposed to reject it. The result is that the entire European integration project is in jeopardy. Meanwhile, there is growing alienation from the political process, despite the wishful thinking of the Taoiseach in his speech, with a disturbing trend of increased support for neo-fascism and the more virulent forms of nationalism and self-interested regionalism. Curiously enough, this was echoed today by the Taoiseach when he said that every nation must go its own way.

What was the response of Birmingham to this depressing litany? They repeated the mantra that Maastricht must be ratified with all speed, without any recognition of its growing unpopularity or any attempt to rectify its now widely recognised deficiencies, except for the grandiosely titled Birmingham Declaration which is less than irrelevant.

On the economic situation they, with masterly understatement, acknowledge that member states "face common economic challenges", and prescribe more of the same medicine; continuation of policies to reduce inflation and to control budget deficits so as to meet European Monetary Union convergence terms. This way, they said, lies recovery, economic and social cohesion and the creation of the new and lasting jobs that are needed. There is no hint of how the same policies which led us into this mess should now miraculously bring us out of it.

On the anarchy in the financial markets, they acknowledged that there is a need "for reflection and analysis" and passed the buck to several committees to "carry this work forward". Whatever that phrase means, if indeed it means anything, it is certainly clear that it contains no proposals for how a recurrence can be prevented or how the wreckage from Black Wednesday which saw three currencies devalued or ejected from the EMS can be reassembled.

On the GATT-Uruguay Round, the Council reaffirmed the importance of an agreement as a means to give a boost to the world economy, with the Commission being urged to negotiate a comprehensive agreement before the end of the year. Within a week the American delegation had packed their bags and gone home, with the French announcing that negotiations will not resume for several months. So much for that.

All in all then, it was a less than inspiring response to what is for tens of millions of Europeans a very real and worsening crisis. It may be foolish to have expected anything different when we consider that these are the same tired faces that we have been watching for the past ten years still trying to peddle burnt out policies whose sell-by date has long since gone.

It would be nice to think that the prospects were rosier closer to home, but unfortunately they are not. We are told that the Taoiseach was in "a remarkably relaxed mood" throughout and that he ambled through the Summit "with detached ease". It is difficult to decide whether this most resembles Ronald Reagan who, in a similarly detached fashion, slept his way through much of his Presidency, or of another famous failure, John Major, who not long ago was promising to build a Britain "at ease with itself". Either one is a poor role model and besides it is hard to imagine how somebody with responsibility for the state of the Irish economy could achieve such a degree of relaxed ease, that is, perhaps without the aid of chemical substances.

The Community's finances and the much promised £6 billion for Ireland were apparently not even discussed at Birmingham. The ground is, however, being prepared for the likelihood that the £6 billion will not materialise. Both the Taoiseach and the Minister for Finance are suggesting that "things are tightening up everywhere and there is a lot of tough negotiating to be done". Next we will be told that it was a negotiating tactic with expectations having to be kept high in order to obtain the optimum outcome. It would be an apt epitaph to a sorry saga of dishonesty, particularly during the referendum campaign, and plain wrongheaded negotiating tactics and objectives.

If the original Delors II package and its crucial component of a phased increase in the budget from 1.2 per cent of Community GNP in 1993 to 1.37 per cent in 1997, had been implemented in full, and if the promised average growth of 2.5 per cent per annum had materialised, unemployment in the Community would still be approximately 500,000 higher in 1997 than it is today. Instead, the Community is heading into deepening recession with 2 per cent of the projected growth lost during 1992 and 1993 alone. The collapse of the GATT talks, continued recession in the EFTA countries and the US, plus the turbulence in the financial markets are likely to cause those growth rates to be revised further downwards. On top of that the richer countries are refusing to pay and even a Commission proposal of a two-year pause, that is no increase until 1995 at least, was not acceptable. The £6 billion figure was always an exaggeration in that it failed to take account of the impact of the former GDR, and that proportionately Ireland's share of whatever cake there was, was likely to decline. Instead of facing up to the reality and adopting an alternative strategy the Government opted for short term political advantage last June which they hope will see them past the next election also. How else does one explain the declared confidence of the Minister for Finance, Deputy Ahern that we will receive £1 billion from the £8 billion Cohesion Fund when Spain is insisting on getting at least 60 per cent of what was their baby anyway, and our population is only one-seventeenth of that of the four countries entitled to benefit?

The fundamental error was, from the outset of the negotiations, to focus on an increase in the Structural Funds as the solution to our cohesion problems. We ought to have pressed for a system of financial transfers such as apply in other federal systems. Even within its own terms, the Structural Funds are not the best means of utilising the moneys which we do receive. For once I agree with that right-wing economist, Mr. Sean Barrett in thinking that equivalent measures to reduce the national debt would yield a better and more beneficial return. The biggest and most incomprehensible mistake however, prompted by the same Mr. Barrett along with others, was to oppose the development of a genuine Common European industrial policy. We should have put less emphasis on Structural Funds, which we get by grace and favour, and instead supported the creation of an interventionist industrial policy to put the objective of regional cohesion at the heart of efforts to raise the technological capability of European firms. The crucial question for peripheral regions of Europe is not Euro hand-outs but rather the investment and divestment decisions of the Euro-multinationals who are being supported by the Community to face US and Japanese competition. That way lies real wealth creation and a meaningful shift of the tools to do it from the overcrowded centre to the peripheral regions. This time last year I made precisely that point in this House in a pre-Masstricht debate. It provoked the ignorant response from the then Taoiseach that "it had been tried in eastern Europe and it failed". Nor, unfortunately, did I receive any support from any other Opposition party on that issue. I still have not heard anything on the same lines, even from the Labour Party today.

What then should be done? Lest there be any doubt, let me repeat my firm belief that there is no future for the Irish economy outside the European Community. That is not an option, nor has it been for many years. Most of our economic policy, and our hopes for a reasonable degree of prosperity, depend on decisions taken at European level. In many cases, and increasingly so, it depends on decisions which need to be taken at the wider international level in forums where our interests can only adequately be represented as part of the European Community. The Maastricht Treaty, particularly economic and monetary union, and the Delors II Package, its medium-term economic and fiscal policy adjunct, determines the parameters within which we must operate for the rest of this century. If that is not right we are in serious trouble because there are virtually no mechanisms left to us which can be used at national level to change course or correct mistakes. Financial deregulation and the globalisation of trade has led to a situation where even the European Community is not a superpower.

Whether or not Maastricht is ratified by the UK or Denmark, we need a new Treaty to rectify the glaring shortcomings — universally recognised if not admitted — in the current one, and to prepare for enlargement to include the applicant EFTA countries.

Having botched the present effort, the Council of Ministers should not be allowed the same leeway to do the same again. As a first step an assizes of the Community's 13 parliaments should be convened, along the lines of the Conference of Parliaments which met in Rome in November 1990. It should be charged with redirecting and giving fresh impetus to the integration process and laying down guidelines for a further intergovernmental conference to be convened in the course of 1993 which should have completed its work before the European elections due in June 1994.

The next phrase of integration should be based on a democratic constitution to be drawn up by the European Parliament and submitted for ratification to the national parliaments. It should include as a fundamental principle that all legislative deliberations be carried out in public, and that, at whatever level power is exercised, it be subject to effective control by, and only with the approval of, a directly elected parliament.

In the immediate term it is essential to devise a new system of currency support, capable of defending currencies which are intrinsically sound against allcomers. Any feasible combination of tax and interest rate mechanisms targeted specifically on speculators should be put in place as soon as possible on a Community-wide basis. If necessary some phases of the European Monetary Union schedule should be accelerated in order to reduce the period of exposure to currency speculation and exchange rate swings, provided appropriate complementary measures are introduced to cushion against the effects of the stricter economic convergence terms which that would necessitate.

The particular case of the sudden wide and fluctuating exchange rate difference between the pound and the punt must be dealt with immediately and in a longerterm manner. An economy like ours cannot hope to sustain a £50 job subsidy scheme for a protracted period. Nor are there any other purely domestic actions which can resolve it. As members of the EMS who are abiding by the rules, including, at some cost, compliance with the convergence terms set for entry to the final stage of European Monetary Union, we are entitled to draw on Community support when a fellow EMS member unilaterally ejects from the system, with destabilising effects on our currency which put at risk thousands of jobs in our manufacturing sector. In view of the unique situation in which we find ourselves among our partners, vis-á-vis sterling, we should press for the formulation of a Community compensation package which will allow the punt to retain its position in the EMS without at the same time crippling our economy. The continuing slide in sterling and the increased likelihood that it will not reenter the EMS for some time makes this an all the more urgent and sustainable case.

In the same way as the chaos in the currency markets was principally caused by underlying economic problems in the UK, US, and, albeit in a different way, the German economies, so there are no purely monetary or technical solutions to the slow-down in the Community. At present there is no economic or industrial policy and only half a monetary policy in the EC. We must insist, and keep insisting until we succeed, on the formulation of a Community coordinated strategy for growth and employment along the lines recommended by the European Social Partners — ETUC and UNICE — last July, and involving the implementation of the Delors II Package as soon as possible. Failure to devise and implement such a policy quickly would expose the unco-ordinated national policies to greater monetary instability, competitive devaluations and still lower economic growth, in the face of which even the Single Market would be unlikely to survive.

The Birmingham Summit would not have been missed, if it had never taken place. True, it did not do any damage in the active sense, or at least, any that has yet become apparent. And, when we observe the capacity for damage of the Prime Minister of Britain and his Tory Cabinet, perhaps we should be grateful for small mercies. That cannot be good enough, however, not by a long shot. The people of Europe had a right to expect that the leaders whom they have elected would tackle and exert control over the institutions and individuals, who, for private gain, could turn the currency markets upside down at will, without interest or concern at what it was doing to thousands of individuals in the real world outside. Vague utterances about subsidiarity, transparency, or national identity are less than appropriate responses to wild currency fluctuations, deepening recession, rising unemployment or EC-wide economic and political paralysis.

We cannot afford another Birmingham, nor can we even afford to wait until Edinburgh in December, for the real agenda to be addressed.