Dáil Éireann debate -
Tuesday, 19 Dec 1995

Vol. 460 No. 2

European Summit: Statements.

The Taoiseach

I was accompanied at the European Council in Madrid by the Tánaiste and Minister for Foreign Affairs, Deputy Spring; the Minister for Finance, Deputy Quinn, and the Minister of State with responsibility for European Affairs, Deputy Gay Mitchell.

This was a very successful European Council which took a number of decisions of fundamental importance to the future of the European Union. This success was due in no small part to the extremely efficient and effective conduct of business of the Council by the President, Felipe Gonzalez. This efficiency has been a hallmark of what has been a very successful Spanish Presidency. This European Council also set out in key areas the parameters of the agenda which will face the Irish Presidency from 1 July next.

The full details of the decisions taken by the Council are set out in Part A of the Council Conclusions copies of which I have arranged to be placed in the Library of the House. I would summarise the key decisions as follows; first, a number of key decisions in relation to economic and monetary union were made. The reference scenario for the changeover to a single currency was approved — 1 January 1999 was confirmed unequivocally as the starting date for stage three. The name of the new single currency, the Euro, was decided upon. Second, further impetus was given to the fight against unemployment which was identified by the Conclusions of the Council as the priority task of the Community and its member states. There will be a major review of progress in this area at the Dublin European Council in December next. Third, the formal decision to launch the Intergovernmental Conference on 29 March 1996 was taken. The Intergovernmental Conference will be a major priority for the Irish Presidency and its task will be to establish the political and institutional conditions for adopting the European Union to present and future needs, particularly with a view to the next enlargement. Fourth, the Council met the leaders and Heads of State and Government of the countries of Central and Eastern Europe, including the Baltics as well as Cyprus and Malta. The Council mandated the Commission to do further work on the implications of enlargement and it agreed in the light of this work and after the ICG to take the necessary decisions for launching accession negotiations at the earliest opportunity. In the case of Cyprus and Malta there is of course, a guarantee to commence negotiations six months after the end of the Intergovernmental Conference. Finally, the Council underlined the importance of action in the Justice and Home Affairs area in ensuring the creation of an area of freedom and security for Europe's citizens. In the area of drugs the Council endorsed the report of the expert group established by the Cannes Council and mandated the Italian and Irish Presidencies to progress implementation of the report, with progress on the drugs issue being reviewed at the Dublin European Council.

The Council also dealt with a wide number of foreign policy issues which will be addressed by the Tánaiste and Minister for Foreign Affairs in his statement.

The Madrid Council has sent an unequivocal message that economic and monetary union will commence on 1 January 1999. All the Heads of State and Government of the Union are committed to this, including those whose countries have an opt-out clause under the Maastricht Treaty. By creating economic and monetary union and the single currency we will enable Europe to fully realise its economic potential and place itself firmly centre stage in the global economy. Perhaps, more importantly, economic and monetary union will cement the integration of the peoples of Europe thereby helping to create a real European identity transcending national boundaries.

There will be hurdles to overcome before European Monetary Union becomes a reality. A significant outcome of the Council from an Irish viewpoint, is the attention being paid to the question of the relationships after 1999, between those within the single currency zone and those outside it. The Madrid Council recognised that these relationships will have to be defined before 1 January 1999. The Council, therefore, mandated the Ecofin Council, together with the European Commission and the European Monetary Institute in their respective fields of competence, to study all the issues arising from the fact that some member states may not initially participate in the single currency and to report as soon as possible. Deputies will be aware that the Minister for Finance recently announced the commissioning of a study of the implications of economic and monetary union for the Irish economy so that we will be better placed to plan our policies in preparation for economic and monetary union and with a view to successful participation in it. The terms of reference of this study include the economic implications of various membership scenarios for relevent member states other than Ireland.

While I do not wish to prejudice the outcome of the various studies under way it does seem at this stage that strong consideration will have to be given to some form of arrangement to promote exchange rate stability between countries inside economic and monetary union and those outside, in order, as far as possible, to eliminate the risk of competitive devaluations and distortion of the single market. Of course the more countries that are in economic and monetary union the less this will be a problem. In this regard I am very heartened by the political determination being shown in member states to ensure that they will meet the criteria for participation in economic and monetary union. I am also very pleased from an Irish perspective to note the recent comments by the UK Chancellor of the Exchequer that, in the event of the UK's non-participation in economic and monetary union, the road of competitive devaluation is not one the UK will follow.

This comment simply reflects the fact that the Maastricht fiscal criteria set out a sensible path for budgetary policy to which every member state should aspire. As I stated in this House very recently, stable public finances as demanded by economic and monetary union deliver low interest rates, low inflation, higher investment and, ultimately, more jobs. In other words, they make social and economic sense even if economic and monetary union did not exist. Finally, on the subject of economic and monetary union I wish to reassert the total determination of the Government to ensure that Ireland will be among the group of countries qualifying for participation in economic and monetary union with effect from 1 January 1999.

The Council had a very constructive exchange of views on employment policy. This was facilitated by the fact that for the first time the Council had before it a joint report on employment strategy from Ecofin, the Social Affairs Council and the Commission. The European Council approved this report and directed the two councils and the Commission to continuously monitor the application of the employment strategy and to report on progress to next year's Dublin European Council.

The Council also recommended specific areas for action on employment policy by member states who were recommended to pay particular attention to young unemployed persons, the long-term unemployed and unemployed women. This is a policy focus which the Irish Government shares. Also of particular Irish interest was the emphasis laid on local development initiatives and small and medium-sized enterprises (SMEs) as agents of employment creation and for tackling unemployment. We have long advocated the potential of local development for employment creation. This commitment is underlined by the fact that the local development programme in Ireland is the responsibility of the Taoiseach's Department. The European Union has committed over £300 million in support of local development in Ireland in the period up to 1999. It is widely acknowledged that the focus in Ireland on areabased strategies to tackle unemployment and support enterprise is yielding results of European significance. It is for that reason that I have announced that a European Conference on Local Development will be held here during our Presidency.

In regard to SMEs the Council had before it a very instructive report from the Commission. This report underlines the importance and job-creating potential of SMEs. It indicates that SMEs now comprise 66 per cent of total employment and 65 per cent of business turnover in the European Union. Moreover, net job creation in SMEs more than compensated for job losses in large enterprises during the period 1988 to 1995. During this period enterprises with fewer than 100 employees were responsible for almost all the new job creation at a rate of 259,000 net jobs per year. Significantly the report concludes that, during periods of recession, small enterprises shed jobs more slowly and absorb economic shocks better than large companies.

The report also points to sharp differences in administrative and VAT compliance costs between large and small businesses. It quotes a German study, which states that the relative cost of administrative burdens per employee is more than 20 times higher in smaller enterprises than in larger ones. A separate UK study estimates that the smallest enterprises pay 2 per cent of their turnover in VAT compliance costs whereas for larger enterprises the cost is negligible.

The report on SMEs sets out a list of priority actions to be taken at European and member state level to facilitate growth in the SME sector. In its Conclusions the Council laid particular stress on the need to do the following for SMEs; simplify administrative formalities; ensure better access to information, training and research; remove obstacles affecting SMEs within the internal market and promote their inter-nationalisation; and improve the financial environment for them by means of better access to capital markets and encourage development of the European Investment Fund function with regards to SMEs.

The European Council urged the Commission to put these aims into practice as swiftly as possible in the framework of the next integrated programme for SMEs. In addition, the Government will be carrying out its own review as to which measures in the Commission report might be suitable for application in Ireland.

The Madrid Council took the formal decision to launch the Intergovernmental Conference in Turin on 29 March 1996. The Intergovernmental Conference will review the Treaties which are, in effect, the constitution of Europe. The Council also welcomed the report of the Reflection Group on which the Minister of State, Deputy Gay Mitchell, was Ireland's representative. Deputy Mitchell is to be congratulated for his painstaking and effective work as a member of the group, which met in all 14 times for a total of 22 days over a six months period. The Intergovernmental Conference will lay the foundations of the Europe of the future and the report of the Reflection Group will, in the words of the Council Conclusions, constitute a sound basis for the work of the Intergovernmental Conference.

The key task for the Intergovernmental Conference is the revision of the Treaties to equip the Union to deal with today's realities and tomorrow's requirements. The Council reaffirmed the guidelines it adopted for the Intergovernmental Conference in Cannes. These are worth restating in full: to analyse the principles, objectives and instruments of the Union, in the context of the new challenges facing Europe; to strengthen the common foreign and security policy so that it can cope with new international challenges; to provide a better response to modern demands as regards internal security, and in the fields of justice and home affairs more generally; to make the institution more efficient, democratic and open so that they are able to adjust to the demands of an enlarged Union; to strengthen public support for the process of European integration by meeting the need for a form of democracy which is closer to the citizens of Europe, who are concerned with employment and environment questions and to put the principle of subsidiary into practice more effectively.

As I have already stated on a number of occasions Ireland will be a constructive participant in the Intergovernmental Conference. The Irish people would expect no less given the commitment which they have displayed to the European ideal in successive referenda. We will, of course, fight to protect Irish interests where necessary. Members here are generally aware of the key Irish concerns and I do not propose to repeat them at this juncture. It is, however, our objective that the end result of the Intergovernmental Conference will be an ever closer, more integrated Europe which will complement, and not conflict with, national identities and which above all will retain those elements which have made membership of the Union a magnet for so many of the states of Europe today.

Ireland will of course chair the Intergovernmental Conference during a crucial stage in its proceedings. No one can say at present when exactly the Intergovernmental Conference will end. The most likely end-date is spring of 1997, but if it can be concluded earlier the Irish Presidency will not be found wanting. On a more practical level the European Council made a number of important procedural decisions in relation to the operation of the Intergovernmental Conference.

The conference will meet once a month at the level of Foreign Affairs Ministers. Preparations for these meetings will be the responsibility of a working party of representatives of Foreign Ministers and the Commission. The Council also decided that the European Parliament, the Central and Eastern European countries, Cyprus and Malta, the members of the European Economic Area and Switzerland will be briefed regularly on the proceedings of the Intergovernmental Conference. Special arrangements are to be put in place whereby the European Parliament can give its point of view on developments in the Intergovernmental Conference. Countries seeking to accede to the Union will be entitled to put their points of view at meetings with the Presidency. It will also be very important that the public in Europe be kept informed of developments at the Intergovernmental Conference as it proceeds, so that they will understand the outcome. This is a responsibility that will fall on a number of bodies, including all the political parties in the House.

The enlargement of the Union to the east and south is perhaps the most daunting of the many challenges facing the European Union over the next decade. Ireland fully supports the statement in the Conclusions of the Council that enlargement is both a political necessity and an historic opportunity for Europe.

I am particularly pleased that the Council expressly recognised that enlargement will ensure the stability and security of the Continent — stability and security are prerequisites for all economic activity. It will offer new prospects for economic growth and serve to strengthen the building of Europe in observance of the acquis communautaire, including the existing common European policies. Any enlargement which led to a substantial dilution of the common policies would not work.

The Council also recognised that enlargement, to be successful, requires sound preparation. To this end it called on the Commission to deepen its evaluation of the effects of enlargement on the common policies of the EU and to forward its opinions on the applications received as soon as possible after the Intergovernmental Conference concludes. The Council also requested the Commission to submit a communication after the conclusion of the Intergovernmental Conference on the future financial framework of the Union from 31 December 1999 having regard to the prospect of enlargement. Overall this is a wholly sensible approach which should allow for a fully informed and timely assessment of all the implications of enlargement before actual negotiations commence.

The question of the cost of enlargement, and how it will be paid for, is of course a key issue for the Union as a whole and for Ireland. This Council has however ensured that the preparation for negotiations will be soundly based.

I wish to refer to the issue of drugs and crime. If the public is to be convinced that European Union is viable in the long-term it must be convinced that their own personal security can be safe-guarded within a European context. Thus a successful fight against drugs and organised crime is essential. The drugs problem is one that can only be tackled at all levels of the Union, local, national and European. The approval of the report of the Group of Experts on Drugs and the stress it laid on translating the guidelines it contains into precise co-ordinated operational activities, are very welcome developments. The incoming Italian Presidency in collaboration with the Irish Presidency will prepare a programme of activities on foot of this report, and the Dublin Council will examine its implementation.

The scope and mandate of the expert's report considered at Madrid did not extend to the issue of legal changes in the EU Treaties themselves. The work of the Reflection Group suggests that some Treaty changes can be made that would have a significant impact on the fight against drugs. In particular the group's suggestion that a specific legal basis for action against drugs be incorporated into the Treaty must be seriously considered.

Various aspects of the drugs problem are discussed in many fora at present, both within and outside the Union. One of the challenges will be to integrate the range of existing programmes and activities so as to take concerted action against the drugs problem. It is only through a comprehensive vision that this problem can be tackled. The expert group itself, whose mandate covered all aspects of the Community's work, is a good example of the approach to follow.

We must never lose sight of the fact that our aim in all the endeavours in this area is to create visible results. These results must be communicated to Europe's citizens in clear and simple terms.

This was a watershed European Council. It signalled the irreversible nature of progress towards a single currency. It addressed the employment issue in a focused manner. It laid down the procedural ground rules for the Intergovernmental Conference. It reiterated and strengthened the commitment to enlargement while protecting the existing gains of the European Union. It focused on integrated activity against the drugs problem.

Above all the Council reflected the willingness of member states to give the process of European integration a new dynamic. I look forward to building on this commitment during Ireland's Presidency of the Council in the second half of 1996.

Mr. B. Ahern

The European Council in Madrid seems to have been fairly successful in terms of pushing forward the agenda of economic and monetary union and enlargement. The Spanish Presidency, under Prime Minister, Felipe Gonzalez, are to be commended on their success. In the limited time available I would like to devote my contribution to two main topics of the Summit and also to the position of Irish Steel.

The Heads of State and Government have shown their determination to proceed with the plans for economic and monetary union and not to be deflected by opposition or scepticism in a number of member states and some financial markets. If economic and monetary union is ever to become a reality there is probably no choice but to proceed in this way. The decisions taken at the Council to call the new currency the "Euro" and to set early 1998, when the figures for the previous year are on the table, as the date for determining which countries are able to go ahead in the first group are largely symbolic. The Euro is not perhaps the most elegant name but it is practical and leaves no one in any doubt that what is involved is a fully fledged European currency.

The 1998 deadline will soon be upon us and, thanks to the good foundations laid by successive Governments since 1987, I am reasonably confident we will continue to be in a position to satisfy the criteria, with our debt-GDP ratio moving rapidly towards 60 per cent. However, if Ireland is to prosper under economic and monetary union we have to do more than satisfy the formal criteria by 1998. My party is seriously concerned that if we maintain borrowing close to the ceiling during periods of high growth then we could face major problems of adjustment if there is an international downturn for any reason. I regard the record high spending level in underlying terms in 1995, and the prospect of underlying spending substantially exceeding targets this time next year, as imprudent. Problems are being stored up for the future while our tax system remains uncompetitive and gives too little reward. We are in danger of wasting a valuable and unique opportunity to catch up quickly with our European partners.

I agree with the German Finance Minister that during normal times borrowing is best kept to minimal levels of approximately 1 per cent of GDP or less, thus providing room for manoeuvre in more difficult times. It is precisely for this reason that the ESRI has advocated the elimination of all borrowing by 1999. If we want to maintain social consensus and avoid the sort of situation we have witnessed in France in recent weeks we must make it possible for our economy to adjust relatively smoothly to differing economic conditions. We should not assume that the public will as patiently accept a second time the type of cutbacks which were essential in 1987-88 to break out of the morass of economic stagnation.

In our public discussions we should not presume that a new British Government will decide to opt out of economic and monetary union. If other European countries are determined to go ahead I find it difficult to believe that the British will yet again allow themselves to be left behind, with all the implications this might have for the city of London as one of the world's financial centres. Despite our political commitment in principle to economic and monetary union, naturally we will have to weigh up our position very carefully at the time, particularly if a British opt out looks likely. It would be against the entire logic of our European policy to opt out simply because Britain has done so. To revert to a position of much greater political and economic dependence on Britain would be a retrograde step, particularly if that country was losing competitive ground. In coming to its decision, the British Government needs to be clear that it cannot count on us to stay out of economic and monetary union with it.

Given the very real interests involved we cannot afford to adopt an uncritical gung-ho approach. As we know from our initial entry to the EU and the entry into EMS in 1979, a blithe approach to problems can be followed later by severe difficulties for which inadequate provision and preparation has been made. We must look before we leap. Real and genuine concerns have been expressed by indigenous industry and farming organisations which are worried about the agri-food sector. We need to think hard about a strategy for improving out competitiveness if economic and monetary union is brought about without the British. The study of the economic impact of a two-tier European Union and its effects on competitiveness is very important. The problem will not be peculiar to us; France will be equally worried if countries to the south are not part of economic and monetary union.

The future role of Structural Funds post-1999 in underpinning economic and monetary union will also be relevant. The point has been well made that German monetary union was underpinned by large transfers between West and East Germany to counter huge economic dislocation. The differences between states participating in economic and monetary union will not be as wide but there will be a need for continuing transfers, even though the relative position of some of the present objective one regions will have improved.

Enlargement is another development to which we are politically committed but which could pose a significant economic threat to us. Even though the European Council decided to treat all applications equally there is, as suggested by Germany, much sense in practice in a phased entry of applicant countries having regard to their stage of development and the readiness of their economies for EU competition. A lengthy transition may be required for some sectors if social disruption is to be avoided. This is particularly relevant for agriculture and negotiations will have to ensure that the accession of new member states does not cause wholesale disruption to the farming sector among existing members or add greatly to food surpluses. We have an interest in European stability and we would like to see those Central and Eastern European states with older democratic traditions able to consolidate their democracies. Above all, we recognise that EU membership will help to consolidate democracy.

I hope good sense will very shortly prevail in regard to Irish Steel so that the workers and their families can enjoy Christmas. The British Government must realise that Anglo-Irish relations and, in particular, commercial relations will suffer immense damage if the Irish Steel package is vetoed which would, in effect, mean that British Steel was using EU rules to close down a much smaller Irish competitor. The attempted bullying of Ireland by its closest neighbour has not been an edifying spectable. It is doubtful if the British Government would have felt free to behave in such a way for so long towards one of its larger continental neighbours. Perhaps we should add up the number of aids to industry in Britain and the North which we have supported in recent years. There are many serious problems regarding the North on which progress has to be made and we do not need the distraction of a continuing conflict in regard to Irish Steel.

Apparently the Taoiseach will meet the British Prime Minister, John Major, in the next few days. I am sure their discussions in Madrid were not confined to Irish Steel, although the Taoiseach did not refer to those meetings. Many of this year's problems have arisen because the British Government is no longer listening closely to the Irish Government. It is futile for the British to pursue a course of action which is considered by virtually the entire political spectrum here as unviable and unworkable. The previous Government helped to bring about the IRA ceasefire. The British Government should allow itself to be guided by us again on how to consolidate the ceasefire given that its preferred course has clearly been having the opposite effect.

It is vital for everyone that the international body is given every co-operation in finding a solution to the impasse which is blocking all party talks. Confrontational and hectoring approaches will not be of any help in this regard. Insistence on the integrity of every position hitherto held should also be eased, at least in public, by all sides so that the international commission can get on with its work. There should be no attempt to marginalise or talk down the significance of this body. On the contrary, we should be immensely grateful to President Clinton and Senator Mitchell for providing us with a mechanism which we hope can be used to end the impasse. We have to find a sensible way of making progress which will require sacrifices by all sides. I hope John Major's visit to Dublin will contribute to the creation of a better climate than the one which has existed for some time.

I welcome the progress made at the Summit on economic and monetary union and the position as set out by the Taoiseach. However, I am totally unimpressed with the Book of Estimates and the different ways the Minister has chosen to dress up the figures. The substitution of gross figures for net figures is not legitimate, and Garret FitzGerald warned of that last March. By any measure, gross or net supply service spending grew substantially faster in 1995 than in 1994. If one excludes the amnesty from the base, it has doubled. Recently an unprecedented level of Supplementary Estimates of well over £200 million were introduced and the Minister's net post-budget spending during his two year stewardship, excluding the 1994 when we were coming out of an international recession. I have no doubt that by the end of 1996 the increase over the two years together will be no lower than it was previously, which means there will have been no significant slow down in Government expenditure even during boom times. This is a major mistake.

An Ceann Comhairle

The Deputy's comments are more appropriate to the next item, the 1996 Estimates.

Mr. B. Ahern

We should have mentioned it.

Miss Harney

A Cheann Comhairle in case I will not be here when the House adjourns at 4.30 p.m. I wish to extend Christmas greetings to you Sir, the staff and the Government. This will be the Taoiseach's last Christmas before the election.

The European Summit at Madrid advanced the European ideal on two important fronts, namely, monetary union and enlargement. Both of these matters are extremely important as far as we are concerned and deserve more debate than has been accorded to date both in this House and in the country. Going it alone, regardless of what Britain does is not, as I said previously in this House, a sensible strategy on monetary union. The Taoiseach's commitment to the effect that Ireland would join the monetary union regardless of what Britain does is a change from a previous Government decision to keep all our options open.

The Taoiseach

I did not quite say that.

Miss Harney

We must recognise that Britain remains our largest trading partner. The official statistics underestimate the effect on the labour intensive indigenous Irish manufacturing sector of our trade with Britain. Britain is our largest source of tourism revenue and therefore of invisible exports. Our companies have to compete with British companies in the domestic market for any product that is transportable. The key determinant in deciding how successful and competitive we are as an economy is the value of the Irish pound vis-à-vis sterling. We all know what happened in 1993 with competitive devaluation. Whilst I accept the Taoiseach says that the Chancellor of the Exchequer has said that Britain would not go for competitive devaluation, if Britain stays out it will be because it suits Britain and if it suits Britain to go for competitive devaluation it will go for it. We need to listen to the voice of business, particularly those representatives who operate in the exposed trading sector. I referred previously to a poll conducted by the Dublin Chamber of Commerece in the summer which showed that while 77 per cent of Irish companies polled favoured joining the economic and monetary union only 37 per cent felt that we should join if Britain stayed out and only 22 per cent felt that the Irish economy was ready for economic and monetary union.

I urge the Government sincerely to listen to the voice of business and particularly to the voices of those who have to compete on a daily basis in the exposed trading sector. Much of the debate on economic and monetary union has concentrated on the criteria for membership, what is known as the Maastricht qualifying criteria. Whilst that is important, and I believe we should meet those criteria even if we were never to join the economic and monetary union because it is good for the economy, what is particularly significant for us is the criteria for continued membership. It is now clear that the Germans will insist on a 1 per cent budget deficit for countries that wish to continue in the economic and monetary union. No Government in a generation has come anywhere near to that and this year the Exchequer borrowing requirement will be 2.5 per cent even after a net input of £2 billion in EU transfers. We need to be realistic. Given the recently published Estimates and the Government's record in 1995 when we increased expenditure by 10.5 per cent when the target was 6 per cent nominally, this Government would not qualify for membership of the credit union never mind membership of the economic and monetary union.

Mr. Spring

That is a smarmy remark.

Miss Harney

The Tánaiste is not too bad at dishing out smarmy remarks at times.

If we are not prepared to undergo tight fiscal control we need to be very careful before we enter the Germanic school of fiscal discipline. I wonder if we have examined the consequences and are prepared to make the hard choices that would be required if we join the economic and monetary union. In that context it is important that we have a full debate in the House and in the country on the options and do not enter blindly into monetary union where we lose our fiscal independence to Frankfurt and our biggest trading partner, Britain, stays out. More significantly, perhaps in the context of what is happening on this island, when many would like to see the creation of a single island economy, that would become virtually impossible if Northern Ireland were to belong to an independent free floating currency and we were to surrender our independence to Frankfurt. I make this point because it is important to have a proper debate on these matters.

We need to look seriously at the consequences of enlargement for Ireland. By the end of the century the EU probably will have expanded to include at least the Czech Republic, Poland, Hungary, Slovenia and possibly Slovakia. Even the richest of those, the Czech Republic has a much lower standard of living with living standards there half those of Ireland. In that context EU transfers, whether Cohesion Funds, Structural Funds or whatever will have to be spread much more thinly. The Germans want to see the Community enlarged to include these five countries because it gives them a market of 67 million more people on their doorstep and having them in a democratic free market system is very attractive to them. Germany funds the Euro budget to the tune of 80 per cent and in spite of the attraction of the additional market it will not be prepared to cough up additional moneys.

The extension of the Community eastwards to include those five countries would cost about £20 billion each year. Many of these countries are twice as dependent on agriculture as the EU countries. To extend the common agricultural policy eastwards would cost an extra £10 billion per year and there is no need to remind the House of the consequence of that for Irish agriculture. We get about £1.4 billion under the CAP annually and would need to debate our position on it. The Minister for Agriculture, Food and Forestry should set out his position in this regard and say whether he favours reform of the CAP or a move to a more market based system for agriculture which unevitably will happen. I mention this because we will not be in a position to get £2 billion we currently receive no matter what level of resources the Germans cough up because of the demands arising from enlargement. There is no doubt that the centre of gravity of Europe will move eastwards and Berlin will certainly become the focal point in the new order of things. That has serious consequences for us.

The Taoiseach referred to Irish Steel in his statement. When the restructuring and privatisation plan for Irish Steel was announced in this House, the Progressive Democrats Party welcomed it. It offers the best option for the workers, the company and the country. I believe ISPAT is a very suitable investor in Irish Steel and I do not think we can take seriously or with any credibility the attitude being adopted by the British Government, which has become merely the mouthpiece for British Steel — a Government that was prepared to invest in private companies when it suited. One has only to look at what it has done in regard to the sale of Rover Cars Limited to British Aerospace. It is acting as the mouthpiece for British Steel which wants to see Irish Steel closed down because it does not want a competitior for one of its product ranges. That is a great vote of confidence in ISPAT which is a dynamic company and will provide a dynamic competitor for British Steel. That is probably the real reason production limits are being suggested.

I hope the Taoiseach has been able to use his influence with the British Premier because this is not a matter of principle for the British Government. It is not an important issue for the British economy but is very important for our economy. Deputies who are linking the British stand on this to the peace process are doing a very dangerous thing and I caution against it. I do not believe we should seek to mix the two. Whatever about doing so privately as a negotiating tax between this Government and the British Government, it would be very dangerous if publicly we were to try to link the stand being taken on British Steel with what or may not happen in the context of the peace process. The peace process is far too important and I hope Deputies will desist from using the language that was used in recent days.

European defence continues to simmer in the background of many of these summits. Again, I am not clear on the Irish Government's position. If we are to enter economic and monetary union as the Taoiseach and Government wishes we will certainly pool our sovereignty and surrender some of our fiscal and economic independence to other member states. In that context it is unrealistic not to consider joining a defence pact. Are we seriously saying we will pool our sovereignty and surrender some of our independence to our neighbours but will do nothing to defend them? What is the Government's position on a European defence pact? Perhaps the Tánaiste will say when the White Paper, which was due for publication in October, will be published. We must be clear on this matter.

On the Euro debate generally, particularly in the context of enlargement of the Union, Europe is becoming more and more removed from its citizens. Not only is there a democratic deficit but people feel alienated from the process, and that is the case in a country which has benefited enormously from membership of the European Union. If a country that receives a net additional £2 billion per year — 25 per cent of total spending — from Europe is becoming cynical about the whole process, there are danger signs for the Union. It must become more open and transparent but equally it must become more democratic.

Many of the decisions, particularly on economic and monetary union and enlargement, have major consequences for this economy. We cannot lightly agree to a larger Union and closer monetary union unless we fully debate and are aware of the consequences for our economy. Such a scenario would result in even greater cynicism than is evident at present. There are Euro-sceptics and Euro-enthusiasts, but we in Ireland must be Euro-realists, and we can only be so if we discuss the consequences and implications and make our decisions on an informed basis.

Tánaiste and Minister for Foreign Affairs (Mr. Spring)

First I will reiterate the Taoiseach's remarks. The European Council in Madrid was a very successful and important one. The conclusions of the Council will be of fundamental importance to the future of the European Union and to a significant extent outline the agenda of the European Union for the years to come. I extend my thanks to Prime Minister Gonzalez who hosted the European Council and to the Spanish Presidency generally as it comes to the end of its term, for the efficient, effective and impartial manner with which the agenda of the European Union has been advanced. I thank the Spanish Presidency for the help and assistance it afforded to us during its term of office.

The Taoiseach outlined the major developments that occurred at the Council on European Monetary Union, employment, the intergovernmental conference, enlargement and in the justice and home affairs areas. It is in everybody's interest that there be a full and informed debate on the issues, as suggested by the leader of the Progressive Democrats. As the Taoiseach said, we have set up a study on economic and monetary union. Consultants in the Department of Finance will undertake an indepth study of the likely economic implications of economic and monetary union for Ireland, with particular reference to employment, including at sectoral level in the context of various membership scenarios for relevant member states. There must be a debate in this House on the matter which, I hope, will result in everybody being much better informed than we probably are at present of the implications and consequences of economic and monetary union. In terms of enlargement, the White Paper on Foreign Policy will be published in January and I hope to have a very early discussion on it in the House.

Many of the other issues discussed in Madrid, will have consequences for our Presidency during the latter half of next year. On former Yugoslavia, the European Council met the day after the Paris signing of the peace agreement which lays the foundation for lasting peace and stability in Bosnia-Hercegovina. The Council welcomed this development and reaffirmed the European Union's commitment to play an important role in the implementation of the agreement.

The Council also welcomed the conclusions of the London Peace Implementation Conference which took place on 8 and 9 December and which established new structures to co-ordinate civil aspects of implementation of the agreement, including a peace implementation council and a steering board. There was also welcome for the London conference endorsement of Carl Bildt, the EU mediator, as the high representative who will chair the steering board and monitor and co-ordinate the massive effort that will be required to implement the civil aspects of the agreement.

The summit reiterated the European Union's willingness to make a substantial contribution to the reconstruction effort in the context of equitable burden-sharing among the international community. A preparatory conference will take place in Brussels tomorrow and Thursday with the aim of identifying the most urgent needs in this area. The need for measures to control the levels of weaponry in the region was also emphasised. This issue was the subject of an international conference in Bonn yesterday when a process of confidence-building and arms control measures was launched.

The European Council also underlined the need to address a number of urgent problems, in particular mutual recognition among the former Yugoslav Republics, the situation in Sarajevo and the importance of ensuring the full implementation of the framework agreement on Eastern Slavonia. Above all else, what was stressed at the meeting in Madrid was the need for the parties to now get down to the business of reinforcing the peace settlement for the region and fulfilling the obligations and commitments they have made.

It is hoped the long period of war, death, destruction, suffering, hardship and uncertainty is now at an end, and that we are entering a new phase of reconciliation and reconstruction where democracy and civil society can be developed. The incoming Italian Presidency of the European Union, and Ireland in the latter part of 1996, will work to ensure the success of the peace settlement and to support the peoples of the region in their efforts to meet the challenges they now face.

The Government, for its part, is determined to contribute significantly to the process of implementing the civil aspects of the agreement for Bosnia. During Ireland's Presidency of the EU, our staffing contribution to the European Community Monitor Mission — ECMM — in the region will be increased to some 80 persons, mainly Defence Force personnel. These monitors will have a vital role in a range of follow-up tasks including most particularly in contributing to the work of the Organisation for Security Co-operation in Europe — OSCE — in preparing for free and fair elections in Bosnia. Ireland will contribute financially to the rehabilitation effort in Bosnia and war-affected areas of Croatia.

I recently signalled the Government's decision to make an initial sum of IR£1 million available for urgent humanitarian and rehabilitation programmes in Bosnia, bringing to over £4.5 million the Government's contribution to the ongoing humanitarian effort. We are continuing to examine other ways in which this country can make a practical contribution to assisting with the implementation of the peace agreement.

There are many problems which remain and must be addressed in the context of an overall settlement — millions of refugees and displaced persons remain far from their homes and must have the opportunity to return to their origins; thousands of people remain missing or unaccounted for — their whereabouts must be investigated; countless atrocities and murders have been committed and those responsible have still to be brought to justice. The parties have made commitments under the agreement on these issues, and these must be honoured.

Although the war in former Yugoslavia is, I hope, finally over, real peace has still to be established. The Dayton Agreement provides the basis for such a peace, but much hard work remains to be done, primarily by the parties to the agreement, but also by the international community, including Ireland, to ensure that the peace will last.

The conclusions of the Madrid European Council rightly emphasise the very significant importance of the New Transatlantic Agenda and the Joint EU-US Action Plan signed in Madrid on 3 December. This initiative represents the fruit of several months negotiations between Europe and the US undertaken with the objective of agreeing a framework for strengthening relations, bilaterally and in the multilateral context, between the two sides. The New Transatlantic Agenda and the Joint Action Plan provide for, among other things, closer co-operation aimed at expanding world trade and ensuring closer economic co-operation between the two sides. The initiative identifies, inter alia, the consolidation of the WTO, the removal of industrial tariffs, co-operation in job creation, transport, energy and financial services as areas where the two sides could successfully work together.

I look forward to close and productive co-operation between the Italian and Irish Presidencies, the European Commission and the US authorities in working towards the achievement of the goals set in the New Transatlantic Agenda and the Action Plan. Success in this endeavour will be of particular importance for Ireland and for our European partners. We also hope similar arrangements can be agreed, in due course, with Canada and Mexico. As regards the latter partner country, the Union is due to commence negotiations as soon as possible with Mexico for a new political, economic and trade agreement.

Russia's integration into the community of free and democratic nations is an essential condition for peace, stability and security on the European continent. The European Council thus reiterated the Union's continuing support for the courageous and difficult transition taking place in Russia towards the establishment of a stable democracy and a market economy. On the eve of the parliamentary elections in Russia the Council adopted a declaration welcoming the significant contribution of the elections towards consolidating Russia's constitutional institutions.

The European Union is deeply interested in establishing a strong and substantial partnership with Russia. The desire to permanently strengthen the ties between the European Union and Russia was clearly expressed by the European Council. The Council noted with satisfaction that the Interim Agreement with Russia is to come into force on 1 February 1996 and urged ratification of the Partnership and Co-operation Agreement as soon as possible. Ireland expects to ratify the PCA shortly.

The attention of the European Union has now turned to developing the relationship with Russia beyond the existing contractual agreements. The European Council endorsed a comprehensive overall approach to the development of the Union's future relations with Russia. The aim is to foster constructive dialogue and co-operation between the Union and Russia and to encourage the further development of democracy, pluralism and economic reform in Russia. The European Council also confirmed it support for Russia's accession to the Council of Europe in the near future.

Courageous efforts have also been undertaken by Ukraine towards economic reform. The European Council expressed its continuing support for this process and welcomed the important agreement reached with Ukraine on the definitive closure of the Chernobyl nuclear power station by the year 2000. The Council also expressed its satisfaction at the recent accession of Ukraine to the Council of Europe.

In its conclusions, the European Council highlighted the major significance of the results achieved at the Euro-Mediterranean Conference and called upon the Council and the Commission to put into practice the Barcelona Declaration and Work Programme.

The Euro-Mediterranean Conference, involving the EU and the representatives of 12 Mediterranean partners, took place in Barcelona at the end of last month. The conference was held at the level of Foreign Minister and participants sought to enhance co-operation in three broad areas. These were: political and security — to develop peace and stability, including the peaceful resolution of conflicts and respect for fundamental rights; economic and financial co-operation — to move to a Euro-Mediterranean Free Trade Area to be completed progressively by 2010, covering most trade and in line with WTO disciplines. The importance of mobilising local economic forces in the interests of sustainable, self-engendered development and the key role of private sector investment was also of importance: social and human elements — co-operation involving cultural and education exchanges to help promote understanding, migrant population groups and health. Greater co-operation envisaged in the field of justice and home affairs with action, in particular against drug trafficking, terrorism and international crime.

The Declaration adopted at Barcelona established a comprehensive partnership between the participants — the Euro-Mediterranean Partnership — through strengthened and regular political dialogue, the development of economic and financial co-operation and greater emphasis on the social, cultural and human dimension. The Declaration also contains a detailed follow-up work programme which includes periodic discussions at Foreign Minister level, as well as thematic discussions at ministerial, senior official and expert level.

As is noted in the conclusions of the Madrid European Council, the Barcelona Conference marked the start of a new stage in which the goal of securing peace, stability and prosperity in the Mediterranean region constitutes a common task for all parties to the new Euro-Mediterranean association.

Part of the Union's strategy for developing closer relations with the Mediterranean region involves the negotiation of Association Agreements with the countries of the region. To date, agreements have been reached with Tunisia, Israel and Morocco and the European Council expressed the hope that negotiations under way with Egypt, Jordan and Lebanon will reach a rapid conclusion.

These Euro-Mediterranean Agreements are wide-ranging and cover political dialogue, progressive liberalisation of trade and capital movements and sectoral co-operation. The trade liberalisation elements of these agreements will constitute important preparatory steps towards the realisation in 2010 of a Euro-Mediterranean Free Trade Area, as envisaged in the Barcelona Declaration.

Turning our attention southwards, I am happy to report that I signed, in the margins of the European Council in Madrid, on behalf of Ireland, an Interregional Framework agreement on Trade and Economic Cooperation between the EU and Mercosur. This agreement, together with others in the pipeline, will provide a good basis for the development of new and important markets for our respective goods and services. I hope that the various sectors in Ireland can benefit fully from the potential offered by these agreements.

The Europe-Asia Summit Meeting, which will take place in Bangkok on 12 March 1996, will provide an important opportunity for representatives of the two regions to have an exchange of views on a wide range of political and economic issues of mutual concern. The European Council welcome the adoption of the General Affairs Council report which will serve as a basis for preparing for the meeting. The European Council also welcomed the conclusions adopted by the General Affairs Council on a long-term policy for China-Europe relations.

The European Council welcomed the European Parliament's assent to the Customs Union with Turkey. This paves the way for the entry into force of the Customs Union on 31 December 1995. The Customs Union is a key element in the European Union's effort to support the process of democratisation and to promote improvements in the human rights situation in Turkey. The prospect of the Customs Union, has already provided a valuable stimulus to the reform process with the approval this year by the Turkish Parliament of a series of constitutional amendments and a revision of the anti-terror law.

The importance attached by the Union to respect for human rights, the rule of law and fundamental freedoms was recalled by the European Council which expressed its strong support for all those in Turkey endeavouring to put reforms into practice. In welcoming the measures already adopted, the European Council urged the Turkish authorities to continue along the path to further reform.

We very much hope that the development of the Union's relations with Turkey and the fixing of a timetable for the opening of EU accession negotiations with Cyprus will help to create a more favourable climate for progress towards a political settlement in Cyprus. The European Council reiterated the importance it attaches to the achievement of a just and viable solution on the island in line with Security Council conclusions and based on the concept of a bizonal, bicommunal federation which would respect the sovereignty and territorial integrity of Cyprus.

The European Council reiterated the grave concern of Ireland and her EU partners about the human rights situations in Nigeria and the case of the late Ken Saro-Wiwa. The Council reserved the right to take further measures over and above those already adopted by the Union in its common positions of 20 November and 4 December if the Nigerian authorities do not ensure full respect for human rights and a swift transition to democracy.

The Government has long been a proponent of concerted international action to address the daunting challenges faced by the Great Lakes region of Africa. We attach considerable importance to the emphasis placed by the Madrid European Council on the importance of national reconciliation and reconstruction in the Great Lakes region and in seeking to ease the return of Rwandan refugees. We also strongly support the Council's call for the rapid appointment of a new special representative of the UN Secretary General in Burundi.

It is the Government's hope that efforts to establish a regional political framework can culminate in the convening of an international conference on the Great Lakes region under the auspices of the United Nations and the Organisation for African Unity. We have supported the holding of such a conference since it was originally suggested by the Security Council and welcome its inclusion in the Madrid conclusions. We remain hopeful that such a conference can, if reinforced with a mechanism for effective follow-up action, provide the framework for lasting peace and stability in the Great Lakes region.

The Government is deeply concerned by continuing reports of human rights violations in East Timor. At home we have been reminded of this unresolved matter by the fact that a Member of the Seanad, a Member of the European Parliament and others were prevented from visiting East Timor last month on a mission of goodwill, peace and prayer to commemorate those killed at the cemetery in Dili over four years ago.

We therefore strongly welcome the pledge of the Madrid European Council to support any appropriate action which could contribute towards a just, overall and internationally acceptable solution to this issue and particularly towards the mediation efforts being made by the UN Secretary-General.