Charlie McCreevy
Question:1 Mr. McCreevy asked the Minister for Finance whether he will oppose the participation of Germany and France in the euro if they fail to qualify under the Maastricht criteria, as currently laid down. [7728/97].
Ceisteanna — Questions. Priority Questions. - Economic and Monetary Union.
The conditions and procedures for joining economic and monetary union — European Monetary Union — are set out in the Maastricht Treaty which was ratified in Ireland by a constitutional referendum. Just under 70 per cent of those who voted in that referendum voted in favour of the Maastricht Treaty and, consequently, for Ireland's participation in economic and monetary union in accordance with its provisions.
The procedure which the treaty sets out for deciding which member states qualify for economic and monetary union is as follows: First, the European Commission and the European Monetary Institute will report on the achievement of a high degree of convergence by reference to the fulfilment by member states of the convergence criteria specified in the treaty. These reports will also take account of the compatibility of member states' legislation with the treaty requirement for Central Bank independence, the development of the ecu, the results of integration of the markets, the situation and development of the balance of payments on current account and an examination of the development of unit labour costs.
Second, the Council, meeting in the composition of the Heads of State or Government, will decide, on the basis of ECOFIN recommendations, taking due account of these reports and the opinion of the European Parliament, which member states fulfil the necessary conditions for the adoption of a single currency. The decision of Council will be taken in the spring of 1998 and will be based on the most recent and reliable data for 1997.
The German and French Governments have stated quite clearly their determination to participate in economic and monetary union from 1 January 1999, the due starting date. At its meeting in Brussels on Monday last the Council of Economic and Finance Ministers welcomed both the commitment given by the German authorities to take all necessary measures to avoid an overshooting of the 1997 deficit target and the commitment by France to take additional measures, if necessary, to achieve its 1997 budgetary objectives.
I do not propose to speculate on the French and German Governments' economic forecasts for 1997. However, I am confident that, with the political commitment among member states to the European Monetary Union timetable, sufficient convergence will be achieved to ensure it will be met in a way which will underpin the economic strength and stability of the euro area.
I note the Minister said he did not want to speculate on the position of the French or Germans but I might point out that that did not deter people in Germany in the past from commenting on the Irish position or criteria. However, I agree with the Minister that it is not his job to speculate on the German position since the same policy could be adopted by some of their spokespersons.
This question really relates to whether the timescale or criteria are the more important in this regard. With increasing evidence within European economies that neither Germany nor France may qualify — on an interpretation of the criteria relating to this and other matters when the Council meets in 1998 — is it now the Irish position that we have decided to join economic and monetary union, willy nilly, regardless of whether other member states meet the relevant criteria? Is it the case that we have concluded our debate on the subject because, until recently, I understood our stance was relatively open whereas a statement by the Taoiseach on 4 March gave the impression we had concluded our debate and would join come what may? Has the Irish Government taken that decision?
In effect the people took that decision when they voted in the referendum — that if Ireland meets the qualifying criteria we would join. The Deputy's party was then in Government and we did not seek an opt-out clause on that occasion. The outcome of that referendum commits us legally to alter our Constitution to participate. We do not have an opt-out clause. I am advised legally that we would not have the right in domestic law, without reference to the people, to unilaterally vary that timetable.
I anticipate the decision to form the euro zone will be taken by the Heads of State or Government some time in late spring 1998. It is clear that Ireland will qualify to join the Single Currency. In that respect I pay tribute to successive Governments on ensuring that, at the outset, we would meet the relevant criteria. It is the intention of this Government, in accordance with our treaty obligations, to be among the first group of countries to participate in economic and monetary union. That is not to say that the debate on the implications of our participation, that the necessity to prepare properly for its consequences has ended, or indeed that we should have regard to the possibility that one of our major trading partners, the United Kingdom, may choose to exercise its opt-out and not join on the commencement date of 1 January, 1999.
We have conducted a major study through the ESRI, a copy of which report was sent to every Member, pointing out some of the exposures in certain sets of circumstances. In answer to the Deputy's question whether our debate on the implications of joining European Monetary Union has ended, my answer is: no, and I would welcome continued debate. However, the debate on our intention to join ended effectively with the successful outcome of the referendum on the Maastricht Treaty.
We have already had a debate on the legal position resulting from the people's decision in the referendum. Does the Minister consider that economic and monetary union can last and succeed as the criteria for joining has been so watered down in recent years? Can an economic and monetary union based on very flexible criteria — which will be interpreted very flexibly — succeed? Bearing in mind that Ireland is talking from a position of strength — I anticipate we will meet the relevant criteria however they are interpreted — is it the Minister's view that an economic and monetary union can succeed and last if the economic criteria on which it is based have been so watered down? Does he consider that such an economic and monetary union should be proceeded with?
There has been no watering down or change in the criteria. At a meeting in Brussels on Monday last ECOFIN Ministers were given a report on the convergence programme in respect of the German and French economies. Categorical assurances were given by the Minister for the German Federal Republic, Herr Weigel and for the French Republic, Monsieur Jean Arthuis, that it was their declared intention to meet the criteria set out in the Maastricht Treaty. Specifically in regard to the German economy, where there is some speculation as to whether the critical criterion of the budget deficit 3 per cent ratio will be met, they have revised their figures from 2.5 per cent, as set out in the programme, to 2.9 per cent. Both Herr Weigel and Herr Jurgen Stark made it very clear that, if their expenditure profile throughout the year indicated that they would breach the 2.9 per cent deficit, they would take whatever expenditure decisions were necessary to comply with the criteria. There is no watering down of the criteria. In today's edition of the Financial Times the incoming President of the European Monetary Institute and the incoming President of the European Central Bank, Mr. Wim Duisenberg, from the Netherlands, has clearly stated it is essential that this project be soundly based. I share that view. Monetary Union must rest on sound fundamental principles——
That is essential.
——of clear convergence of the relevant economies. We are on course to achieve that. At the various ECOFIN councils I have attended and in the informal discussions that have taken place in the margins of those councils there has been no suggestion that anybody wants to water down the criteria. The criteria have not been watered down. The project will go ahead on 1 January, a critical mass of countries will qualify to participate on 1 January 1999 and Ireland will be among them. As the Taoiseach said on 4 March it is the intention of this country to participate.