Dáil Éireann debate -
Tuesday, 23 Jun 1998

Vol. 492 No. 7

EU Summit: Statements.

The Taoiseach

I attended the European Council meeting in Cardiff on 15 and 16 June accompanied by the Minister for Foreign Affairs, Deputy Andrews, and the Minister for Finance, Deputy McCreevy. The Conclusions from the Council have been laid before the House.

It would be useful to outline the areas I identified as the priorities for Ireland in advance of the Council. Clearly, the topics for discussion at Cardiff were set by the UK Presidency in the light, inter alia, of the current EU agenda. However, I took advantage of Prime Minister Blair's visit to Dublin on 1 June to highlight Irish interests in the content and handling of the discussions at Cardiff, and I am pleased to record that the Conclusions reflect the strategic outcomes I sought on employment, Agenda 2000 and institutional reform.

The introduction of the euro on 1 January next year will make the closer co-ordination of the economic policy of member states essential. Much of the summit, therefore, was taken up with the discussion of economic and employment guidelines. The period leading to the introduction of the euro on 1 January and the historic decisions taken at the last meeting of the Heads of State or Government in May provided the backdrop to a broad-ranging discussion at Council on economic issues with a particular focus on the promotion of employment, growth and prosperity.

The Heads of State or Government agreed the recommendations on the Broad Economic Guidelines in the member states and in the Community and commended them to Council for formal adoption. The economic guidelines do not present Ireland with any difficulties because the Government is determined to continue with the sound economic policies which have led to the current healthy state of the economy. This commitment to good economic management reflects the earlier commitment in the Declaration produced by ECOFIN at the Special Council in May, when EMU members and conversion rates were announced.

I am pleased to welcome the decision by Council that the preparation of the Broad Economic Guidelines should in future draw on short yearend reports drawn up by the member states and the Commission within their respective areas of competence. Such reports will be a useful complement to information on national employment plans and they will be drawn up on the basis of a light procedure, avoiding unnecessary bureaucracy.

The annual guidelines will help to further the process of economic integration and to foster the stable low inflation climate required for sustainable job creation. Equally, the guidelines should, to the greatest possible extent, reflect the competency of national governments in the area of economic management.

The Council also considered progress on the implementation of the employment guidelines adopted following the Extraordinary European Council on Employment held in Luxembourg last year and which are now reflected in the national employment action plans drawn up by the member states. The Council urged the member states to proceed with the practical implementation of the action plans as speedily as possible, allowing for continued evaluation and updating. It is worth mentioning that the plan submitted by Ireland is well regarded. Ireland's plan contains an account of much of the best employment practice across the Union. We will take up the employment issue in greater detail in Vienna in December when we consider new employment guidelines for 1999.

A number of key factors, however, are already identifiable as essential in fostering employment growth. These include the active involvement of the social partners at European and national level in labour market policy development and implementation; the need for targeted investment in education and training to provide opportunities for those who are long-term unemployed or who experience disadvantage or marginalisation; and the need to promote an enterprise culture which favours risk-taking and minimises the burden of regulation falling on SMEs.

There was a general consensus, which under-scored much of the discussions at the Council on a variety of subjects, that national discretion for action should be maximised. Accordingly, as regards employment, while sharing information on best practice and completing the Single Market through the more rapid transposition of directives are certainly necessary, the need for innovation and the opportunity for competition between member states should not be stifled. The issue here centres on achieving the right balance and it is worth mentioning that our discussions on promoting entrepreneurship crystallised many of the wider subsidiarity related issues.

At Cardiff, leaders looked at ways to make the Union more relevant to its people through greater transparency in the workings of the Union and its institutions and through continuing to tackle the real concerns of the citizen, for instance, in relation to crime and drugs.

Specifically in relation to crime and drugs we examined the implementation of the action plan to combat organised crime; we noted progress in the preparations for the establishment of Europol — Ireland lodged its instrument of adoption of the Europol Convention in March of this year — and it is hoped that the three remaining partners who have yet to complete the adoption process will do so shortly; and the UK Presidency reported on work in the drugs area, especially as regards identifying the key elements of the Union's anti-drug strategy for the post-1999 period. The plans for the European Drug Prevention Week in November of this year were also noted.

I mentioned earlier that I had raised particular interests of Ireland with Prime Minister Blair on his visit to Dublin. One of these was the British-Irish Agreement and the ways in which EU support might be secured for the future, that is, beyond next year. I am happy to be able to point to the very positive section on the British-Irish Agreement in the Conclusions. I took the opportunity at the Council to express Ireland's gratitude for the substantial support from our partners, the Commission and the European Parliament. The Cardiff Conclusions note the Commission's commitment "to go on finding new, creative ways to support the fresh opportunities which the Peace Agreement will bring, and invite the Commission to make proposals accordingly". We will follow up this commitment with the Commission, in consultation with the UK authorities.

A key strategic interest for Ireland at European level over the next year is the negotiation of a successful outcome to the Agenda 2000 negotiations. While no substantive decisions were taken at Cardiff, I put down clear markers as to Ireland's expectations from the negotiations and sought to avoid a situation which adversely prejudiced the outcome from an Irish perspective. This was one of my key priorities for the Council and it was achieved. The most significant result from the Cardiff Council under this heading was a political commitment to conclude negotiations on Agenda 2000 no later than March 1999.

In the course of our consideration of the topic, I emphasised again our primary concerns in relation to Structural Funds, namely, the need for adequate full transitional arrangements.

The Austrian Presidency has been mandated to make progress on Agenda 2000 in advance of the December Summit in Vienna. I am confident, on the basis of my recent meeting with Chancellor Klima in Vienna, that significant progress can be made during the Austrian Presidency. This, in turn, will hopefully allow for political agreement on the future financial framework, treating Structural, Cohesion and agriculture funding as a whole package at a Special European Council in March under the German Presidency.

As regards the CAP in particular, I made it clear that the current proposals from the Commission will need to be substantially amended to meet the needs of Irish agriculture. At my request the European Council took note of the conclusions of the Agriculture Council of 25 and 26 May 1998, which recognised the importance of particular sectors to individual member states. I stressed the need for a balanced outcome and for an equitable impact on all member states. It is fair to say that Ireland is not alone in rejecting the proposals as they now stand.

Some member states pressed their case at Cardiff to develop mechanisms to limit their EU budget contributions. In contrast, other member states expressed opposition to such arrangements and some opposed acceptance of the 1.27 per cent ceiling on the basis that they believe it is inadequate to fund enlargement.

For the moment, we will carry on with the 1.27 per cent ceiling as a working assumption. This is acceptable to Ireland on the basis that it will be necessary to ensure the Union is adequately resourced to meet both the costs of maintaining and developing Community policies in existing member states and of enlargement. In this context, I look forward to the Commission's Report on Own Resources in the autumn which, as indicated by the Cardiff Council, will deal with the question of relative budgetary positions in the light of policy reforms and the issues raised under this heading at Cardiff.

Together with other leaders, I expressed my satisfaction at the good progress being made in the screening process, particularly with regard to the so-called "pre-ins"— Bulgaria, Latvia, Lithuania, Romania and Slovakia — in terms of beginning the analytical screening of their adoption of the Community acquis, i.e. the entire body of legislation, obligations and objectives that have been agreed or developed within the Union.

The Conclusions regarding the development of improved relations with Turkey are welcome and reflect accurately the concerns of the Union to develop and deepen those relations. Unfortunately, we could not progress the issue of unblocking financial assistance for Turkey. The conclusions welcome the Commission's confirmation that it will submit, at end-1998, its first regular reports on each candidate's progress toward accession. The conclusions also state that in the case of Turkey, reports will be based on Article 28 of the Accession Agreement and the conclusions of the Luxembourg Council. The Government's recent decision to establish an embassy in Ankara will make a significant contribution towards the deepening of bilateral relations and improved EU-Turkish relations.

I am pleased with the outcome of the wide-ranging discussions in relation to the future development of Europe. The joint letter to the Presidency by Chancellor Kohl and President Chirac, as to possible outcomes, contributed to our discussions.

As regards further institutional reform, the general view which is reflected in the conclusions was that the first priority is the ratification of the Amsterdam Treaty. It is only at that stage a decision will be required on how and when to tackle the implementation of the Protocol in the Amsterdam Treaty, which involves, in the first instance, the changing of the number of Commissioners and voting weights. There was considerable support for the view that we should leave the consideration of more fundamental and wider institutional reform for a later date, closer to the date of the first enlargement.

I look forward to the autumn meeting under the Austrian Presidency — the planned informal meeting of Heads of State and Government — on how to bring the EU closer to its people and to focus on the issues which matter most to citizens. This theme and that of subsidiarity ran through almost all the discussions on the Union's future development and the efficiency, effectiveness and transparency of its institutions. Our preparatory meeting, likely to take place in October, should allow for discussions on this issue to be taken further in Vienna.

I do not intend to report on the wide range of foreign policy items considered at Cardiff as this will be done in the concluding statement, other than first to recall the real concern which I and other leaders expressed about the position in Kosovo and to reaffirm my commitment to the separate declaration which the Council adopted on 15 June. In terms which I fully support, the declaration firmly points to the responsibility which President Milosovic bears for the use of military repression against the citizens of Kosovo.

Second, the current status of the Middle East peace process was reviewed by the Council. Together with other leaders, I expressed concern at the lack of visible progress in the peace process and the threat this poses to stability in the region. The Council welcomed the Union's positive role in the process and reaffirmed it would continue to do all in its power to support and strengthen both the peace process and those working for peace.

President Mandela met with me and the other leaders over lunch where a variety of issues were discussed, including South Africa's economy and its efforts to modernise under its Growth, Employment and Redistribution Programme, its relations with neighbouring African States and EU-South African trade co-operation. On this last item, the lunch-time discussion was important in securing a more positive approach across all member states towards the finalisation of the outstanding trade and co-operation agreement between the Union and South Africa. I am hopeful that the next negotiating round which will take place in July will see the conclusion of this matter.

In a subsequent separate bilateral meeting, I discussed the Northern Ireland peace agreement with the President and thanked him for South African-ANC support for the negotiation process. I also briefed him on the challenges ahead in relation to implementation of the agreement. Finally, I extended an invitation to him to visit Ireland.

I would like to record my congratulations and thanks to the UK Presidency, particularly to Prime Minister Blair, for a successful Presidency of the Union. The EU conference which took place in March in London with applicant states, the ASEM II conference which also took place in London during April with Asian leaders, the launch of economic and monetary union in May in Brussels and the Cardiff summit can be regarded as significant achievements of the UK Presidency.

Mr. G. Mitchell

I thank the Taoiseach for his report. I am somewhat disappointed at the outcome of the Cardiff summit which lacked innovation. It has resulted in no less than five further summits in the coming 12 months to deal with unfinished business. Given the nature of unemployment, not only in Ireland where long-term unemployment is a big problem but in other parts of the European Union, I am disappointed that in the 30-page Cardiff summit statement there was not one reference to local development initiatives. At every European summit since and including the Essen summit, local development initiatives were referred to. Given the investment we have made in local development partnerships in the most neglected parts of this State, we should have ensured that was inserted prominently in the summit statement. It is a major failure on our part not to have done so.

I wish to refer to EMU and the Taoiseach's acceptance of the 1.27 per cent ceiling as a working assumption. The goal of EMU was set at a meeting of Heads of State of the then Six in 1969, with 1980 as a target date. Despite that, people still say we are not properly prepared for EMU. The people who said it would not come about are the people who now say we are not properly prepared. In 1970 the Werner report caused the Paris summit of 1972 to affirm this objective. EMU was relaunched by Roy Jenkins, President of the Commission, in 1977 and was again taken up by Jacques Delors in 1985, and was mentioned in the preamble and the amendment to the Treaty of Rome contained in the Single European Act, 1986.

In 1988 work began on the Delors report and this led to a decision to convene an intergovernmental conference on EMU, the conclusions of which were a key part of the Maastricht Treaty of 1992 which set out the convergence criteria. In January 1994 the European Monetary Institute began assuming a co-ordinating role in preparation for EMU. Never before has such careful preparation been put into a project. At home we submitted it to independent examination by the ESRI, yet those who said it would never come about say that preparation for it has been inadequate. They ask, what would happen if Ireland was hit by an asymmetric shock. As things stand, what would happen if we were hit by an asymmetric shock? We are at the mercy of sterling, the deutschmark, the Bundesbank or what is decided in London. At least under the proposed arrangements there will be some hope that it will not be a national interest which will prevail but the interests of member states within EMU. It is time we stopped navel gazing and realised that EMU is about to become a reality.

I wish to raise concerns about political and other supports that are not in place, as they should be, for economic and monetary union. There are many examples of currency union that did not succeed and some that did succeed. I will refer in particular to two that succeeded because they were based on creating a genuine political union, while those that failed in Europe in the past century failed because political union did not accompany the objectives. When the single currency proposal for Europe was first launched there was a strong political commitment in Germany and France to political union. European leaders were not afraid to say they favoured a federal Europe with ever-increasing pooling of sovereignty. In the cases of currency union that succeeded, the reason for success was that political union accompanied economic and monetary union.

If we go along with the proposal for a 1.27 per cent ceiling as a working assumption, we are agreeing at the outset to the most likely source of difficulty and trouble for EMU at some point in the future. Resistance by many European states to an increase in the European budget displays a lack of understanding of the political commitment necessary if a single currency is to work. Let me illustrate this by reference to the United States. The United States has a successful currency union, the US dollar. There are built in safeguards in the American federal system to enable it to protect states which suffer an economic shock of the type, for example, which might happen if Texas suffered as a result of a sudden fall in oil prices. Where an American state suffers an economic shock, it is helped by large federal government transfers from Washington. Because there are federal taxes in all states, a state whose income has fallen will pay less tax as a result. The expenditure and tax stabilisers help US states survive successfully within a single currency. In New-foundland, Canada, one third of the provincial income comes from the federal government.

Given the experience Europe has had where successful monetary union has taken place in the past because it was accompanied by political union, and where it has failed because it was not accompanied by political union, surely the Cardiff summit on the eve of EMU should have been more courageous in looking at this example of 1.2 per cent of GNP as budget, which the Taoiseach said we continue to take as a working assumption. Either we are committed to the idea of political union and integration or we are not. If we are, then a budget of 1.27 per cent will not deliver that level of political union.

The European Union has missed a golden opportunity not only to make real political advance in terms of its future budget, but to ensure that the Union becomes a more effective and relevant organisation to its citizens. Each time an EU summit or an intergovernmental conference is held or there is a meeting of the Council of Ministers or the reflection group, we say we want to make the Union more relevant, to relate more to the citizen and to deal with the issues about which the citizen is concerned, but do nothing about it.

There are a number of ways in which the Cardiff summit could have made real progress by relating to the Union the concerns of the citizens. We have all seen what happened in Algeria recently and the dangers of Kosovo. We saw what happened in other parts of former Yugoslavia, particularly in Bosnia. We issued démarches and sat around luncheon tables deciding on short paragraphs for statements over which we could all stand. While we await confirmation of the Amsterdam Treaty in the member states real and purposeful advances should have been made well beyond what was indicated from the Cardiff summit in setting up the planning and analysis unit in the common, foreign and security policy area, the second pillar, so that we can play a more effective part, as a Union, in trying to prevent the type of situation which is evolving in Kosovo and pertains in Algeria. We should not wait for the full ratification of the Amsterdam Treaty to bring that about.

We could also make the Union more relevant to the citizen in the area of wasteful expenditure. For whatever reason — perhaps it is that we have received something of the order of £25 billion in transfers from the European Union since 1973 — we are slow to draw attention to the fact that the European Union is a source of great wasteful expenditure.

If the Union is to have up to 30 Commissioners in time, what will they do? If we want to give encouragement to the contributor member states, the net contributors, which we in the foreseeable future, are likely to become, to increase the budget beyond the 1.27 per cent ceiling, we must be serious about cutting out fraud and wasteful expenditure in the European Union and ensure the Union and those who manage it are accountable. I suggest the Taoiseach push out the boat in relation to the role of Commissioners in appearing at not only European Parliament sessions and committees of the European Parliament but at committees of national parliaments.

Is there any reason the relevant Commissioner, whether the budget Commissioner or another, should not appear at the relevant committee of the Dáil or the Dáil and Seanad at the beginning and end of a commission year, set out his stall and say what his or her plans are for the year and come at the end of the year to say how it was achieved? If this is done, a role can be found for national parliamentarians — not only in the policy area but specifically in relation to wasteful expenditure — to complement that of the European Parliament in bringing about greater accountability for expenditure. Nobody would run a business in the way the European Union is run.

In tandem with that, the role of the Court of Auditors should be strengthened to give greater value for money audit powers based on efficiency, effectiveness and economy. Members of the Court of Auditors should not confine themselves to reporting to the European Parliament. We have a precedent for that here in that Richie Ryan, who was a member of the Court of Auditors, appeared before the Committee of Public Accounts, as did his predecessor, and gave an explanation of its report. These are basic suggestions on how to make the Union and national parliaments more relevant, cut out wasteful expenditure and persuade member states to contribute a greater amount to the European Union budget because it will be used more effectively. The Taoiseach and his Minister could advance these suggestions which would be relevant to the European citizen.

I was disappointed with the plan on action for employment. Given the committees, discussions and considerations, I would have thought that at this stage more advanced and innovative proposals would have emerged from the Cardiff summit, including building on the local development initiatives which were not mentioned. I was particularly disappointed to note that the role of the European Union in dealing with racism and xenophobia was not mentioned nor was the possibility of it taking a leading role in tackling that problem, given our recent problems and the concerns expressed by President Yeltsin in recent days about the rise of racism and xenophobia in Russia, I also note the summit report referred to the advances being made to admit Norway and Iceland to the Schengen agreement. It will be a source of great disappointment to our citizens — I raised this issue not only today but when I was a member of the reflection group and at every opportunity — to see we are racing ahead to give more advanced and preferential treatment to the citizens of Norway and Iceland in relation to travel within the European Union without a passport while our citizens continue to use one. The Taoiseach should make a point of this at every summit until the British eventually come on side and fully join the European Union which we all want it to do. It is unacceptable that citizens of Norway and Iceland should have freer access to the European Union than Ireland as a full member.

I thank the Taoiseach for his report. I hope he will note my concerns and that they will be addressed at future summits.

Mr. Quinn

The European Council in Cardiff was a low key affair which did not make much progress in terms of advancing the European project. However, the six months Presidency of the United Kingdom was marked by a dramatic shift in the relationship between the United Kingdom and the rest of the European Union.

The positive transformation of this relationship can be attributed to the attitude adopted by the new British Labour Government led by Prime Minister, Tony Blair. The British handling of the Presidency was positive and effective and we are indebted to them for that.

As Tony Blair said in his final address to the European Parliament on 18 June, the Presidency was marked by the launch of two historic events — economic and monetary union and enlargement. It is somewhat ironic that Britain presided over the successful completion of the negotiations around the establishment of a single currency while, at the same time, not being one of the 11 participating member states. It is clear from the tone of Tony Blair's speech in Strasbourg and the repeated remarks of the British Chancellor, Gordon Brown, that the British Labour Government is committed to joining the single currency in due course. The probability is that sometime around 2002 Britain will be a full member of the EMU. This is good news for Ireland as it removes the volatile relationship between sterling and the Irish pound. Volatility in the relationship between the two currencies creates problems for Irish business and consequently for the overall performance of the Irish economy.

The political row between France and the rest of the member states of the European Union over the appointment of the President of the independent European Central Bank did no credit to France and has probably damaged the perception of the independence of the ECB. The compromise which was arrived at is messy but workable. The immediate necessity is to ensure that the ECB gets off to a good start from 1 January next year although it has now come into existence in part.

Sadly, Ireland will not be represented in the operations of ECB management. This is a failure on the part of the Irish Government to lobby successfully on behalf of a candidate, whom it would have sought and promoted for one of the top 12 senior management posts. To suggest, as the Taoiseach and the Minister for Finance did, that since nobody applied for the job they had nobody for whom to lobby is simply out of step with the realities of politics in continental Europe. It is not clear what the effect will be on Ireland's fortunes in not having a top senior person involved in the day to day management of the bank. We have lost the opportunity of having someone well placed who, on critical occasions, could be able to keep us properly informed of and represent our views on what was happening. In years to come we will regret the omission of the Government to ensure an Irish person was placed in one of those senior slots.

The decision taken at Cardiff on enlargement was a good one. The European Union must enlarge eastwards to embrace the countries of central and eastern Europe. The six countries that have been selected — Cyprus, and the central European countries of the former Soviet bloc, Estonia, Poland, The Czech Republic, Hungary and Slovenia — have made extraordinarily good progress towards the democratisation of their societies and the transition from command economies to market economies. However, they still have a long road to travel and Ireland should be to the forefront in assisting that transition and adaptation.

The issue of employment remains high on the European agenda. Some 18 million European workers are still unemployed. They are a reminder that the European labour market is not working as effectively or efficiently as it should or could. The changes proposed at the Luxembourg Summit last autumn and which are incorporated in the employment chapter of the Amsterdam Treaty will, in time, make a significant impact on the high levels of unemployment in certain parts of Europe. In addition the progress in completing the single market will ensure the remaining barriers to the full integration of the European market will be removed.

Since December last year the single market scoreboard shows that the proportion of measures which have to be implemented in all member states to confirm the single market has increased from 73 per cent to 82 per cent. As Tony Blair said, we must go further and faster. Particular priorities for the future are further progress in financial services, improved enforcement of single market law and tackling unwarranted price differences across Europe. From 1 January 1999 those price differences will become far more transparent and obvious because of the introduction of the single currency. While national currencies will continue to be used to 2001 the fact that exchange rates will be irrevocably fixed will ensure people will be able to compare clearly and directly prices in Spain as against Portugal or, indeed, prices in Ireland as against France and Germany.

I note the question of Agenda 2000 has, in effect, been postponed until the Austrian Presidency with a commitment that the major decisions on Agenda 2000 will be taken during the German Presidency in the first half of next year. This is an ambitious timetable and there are many issues of concern from Ireland's point of view. All we can do here today is note the limited progress that has been made to date and to ensure this House has an opportunity on a number of occasions to look in detail at progress in relation to these important negotiations. Both the Taoiseach and the Minister for Agriculture and Food have spoken out strongly on this issue. This side of the House will monitor the progress of these talks very carefully.

I am particularly disappointed at the failure of the Cardiff Summit to address the issue of the democratic deficit which is now looming as a major issue on the European political landscape. I am also disappointed the Taoiseach repeatedly refused to debate this issue in advance of attending the Cardiff summit so that we might have had a chance in the House to put on record our views regarding this matter. It would also have given the Taoiseach an opportunity to set out the Government's attitude on these issues. Yet, repeated attempts by me to table questions to the Taoiseach were effectively blocked.

Many people have commented that the percentage no vote in the recent Amsterdam referendum on 22 May was the highest recorded in any European referendum here since 1972. Many of the people who voted no indicated a wariness about the future transfer of sovereignty from nation states to European institutions that do not appear to be open to or answerable to democratic accountability. I share that view. There is far too much unnecessary secrecy surrounding the proceedings of various Councils of Ministers. All those meetings should be open to print and broadcast media. The present situation is farcical. Regularly, during the course of ECOFIN Council meetings which take place once a month, Ministers from different states systematically leave the Council to brief the gathered journalists on the outcome of a particular issue to give their most favourable spin on it. As matters stand the same journalists already have access to much more information within the corridors of Brussels and Strasbourg than in Ireland.

The process of decision making is such that by the time a formal Council meeting takes place, many of the difficulties surrounding a particular issue have been resolved. Consequently there is no threat to the efficiency of decision making by opening the Councils to the full glare of the media, both television and print journalists. Arguments against it are similar to the arguments we heard in recent years against the introduction of radio and television coverage of proceedings in Dáil Éireann.

The other area of concern to European citizens is the manner and the way in which the President of the Commission is chosen. The process is more akin to the quintessential smoke-filled backrooms associated with the political haggling of conventions for the selection of candidates for the American Presidency. The previous selection for the President of the European Commission saw the vetoing of Ruud Lubbers, the former Prime Minister of the Netherlands, by the German Chancellor, Helmut Kohl, who then, with the French, promoted the candidacy of the Prime Minister of Belgium, Jean Luc Dehaene. This, in turn, was vetoed by the then British Prime Minister, John Major. This was entirely for domestic political purposes and on behalf of the troubled, beleaguered and bitterly divided British Conservative Party. The man selected as a compromise, Jacques Santer, was every bit as much a pro-European and adopted the same stance as Jean Luc Dehaene on all the key issues about which Mr. Major was so concerned.

I support the initiative launched by the former President of the EU Commission, Jacques Delors, which suggests that candidates for the Presidency of the European Commission should be nominated by the political parties within the European Parliament and proposed to the Heads of Government for consideration. This proposal has great merit and should be examined in a constructive and positive manner. The Government should take a formal view in relation to this. There is a clear necessity for a debate about the kind of Europe in which we wish to participate and the sort of democratic checks and balances which it requires. If there is a lesson to be learned from the referendum on the Amsterdam Treaty, it is that the original love affair which many Irish citizens have had with European Union appears to be coming to an end.

Proinsias De Rossa

The Cardiff Summit marks the closing stages of the British Presidency of the EU. The Prime Minister, Mr. Tony Blair, and the British Government are entitled to praise for the solid and steady leadership provided over the past six months. The British Presidency will be remembered less for Cardiff than for the earlier summit in Brussels which finalised arrangements for EMU. If there were no single or particular matter of historical importance at Cardiff, EU leaders nonetheless touched on a number of important issues which must be decided in the coming months and which will have a profound impact on the success or otherwise of the European project. The Cardiff Summit set out a formidable agenda of work with no fewer than five formal or informal summits over the next nine months.

I welcome the decision to hold a special summit in Innsbruck to consider ways of bringing the European Union back to its citizens. The further development of the European Union will only be possible with the involvement and support of its citizens. However, the signs are that more people increasingly regard the institutions of the European Union as remote and appearing to lack any relevance to the day to day problems they face. Concern about this problem which already existed was intensified by the significant "no" votes in the referendums in Ireland and Denmark on the Amsterdam Treaty. There is significant evidence, supported not just by anecdotal experience but also opinion polls, that many of those who voted "no" in the referendum in this country did so, not because they opposed any specific item in the treaty, but because they did not understand it and were unsure of the likely impact of its ratification. We clearly need to improve the flow of information to the public. This must be done, not just when they are asked to vote, but on an ongoing basis.

We also not only need to improve the level of information but also the level of debate about European Union related issues. This should be done by putting in place an effective role for national parliaments in the decision making process as well as formal consultation with non-governmental organisations and local authorities. The European Union is largely run by way of intergovernmental decision making, by the Commission initiating legislation and by the Parliament and the Council addressing those issues. I am sure all national parliaments have European affairs committees. By and large, these committees address issues related to the European Union after the fact rather than before legislation is dealt with. We need to find a way to make what is happening in Europe relevant, not just to the governments of member states but to the parliaments. I would go further and suggest that there should be a way of involving the elected members' local authorities in a consultative process related to what is happening in Europe. It is only through some such mechanism that we will have an engagement at a political level with what is happening in Europe.

Part of the problem is self-inflicted. Too often decisions made by the Commission or the Council of Ministers are seen to be inflexible or illogical.

The decision made in 1991 to abolish duty free is a classic example of a European Union own goal. Another potential one is the threat to anti-poverty community and development projects in Ireland and throughout the Union arising from the decision of the Commission earlier this month to freeze a series of budget lines. The Commission made the decision to freeze budget funding of around £300 million following a judgment of the European Court of Justice that certain spending programmes had no legal basis. This arose from a case taken by the UK and reflects the position before the Amsterdam Treaty. The Commission was unnecessarily cautious in deciding to cut the funding and, if the decision is allowed to stand, it will not only cripple vital projects but will be enormously damaging to the standing of the European Union. The ratification of the Amsterdam Treaty by all member states will allow funding of this nature to be put on a firm legal basis. In the meantime, emergency provision should be made to allow all deserving projects to continue. It is a pity the subject did not even merit a mention at the summit last weekend.

The other key issues which must be decided in the coming months and which will have particular significance for Ireland are the Agenda 2000 proposals and the decisions relating to the next round of EU funding. In this regard, the Government must take every step to ensure that proposals to reduce EU Structural and Cohesion Funds do not undermine the economic progress made by this country in recent years. Proposals to reduce our share of EU funds were inevitable given the failure of the Union to increase its central budget. Successive Irish Governments have not argued strongly enough for an increase in the central budget. Even without enlargement, the current budget would not be sufficient to manage the degree of integration EMU will bring. With ten prospective member states knocking on the door and with the proposed budget ceiling of 1.27 per cent of GDP, it is totally inadequate. If the status quo is allowed to stand, it will be unsustainable and, unless there is change, we will be faced ten to 15 years down the road with a possible disintegration of the European Union.

If we want to combat poverty and unemployment effectively, it is essential reductions in Structural Funds are kept to a minimum and that the process is managed effectively. The Government should not seek to retain Objective I status for certain parts of the country. It is far better the entire country be categorised the same way, thus allowing targeting of funds to tackle specific problems, such as poverty and unemployment which are found in both rural and urban Ireland, rather than putting everything in certain geographical areas. There must be no question of throwing in the towel on Structural and Cohesion Funds to concentrate all efforts on trying to preserve Ireland's funding under the Common Agricultural Policy. Notwithstanding the importance of agriculture to Ireland, it would not be in the national interest to trade Structural and Cohesion Funds for the retention of a discredited CAP system which adds significantly to the cost of food for consumers and which disproportionately benefits the largest and wealthiest farmers.

It is clear we need to start making our own plans to deal with the new situation. It is inevitable EMU will lead to new problems for this country with the threat of increased unemployment a concern. We should follow the lead of the Finns who have established a buffer fund to deal with the potential problems of EMU. Rather than providing tax give-aways for the rich, such as halving capital gains tax, the Government should commit available resources to such a buffer fund.

I welcome the reference by the Taoiseach to the conclusions of the Cardiff Summit which state that one of the important issues for the creation and maintenance of employment is the need for targeted investment in education and training so that we provide opportunities for those who are long-term unemployed or who experience disadvantage or marginalisation. Will the Taoiseach impress that view on Deputy Harney so that we no longer have to listen to the nonsense she trotted out last week on unemployment? She seems to think that threatening the unemployed with the loss of benefit will, in some miraculous way, make them employable. In many cases they are unemployable because of their lack of skills and the long period they have been out of the work-force. The Taoiseach's views are contrary to those of Deputy Harney.

I would like to refer to a Green group motion before the European Parliament last week, subsequent to the Cardiff Summit. I urge Green Party Deputies to read the motion as it is in stark contrast to the position the Green Party takes in this House on EMU. The first paragraph of the motion states:

.rejects the attempts by President Chirac and Chancellor Kohl to misuse the concept of subsidiarity and decentralisation in order to weaken European institutions and to prevent, after the implementation of the euro, any serious European initiatives in the economic, social and environmental fields; supports the Commission in its efforts to develop the necessary common European policies; repeats its call for a clearer division of tasks between the EU and its member states and regions.

I hope the Green Party will take those sentiments on board and end the nonsensical, chauvinistic line it has been peddling in and outside this House for so long.

Mr. Gormley

It has been noted that the European Council at Cardiff was a good illustration that the reality of European integration is a perpetual work in progress. High on the agenda of the five summit meetings proposed for the next 12 months is: "The stimulation of the attention and commitment of citizens who are widely perceived to be alienated from this emerging system of internationalised government." In this regard the Irish and the Danes can take a bow, primarily because we have given ourselves institutions which require major decisions relating to the EU to be taken by referendum rather than by cabinet.

In Ireland's case, it must be noted that it was the intrepid vigilance of the late Ray Crotty and Patricia McKenna MEP which gave the Supreme Court the opportunity to instruct the Government as to its responsibilities on such decision making and as to the appropriate manner of its discharging those responsibilities. In effect, successive Governments have had subsidiarity forced upon them by individual citizens who have shown tremendous courage and determination. In his own words, Ray Crotty "caught the Government with its hands in the till of the people's constitutional rights" in his challenge to the Single European Act. He seems to have played a major posthumous role in influencing the attitude of the Cardiff Summit.

The emphasis on bringing the EU closer to its citizens and on focusing on issues which matter to them would have given Ray Crotty some wry satisfaction. It is interesting that some of those who now express concern about the democratic deficit had no time for Ray Crotty and did not welcome the Supreme Court's decision.

The second reason Irish voters can take pride in having influenced the Cardiff Summit derives from the strength and growth of the sceptical vote in the EU referenda. This culminated in the Amsterdam referendum where almost 40 per cent of the electorate, following the lead of fewer than a handful of parliamentarians, gave clear expression to their views on the idea of a federal European superstate. The summit confirms that our voice was, at least, heard.

However, there are sharp encounters to come. A system of internationalised government which seeks to bring about a fortress European superstate, belching out its wastes and toxins and excreting its technologically armed, pharmaceutically enhanced and genetically modified product lines on an undernourished and war torn southern hemisphere, is a nightmare which true international Governments would seek to avoid. However, that is the reality which has been created by the political elite of the EU who met at Cardiff last week.

President Mandela reminded the conference of this fact, emphasising the need for Europe to build a special relationship with Africa based on mutual confidence and co-operation rather than handouts. There is a striking contrast in the welcome the Irish people gave to Nelson Mandela in 1990 and the current, somewhat hysterical, expressions of zero tolerance towards refugees and asylum seekers from Africa and elsewhere. If the recent attacks on the offices of the Association of Refugees and Asylum Seekers in Ireland indicates that we are moving towards some kind of European mainstream then there is little to celebrate.

Cardiff showed that European leaders are unsure about the future direction of Europe and that they have become aware of the widespread dissatisfaction with the creation of a European superstate. President Chirac and Chancellor Kohl had the audacity to write to Tony Blair on the eve of the summit stating that they did not want to see the creation of a Central European state. Chancellor Kohl has been the prime mover in creating a federal Europe and this statement was made for domestic political reasons. He is donning Euro-sceptical clothes simply because of the forthcoming election.

The recent referendum results show that there is growing disenchantment with the direction Europe is taking. The centralisation of power will lead to a power vacuum, leading in turn to an emergence of right wing groups and greater political instability. The democratic deficit has not been addressed and ordinary Europeans feel alienated from the decision making process. Many who voted for the EEC do not want a federal Europe. Following the Amsterdam Treaty the Taoiseach stated that the Irish people do not want to see a federal superstate. However, that is what we are getting. The single European currency is a pillar of statehood. So too are the creation of a European FBI — Europol — and the eventual creation of a European army, favoured by Chancellor Kohl.

Cardiff failed to address the major issues facing Europe. Deputy Gay Mitchell is correct to say that unemployment is not being properly addressed. However, he is not correct to say that Ireland is perfectly placed to avail of EMU. Most European and Irish economists will confirm that our economy is out of synchronisation with other European economies and the last thing we need is lower interest rates but that is what we will get. The housing market is out of control and the Bacon report is powerless to do anything about it. It is clear that we are following a European model where house ownership will become the preserve of the wealthy.

Deputy Gay Mitchell is an ardent proponent of EMU and has highlighted the fact that economic union is not possible without fiscal union or transfers. In fact he contradicts himself. On the one hand he says that it does not matter if we have an asymmetric shock. On the other hand he gives the example of the US where there are fiscal transfers.

Mr. G. Mitchell

I did not say that.

Mr. Gormley

That is what I heard, Deputy.

Mr. G. Mitchell

The Deputy should not misquote me.

Mr. Gormley

We can check the record. Hans Tietmeyer, President of the Bundesbank, stated that when it comes to asymmetric shocks one is on one's own. Without fiscal transfers that is the situation. I have no doubt that we will eventually see fiscal union and tax harmonisation and I await the reaction of the Irish people when they become aware of this fact. The sad fact is that for many people and political parties, Europe is nothing more than a gravy train but the gravy is drying up.

Mr. M. Smith

Such lack of confidence.

Mr. Gormley

We do not have a contingency plan. We are hoping that if we continue to be compliant Europeans some money will continue to come our way. We were told that Cardiff would deliver innovative proposals on the environment. That did not happen. The recent report from the European Environment Agency shows that, despite many EU environmental directives, pollution problems and habitat destruction continues apace.

If Deputy De Rossa believes in subsidiarity, I hope he accepts that the Green Party is entitled to its opinion. We do not have to fall into the Stalinist line with Green parties elsewhere. We have our own opinions. It is interesting to note that the Green movement and Green parties in Europe were at one in rejecting the Amsterdam Treaty.

Minister for Defence (Mr. M. Smith)

As will be clear from the Taoiseach's statement earlier, the Cardiff European Council established the timetable for taking key decisions on the future of the European Union during the Austrian and German Presidencies.

In keeping with their importance for the lives of our citizens, the Heads of State or Government attached high priority to economic issues and specifically to the key question of how to promote employment. Recalling the recent decisions on the move to the third stage of EMU on 1 January 1999, the Council recognised the progress made by all member states towards a high degree of convergence and reiterated that the introduction of the euro will help to ensure stable macroeconomic conditions. As the Taoiseach reported, Cardiff endorsed a set of broad economic guidelines and reviewed progress in the implementation of the Employment Guidelines for 1998.

In relation to Agenda 2000, Deputies will have noted that, while the Taoiseach used this occasion to register some of Ireland's key concerns, Cardiff represented very much a stocktaking exercise and a package of fundamental decisions remains to be taken by the target date of March 1999. In the first instance, discussions will resume in the Council of Ministers on the key issues. The Minister for Foreign Affairs and his colleagues in the General Affairs Council will lay the ground for achieving as much progress as possible at the Vienna European Council in December, in line with the Cardiff conclusions. There will be detailed input from the Agriculture and Finance Ministers in their areas of responsibility.

A number of questions of fundamental importance to Ireland need to be resolved in the negotiations ahead. In regard to the proposed reform of the Common Agricultural Policy, we will continue robustly to defend our interests and seek an equitable outcome which reflects the great importance to our farming economy, and our economy as a whole, of the beef and milk sectors. We will maintain our position that the proposals as they stand are not acceptable to us. The most important aspect of the proposals on Structural Funds from our point of view is the transitional arrangements for regions, such as Ireland, which have ceased to meet the qualifying criterion for Objective I status. The outcome of the negotiations in this area must address our continuing development needs, especially in the area of infrastructure. It must also meet the needs of the less developed parts of the country. We will continue to resist firmly any link between our EMU participation and our eligibility for Cohesion Fund assistance.

The Taoiseach spoke of the value and significance of the European Council's conclusions to the British-Irish Agreement. It will be important that, at the appropriate time, substance should be put on the undertaking of the Union to continue to play an active part in promoting lasting peace and prosperity in Northern Ireland. The Cardiff European Council noted the Commission's commitment to finding new creative ways to support the fresh opportunities arising from the Agreement and invited the Commission to make proposals accordingly. The continued support of our European partners, of the European Commission and of the European Parliament is deeply appreciated.

The European Council welcomed the substantial progress made since Luxembourg in preparing for enlargement. The Union's priority is to maintain the enlargement process for the countries covered in the Luxembourg European Council Conclusions, a process within which these countries can actively pursue their candidatures and make progress towards taking on the obligations of membership. The Conclusions state that each of these candidate countries will be judged on the basis of the same criteria and will proceed in its candidature at its own rate, depending on its degree of preparedness. The Commission will submit its first regular reports on each candidate's progress towards accession at the end of this year. In the case of Turkey, these reports will be based on Article 28 of the Association Agreement and the conclusions of the Luxembourg European Council.

The Taoiseach also spoke about the wide-ranging preliminary exchange of views among Heads of State or Government at Cardiff on the future development of the European Union and other speakers referred to this important discussion. This is to be carried forward at an informal meeting of Heads of State or Government, probably in October, in preparation for the Vienna European Council. All member states, not least Ireland, have a particular interest in the subjects which arise in this context.

While the main focus in Cardiff was on the need to advance discussion of internal issues, the Council also addressed a number of urgent foreign policy concerns. The Taoiseach referred to the firm and unequivocal declaration adopted by the Council on the subject of Kosovo. This was issued on Monday, 15 June, with the intention of influencing the outcome of President Milosevic's meeting in Moscow with President Yeltsin the following day. The text reflects a lengthy and sombre discussion by Foreign Ministers in Cardiff during which my colleague Minister Andrews expressed his concern about the plight of the Kosovo Albanians. I am sure Deputies on all sides will share the view that the crisis poses a serious threat to regional peace and security in the region. The Council declaration strongly condemns the actions of President Milosevic who bears a heavy personal responsibility for the use of brutal military repression against the citizens of Kosovo. That repression has driven many from their homes and created a significant displacement and refugee problem in Kosovo and neighbouring Albania.

In Cardiff the European Union supplemented existing sanctions on the Federal Republic of Yugoslavia by imposing a ban on flights to member states by Yugoslav carriers. The Declaration of the European Council addresses a number of demands to President Milosevic, including the withdrawal of security units used for civilian repression in Kosovo, unimpeded access for humanitarian and international monitoring agencies, facilitation of the return of refugees and rapid progress in the political dialogue with the Kosovo Albanian leadership. Failure on the part of Belgrade to take these steps would result in a much stronger response, of a qualitatively different order, on the part of the international community, including measures which would require a resolution of the UN Security Council.

Foreign Ministers returned to the subject of Kosovo on the second day of the Council, Tuesday 16 June, after receiving initial reports of the outcome of the meeting between Presidents Yeltsin and Milosevic. While some limited progress was made in Moscow, including agreement on international access and dialogue, there was no clear commitment by President Milosevic to the withdrawal of security units used for civilian repression. Furthermore, while he has undertaken to resume dialogue with the Kosovo Albanian leadership, President Milosevic did not accede to the long standing demand of the European Union and Contact Group members for international mediation. This is an ongoing concern. The European Council called on both sides to return to the negotiating table and on the Kosovo Albanian leadership to state clearly its rejection of violence and terrorism.

President Milosevic has not yet responded adequately to the European Union's demands. Nevertheless, the measures he has agreed to take are being examined carefully. In the light of this examination, the need for further action will be considered by the Union and the relevant international bodies. The Council agreed that the European Union will play its part in an effective monitoring effort by increasing the number of its monitors in the Federal Republic of Yugoslavia.

The European Council also agreed to adopt a comprehensive approach to solving the refugee problem within the region based on the right of refugees to return to their homes in conditions of security. As a first step, assistance will be provided from the European Community budget and member states. I am pleased to inform the House that the Government took immediate action in respect of this commitment by allocating £50,000 to the International Federation of the Red Cross for Kosovo refugees in Albania.

The European Council expressed its very grave concern at the continuing lack of progress in the Middle East peace process and the threat that this poses to the stability and security of the region. It stressed that the current opportunity for progress on the Palestinian track must not be lost. It confirmed its strong support for the efforts which the US is making in this context. The Council called on Israel to recognise the right of the Palestinians to exercise self-determination without excluding the option of a State. The European Council also called upon the Palestinian people "to reaffirm their commitment to the legitimate right of Israel to live within safe, recognised borders".

The statement by the European Council was a balanced and well intentioned expression of our collective concern at the very serious stalemate in the process set out in the Oslo Accords. The Israeli Government's subsequent rejection of the views expressed by the European Union in Cardiff is a matter of deep regret. Indeed, the situation on the ground has been further exacerbated by the announcement by Prime Minister Netanyahu of a draft plan relating to Jerusalem.

The European Council confirmed the Union's desire to do all in its power to support and strengthen the peace process and those striving to carry it forward.

The recent nuclear tests by India and Pakistan have caused grave concern both in the region and the wider international community. The European Council reiterated its concern over the situation in South Asia, whose stability has been damaged by the tests, and encouraged India and Pakistan to address constructively the issues which divide them. It welcomed the establishment by a number of countries of a task force to promote non-proliferation in the region. The Council reaffirmed the EU view that the Non-Proliferation Treaty constitutes the cornerstone of the international non-proliferation regime and called on India, Pakistan and others who have not done so to accede to it.

The Cardiff conclusions also recalled member states' commitment to the goal of global elimination of nuclear weapons enshrined in Article VI of the Non-Proliferation Treaty. This month, as the House is aware, Ireland and Sweden, with a number of other countries, launched an important initiative on nuclear disarmament. I am pleased to report that its significance was recognised by the European Council which "took note of the recent initiative on this issue by several countries, including Ireland and Sweden".

Developments in Indonesia and their implications for East Timor were considered by the Council which encouraged President Habibie to implement his commitment to political and economic reform and the holding of early elections next year. It is most important that these commitments are fulfilled for the welfare of the Indonesian people in the post Suharto era. The Council expressed its support for the economic recovery of Indonesia and welcomed the humanitarian assistance being provided by the EU and its member states.

Ireland pressed for a strong statement on East Timor from the European Council. I am pleased to report that the Council reaffirmed the importance of a just, global and internationally acceptable solution. The Council conclusions also called for the release of all political prisoners, including those from East Timor, and agreed to continue to press for the early release of Xanana Gusmao. The Minister for Foreign Affairs had earlier raised the question of Gusmao's release with his European colleagues as well as in his discussions with President Mandela. The Government very much hopes that recent developments in Indonesia will help to advance efforts towards a settlement under the auspices of the UN Secretary General. Ireland will continue to raise the question of justice for East Timor within the EU and elsewhere.

The Council called for a ceasefire in the tragic dispute between Ethiopia and Eritrea and condemned the bombings of each others territories and the needless loss of lives. The Union will continue its support for the mediation efforts under way, including those of the US-Rwandan facilitation team, and has offered to provide material assistance.

Deputies will be aware that the Treaty of Amsterdam will bring about certain changes in the organisation of the common foreign and security policy of the Union. Specifically the Secretary General of the Council of Ministers will become high representative for the CFSP with the dual role of assisting the presidency in the representation of the Union and contributing to policy formulation. To free him to take on this additional responsibility a post of deputy secretary general will be created. The Treaty of Amsterdam also provides for the establishment of a policy planning and early warning unit under the responsibility of the high representative to advise the Council in the CFSP area. The conclusions of the European Council refer to both these innovations and commit the Heads of State or Government to make the necessary decisions in December next. I expect the Vienna European Council will agree on the person to fill the post of high representative. It is intended that the high representative will be an international figure of standing and established reputation.

The Minister, Deputy Andrews, raised his concern about the tragic situation in Sudan during the lunchtime discussion of Foreign Ministers at Cardiff. In response, and at the Minister's request, the Presidency indicated its intention of providing for a substantial discussion of the issue during the forthcoming General Affairs Council on 29 June.