I attended the European Council meeting held in Brussels on 24 and 25 October together with the Minister for Foreign Affairs, Deputy Cowen. The Minister of State with special responsibility for European Affairs, Deputy Roche, was also a member of the delegation. The European Council marked a major watershed in the enlargement process. In particular, the agreement on the financial aspects of enlargement was a major achievement and a most satisfactory one from Ireland's point of view. The meeting was the first European Council meeting to be conducted according to the shorter and more focused format agreed at the Seville European Council. Copies of the Presidency Conclusions have been laid before the Houses of the Oireachtas. The positive outcome to our referendum on 19 October laid the basis for achieving a successful outcome to the meeting. The Irish people stretched out the hand of welcome and friendship to the peoples of the accession countries. By doing so, we removed the last major obstacle on the path to enlargement.
In Brussels, we decided that ten candidate countries close to concluding their negotiations will be able to become members of the European Union in 2004. These countries are: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia. As Ireland will hold the Presidency of the European Union from 1 January 2004, the honour of welcoming the new member states will fall to us. The dynamic created by the successful outcome of our referendum on Nice should not be under estimated. The resounding and positive welcome by the Irish people to the people of the candidate countries was enormously significant. This sense of historic opportunity was shared, not only by the members of the European Council, but by the President of the European Parliament, Pat Cox, who addressed the members of the European Council on this issue.
I am also happy that, as a result of the positive outcome to our referendum, Ireland's place at the heart of Europe, where we belong, has been secured. I took the opportunity to thank the members of the European Council, including the President of the European Commission, Romano Prodi, for their positive response to the referendum outcome. I thanked them also for the support they had shown to Ireland, in particular the adoption of the declarations agreed in Seville last June. While much work is required to be done to conclude the negotiations at the European Council in Copenhagen in December, the key elements of the European Union's approach to the enlargement negotiations, including the financial aspects, were agreed. The Financial Perspective for the period 2000 to 2006, which was agreed at the Berlin European Council in March 1999, included a provision for the application of the Common Agricultural Policy, with the exception of direct payments, to six new member states.
The Commission's recent proposal that direct payments should be gradually extended to the ten candidate countries considered ready to join the Union in 2004, required a new decision from the European Council on the agricultural aspects of enlargement, at least for the period 2004 to 2006.
The Commission proposed that direct payments should apply incrementally to the new member states, with the first increment of 25% of the level applicable in the Union of 15 to apply in 2004, followed by three increments of 5% in the next three years, and, from 2008, by annual increments of 10%, reaching 100% in 2013. The European Council accepted the Commission's proposals. Direct payments are made a year in arrears and consequently the budgetary impact of, for example, paying 100% direct payments to the new member states in respect of 2013 will not be felt until 2014. The cost of this proposal is estimated by the Commission at €1.3 billion in 2005 rising to €4.7 billion in 2013.
The Brussels European Council decided that the total annual outlay on market-related expenditure and direct payments should not exceed the amount in real terms of the ceiling set for these expenditures for the Union of 15 for 2006 by the Berlin European Council, plus the amount of these expenditures for the ten new member states in 2006 as estimated by the Commission. These two amounts, €42.8 billion and €2.5 billion respectively, constitute the baseline for future years. The European Council decided that expenditure in nominal terms over the years 2007 to 2013 should be kept within this baseline, increased by 1% a year. These decisions relate to a Union of 25. A separate decision about funding for Bulgaria and Romania will have to be made prior to their accession which is at present targeted for 2007.
The annual 1% increase in the budget over the 2006 baseline provides funding of €48.6 billion in 2013. The cost of market-related expenditure and direct payments in the new member states in 2013 is estimated by the Commission at €5.5 billion. That leaves a balance of €43.1 billion for the existing Union which compares favourably with current levels of expenditure of between €40 billion and €41 billion. These decisions of the European Council are stated to be without prejudice to future decisions on the Common Agriculture Policy and the financing of the European Union after 2006; any result following the implementation of the reviews of the Agenda 2000 agreement provided for by the Berlin European Council; and the international commitments which the Union has undertaken, inter alia, in launching the Doha round of WTO negotiations.
While the Brussels agreement is, as I stated, without prejudice to the outcome of the mid-term review of Agenda 2000, there is now little likelihood that a qualified majority can be obtained for any significant change in Common Agricultural Policy until 2007. A further positive feature of the Brussels agreement is that no upper limits have been placed after 2006 on rural development expenditure which includes agri-environmental programmes such as the rural environment protection scheme, forestry and farmer retirement. The European Council also emphasised that the needs of farmers living in disadvantaged areas should be safeguarded and that multifunctional agriculture should be maintained in all areas of Europe.
In arriving at its conclusions, the European Council strove to balance the need, as perceived particularly by the net contributor member states, to restrain expenditure on agriculture with the need to make a fair offer to the new member states and the need to provide all farmers in the enlarged Union with a reasonable degree of stability. I believe the agreement reached in Brussels meets those needs in a balanced way. Direct payments will be extended to the new member states in a gradual manner which will minimise the distortions which, in many cases, would result from sudden huge increases in income and which will not unduly hinder the widespread structural changes that are necessary. The agreement also provides assurances to the net contributor member states that the extension of the Common Agriculture Policy to a Union of 25 will not place intolerable burdens on their exchequers and, in the process, provides safeguards for the farmers of the existing member states, including Ireland. In so far as can be foreseen, budgetary provision for the Common Agriculture Policy is now in place until 2013 and there is no budgetary reason why direct payments should be reduced during that period. In addition, the absence of a limit on rural development expenditure and the emphasis placed on the importance of rural development amount to a significant commitment by the European Council to protect and enhance the economic and social fabric of Europe's rural areas.
In addition to the issue of enlargement, the Brussels European Council resumed the ongoing discussions on how the European Union can undertake peacekeeping operations, an issue that has been on the agenda of successive European Council meetings. Because the European Union is not a military organisation it requires access to NATO infrastructure, particularly in the Balkans, to carry out its peacekeeping tasks. This will facilitate the European Union playing a central role in response to humanitarian and other crises that may arise. The European Union is considering taking on responsibility for the current peacekeeping operation in Macedonia. This mission provides security to unarmed European Union monitors. These monitors are led by an Irish official. This is fully in line with long-standing European Union decisions and Ireland's position of military neutrality which is fully recognised in the European Council Conclusions. I want to emphasise again that Ireland's participation in any EU humanitarian or crisis management operation will be subject to the three conditions of United Nations authorisation, a Government decision and Dáil approval.
As the Presidency Conclusions show, the European Council strongly condemned the hostage taking in Moscow as an act of terrorism. The European Council also endorsed the approach adopted by the General Affairs and External Relations Council on Kaliningrad. This issue will now be discussed at the EU-Russia Summit later this month. At their separate meetings on the Thursday evening and at lunch time on Friday, the Foreign Ministers discussed a range of foreign policy issues including Iraq and the Middle East.
I had a very constructive bilateral meeting with Prime Minister Simitis of Greece. The Prime Minister outlined the priorities of the incoming Greek Presidency from 1 January next. These priorities include enlargement, with the accession treaty due to be signed in Athens in April. The incoming Greek Presidency also promised to pursue vigorously the European Union's goals and objectives on the wider agenda. Greece will pay particular attention to developing the enlarged European Union's relations with its neighbours.
When I met with Prime Minister Blair in the margins of the European Council meeting in Brussels, we again emphasised our full commitment to the implementation of the Good Friday Agreement. In the course of our ongoing contacts with the parties, including Sinn Féin, we will be working to ensure that all issues are addressed in a way which will promote confidence and trust and will allow for the restoration of the devolved institutions as soon as possible.
I would like to take this opportunity to thank the Danish Presidency for the efficient and effective way which in which the European Council meeting was managed. I look forward to the European Council meeting which will be held in Copenhagen on 12 and 13 December. There, once again, the main item on the agenda and the major priority will be the enlargement of the European Union with a view to concluding the negotiations with the accession countries. The full agenda for this meeting will be prepared in due course by the General Affairs and External Relations Council. At this stage, it is expected that, in addition to enlargement, we will discuss an initial report by the Presidency on reform of the Council on foot of decisions we took at Seville. The Brussels European Council proved once again that the European Union works. At the Council, Ireland proved once again that it is committed to the European Union and that it is able to further its national interests within the framework of stability, prosperity and peace provided by the Union.
The Brussels Council was extremely important. It has been well recorded that so much progress was made because the Irish people had voted to accept the Nice treaty. This allowed the German Chancellor, Gerhard Schroder, to come to agreement with the French. That agreement then moved into the extended Council securing a very satisfactory agreement on the Common Agriculture Policy until 2013. I do not think anyone believed we would have concluded that agreement at this meeting – many believed that it would have been discussed and dealt with in Copenhagen.
I wish to register my appreciation to Deputy Kenny and his colleagues in Fine Gael, Deputy Rabbitte and his colleagues, the social partners and other groups who campaigned to secure a "Yes" vote. It allowed enormous progress to be made and several months work was dealt with in one fell swoop. I also thank the Minister for Foreign Affairs, Deputy Cowen, and the Minister of State with responsibility for European affairs, Deputy Roche, who did an enormous amount of work in recent months.