European Council: Statements

The Taoiseach

I welcome this opportunity to brief the House on the outcome of last week's meeting of the European Council, which was an important meeting in many respects.

There were four main items on our agenda: the report of the task force, chaired by President Van Rompuy, which examined issues relating to economic governance at EU level; preparations for the forthcoming G20 meeting that will take place in Seoul in November; preparations for the Cancun conference on climate change in December; and preparations for a number of upcoming summits, including those with the US, Russia and Ukraine. In addition, the question of the Union's future budget was raised by a number of partners, and the Council agreed that we will return to this question at our next meeting.

In the context of our discussion on economic governance, it is worth recalling recent events and developments in this area. In the light of the economic challenges facing Europe, in March of this year the European Council asked its President, Herman Van Rompuy, to establish a task force of member states, in co-operation with the Commission and the European Central Bank, to examine options to strengthen the Union's framework for economic governance and to bring forward recommendations before the end of 2010. In April, in the face of extreme pressure from international markets, Greece turned to its partners in the Union for support, which led to the putting in place of a programme of bilateral loans from other eurozone member states, in which Ireland played its part. In May, in the spirit of solidarity that characterises the Union, a "European stabilisation mechanism", aimed at preserving financial stability, was put in place for a period of three years.

In what was a fast moving context, an immediate and effective response was required. This was achieved through the establishment of the European Financial Stability Facility, through which euro area member states agreed to provide pro rata guarantees in respect of funding raised to support member states that find themselves in difficulties caused by exceptional circumstances beyond their control. Ireland, along with the others, took the necessary legislative steps to ensure the facility came into being. Under the circumstances, President Van Rompuy also readily agreed to accelerate the work of the task force, which conducted its business very intensively over the following months.

The task force, on which Ireland was represented by the Minister for Finance, produced its final report on 21 October. It made recommendations aimed at strengthening fiscal discipline in the Union; introducing new macroeconomic surveillance arrangements; and setting the principles for a robust crisis management framework. The package of measures proposed by the task force includes a number of key elements. The report proposes a strengthened Stability and Growth Pact, introducing greater financial discipline with an enhanced focus on public debt as well as deficits. While the report found that the current framework remains "broadly valid", it felt that it needs to be applied in a better and more consistent way. In particular, there is a need for greater focus on debt and fiscal sustainability.

On sanctions, which were the subject of particular and detailed consideration, the task force sought to strike the right balance. It proposes to enlarge the spectrum of sanctions available and to apply them earlier and on a more semi-automatic basis than is currently the case, with the new arrangements, in the first instance, applying to euro area member states only. The report also recommends the introduction of a new macroeconomic surveillance framework, including an "Excessive Imbalances" procedure, which will operate alongside the Stability and Growth Pact. Under this an annual assessment of macroeconomic imbalances and vulnerabilities will be undertaken. In particularly serious cases, and where prompt corrective action is not taken, euro area member states will, ultimately, face sanctions.

While respecting national responsibilities for fiscal and economic policies, the report also notes the agreement of the European Council earlier this year that economic policy coordination be deepened and strengthened through the institution of a "European Semester", a new timetable designed to enable the EU dimension to be better reflected when countries prepare budget and economic reform programmes. This involves the earlier submission of stability programmes, which will take place by the end of April each year. The task force also recommends that national budgetary frameworks be strengthened to underpin compliance with the SGP. At last week's meeting, the Council endorsed the task force report and called for a fast-track approach to its implementation. The task force recommendations represent significant improvements in economic governance and are to be welcomed. The task force set summer 2011 as a target timeframe for agreement between the Council and the European Parliament on the related legislative proposals from the Commission.

The task force also examined what was required to ensure a robust framework for crisis management. It acknowledged that the arrangements put in place earlier in the year offer a good line of defence for the next three years. It went on, however, to state that, in the medium term, it believed that there is a need to establish a credible, permanent crisis resolution framework for the euro area and that further work is required in this regard. Any permanent framework to safeguard the financial stability of the euro area must stand on a firm legal foundation. This is not just a matter for one or two member states, although the matter was highlighted in advance of our meeting by a joint declaration by Germany and France in Deauville on 18 October. All member states have a shared interest in ensuring our actions are fully within the boundaries of the law at all times.

While it was possible to design a mechanism that met our immediate policy and legal requirements earlier in the year, those arrangements were made at a time matters were urgent and pressing. There is an opportunity now, on foot of the initial consideration by the task force, to reflect on appropriate arrangements for the future building on the experience gained with the European Financial Stability Facility and to take a more considered approach to what is required of a permanent mechanism. The European Council has, therefore, asked President Van Rompuy to undertake consultations with member states including on the question of limited treaty change required to that effect. It has agreed to revert to the matter in December, with a view to taking the final decision both on the outline of a crisis mechanism and on a limited treaty amendment so that any change can be ratified by mid-2013 at the latest.

I am, of course, aware of speculation on what this might mean in legal terms for Ireland. It is important to stress that what is being proposed is a very targeted and limited exercise. When, on foot of the instructions we have now given him, President Van Rompuy has completed his consultations, he will bring forward a detailed proposal setting out what is required. Until this proposal is finalised, it is not possible to conclude what will be needed to enable Ireland to ratify the new arrangements. It will have to be analysed closely and carefully. However, I assure the House that whatever legal steps are necessary and appropriate will be followed.

It is worth recalling that the treaties contain various approaches to treaty change, including the "Simplified Revision Procedures". This approach provides for situations where it is agreed that some change is needed within particular policy areas of the treaties but where the competences conferred on the Union by the member states are not increased. No decision was taken last week on which approach will apply in this situation; this is something to which President Van Rompuy will need to give careful consideration. However, the European Council conclusions place great emphasis on the limited nature of what is required.

Ahead of the summit, suggestions were also made by a small number of member states, most prominently France and Germany, that the treaties should be amended to provide for the suspension of the voting rights of a member state persistently in breach of its obligations under the Stability and Growth Pact. This was a particularly controversial proposal and there was little enthusiasm for it last week, either at home in Ireland or around the table at our meeting in Brussels. Nonetheless, the President of the European Council intends as a subsequent and completely separate exercise, to examine the matter in further consultation with the member states. No timeframe or deadline has been placed on this and I do not expect to see it get much support.

I will refer briefly to other matters discussed last week. While it was not an item on our agenda, a number of member states, led by the United Kingdom, indicated a wish to discuss the Union's future budget following a presentation by the President of the European Parliament, Jerzy Buzek. The treaties set out a procedure for agreement on the budget between the Council and the European Parliament. This process is under way for the 2011 budget and discussions are at a delicate stage. The Council did not have an opportunity to discuss the matter in detail nor, given the ongoing negotiations, would it have been timely to do so.

In our conclusions, however, we stressed that it is essential that the European Union budget and the forthcoming multi-annual financial framework reflect the reality that most member states face, which is the need to take significant steps to make their deficit and debt levels more sustainable. We agreed to discuss how to ensure that spending at the European level makes an appropriate contribution to this work at our next meeting in December. Subsequently, the Heads of State or Government of 12 member states cosigned a letter to the President of the European Council and the current Belgian Presidency stating that they were not prepared to accept that the EU budget for 2011 could increase by more than the 2.91% proposed by the Council earlier this year. Given that negotiations are continuing, and I expect will be brought to conclusion at the EU Budget Council later this month, I did not consider it helpful to participate in this initiative.

The European Council also discussed a number of issues, including preparations for the forthcoming G20 summit in Seoul, for the Cancun conference on climate change and for summits with third countries, including the United States, Russia, Ukraine, India and Africa. The Minister of State, Deputy Roche, will go into further detail on what was agreed on these matters. In broad terms, however, I welcome the approach being taken by President Van Rompuy in ensuring that a strategic debate takes place at head of State or Government level ahead of such important engagements.

Implementation of the recommendations of the Van Rompuy task force, as the President of the European Council said, will mark a major improvement in the economic governance of the European Union and the euro area. It will bring greater strength and clarity to the application of the rules, and real consequences to those who choose to ignore them. I welcomed the report and I welcome the decision of the European Council to endorse its conclusions.

A great deal has been said in recent times about the role of the European Union in economic matters, much of it ill-informed and wide of the mark. The fact is that Ireland, as a matter of sovereign choice, is a part of an economic and monetary union that brings great benefit to this country. It has helped us weather recent economic storms and placed us in a better position to deal with developments in the international markets than we could possibly have achieved on our own.

Like any other shared endeavour, membership brings within it opportunities and responsibilities. These must apply to all participants equally, without fear or favour. The Van Rompuy task force went about its work in a serious and comprehensive way. It has produced an important set of recommendations within a very tight timeframe. I pay tribute to the Minister for Finance and to his colleagues for the sterling work they did. Their work demonstrates again the fact that economic union draws its legitimacy from the member states and the rules which they set for themselves, and by which they collectively agree to be bound. This applies to Ireland every bit as much as to other member states.

We are currently engaged in preparing a detailed four year plan to chart our way to bringing our budget deficit back within the 3% limit set in the stability and growth pact by 2014. Developing and implementing this is necessary to rebalance our public finances and provide a platform for economic recovery and job creation. It is very much about the national interest. This work does not take place in a vacuum. Just as we have obligations to ourselves, we have also entered into commitments with others. This Government will continue to ensure that we live up to all of them.

Deputy Enda Kenny

Last week's European Council saw the concern of many states about the threat to the stability of the euro being aired in public. In advance of the European Council meeting, I attended a summit meeting of the leaders of the European Peoples Party. While there was general consensus that greater oversight of fiscal plans is necessary, there was also recognition that a broad re-opening of the Lisbon treaty would not be desirable as it would lead to difficult and complicated ratification processes in several member states, including Ireland.

Fine Gael agrees that we need for tighter fiscal plans to be put in place to ensure the current crises across many EU states, including Ireland, does not recur. There were reports from Greece and Portugal at the same meeting. Fine Gael also notes the President of the European Council, Mr. Herman Van Rompuy, has been tasked with engaging in each member state on how this fiscal tightening and control can be achieved. I look forward to meeting Mr. Van Rompuy in that regard and I hope the Taoiseach will keep Opposition parties informed of the Government's discussions with him.

There is nervousness among many European member states about any, albeit limited, change to the treaty so soon after its ratification just a year ago. I understand that the President of the European Council hopes to explore options that would not necessitate fundamental amendments to the EU treaties which would require a change in competency. I understand general preparatory work on a new fiscal mechanism will now take place and it will be discussed at the meeting of the Council in December.

The issue of improved economic governance was also discussed at the summit. At national level, the task force recommended the use or establishment of public institutions or bodies to provide independent analysis, assessments or forecasts on domestic fiscal policy matters as a way to reinforce fiscal governance and ensure long-term sustainability. I can support that. Fine Gael has always supported greater EU economic governance and we have never objected to greater EU scrutiny and coordination of budgetary proposals, subject to two conditions: we must reform the parliamentary procedure here for the budget process to ensure meaningful debate, as well as independent oversight of budgetary principles. We must also ensure that it is not just about member states in deficit. Germany also has a role to play to ensure effective and smooth growth in the European community.

Fine Gael has been demanding reform of the budgetary process for many years. Before a budget is adopted, independent expert fiscal advice must be made available to the Dáil to expose over-optimistic assumptions and reckless budgeting. The Government has consistently refused to allow the Dáil to have proper scrutiny of the budget. The catastrophic consequences of this undemocratic approach by the Government are obvious in the dismal state of the public finances. Coordination and consultation with our colleagues in the eurozone is essential for recovery. The only way to deal successfully with this crisis in the eurozone will be through a strong European economy based on independent democracies that share power in an appropriate way and which develops the necessary growth policies to achieve that objective.

I also used the opportunity of the EPP summit to reaffirm to Fine Gael's allies my party's commitment to dealing with Ireland's fiscal crisis and to fulfilling our obligations as members of the eurozone. This statement of Fine Gael's position was received very positively by our colleagues around the table.

Deputy Seán Barrett

The measures being proposed here were brought about as a result of mismanagement and, unfortunately, Ireland is one of the reasons for that. At various budgets dating back to 2005, Fine Gael warned about the mismanagement of the Irish economy and the unfortunate outlook that existed. I would like to remind the House of some of the statements at the time by the then Fine Gael spokesman on finance, Deputy Richard Bruton. On the budget of 2007, he commented, "This is the latest in a series of budgets whose pattern is set by the huge spending spree. Government spending has grown 50% faster than the rate of growth in national income. Government has doubled its dependence on a construction boom, which now contributes 25% of its revenue." He continued to say, "You cannot possibly build indefinite spending growth on the back of a building boom no more than you can build long-term economic prosperity on the back of a building boom." I heard commentators asking why Fine Gael did not bring this to the public's attention over the years. We did. We consistently warned about the contents of the 2008 and 2009 budgets.

I value our membership of the European Union and it is unfortunate that we are part of the cause of the implementation of these changes, which are urgent and necessary. While I have doubts about any proposal for the suspension of voting rights, it is necessary to protect the euro and eurozone countries by putting such measures in place. In proposing that we accept necessary measures, we should seek a carrot and stick approach. I see no reason the European Union cannot establish its own independent credit ratings agency, staffed by independent professionals who would rate each member state's economy. There is no reason the power of the European Union cannot be used to borrow from the markets on behalf of all member states. Big can be beautiful when it comes to borrowing money. Member states would have greater strength borrowing money on a combined basis and receive a better interest rate. I accept our rate may still be higher than German interest rates.

This provides an opportunity to do more than just impose obligations on member states. It is time the Government sought these changes and encouraged banking facilities from other member states to be freely available to Ireland.

I must warn the Government about the challenges of climate change. The decisions taken by the electorate in the US yesterday will have a huge bearing on achieving a worldwide agreement on climate change. It is important Europe takes a leading role at the forthcoming Cancún climate conference to tackle climate change which is having a large effect across the world, particularly on the African Continent.

Deputy Michael Creed

It is interesting and a cause for optimism to note the emergence of the post-Lisbon treaty institutional architecture which enables the European Union to respond quicker and in a more effective manner to crises that have engulfed eurozone economies. One such response was the establishment of the European Financial Stability Facility arising from the Greek crisis. Ireland might be grateful for this facility given the way bond spreads are going. While I accept using the facility would mean a certain degree of running up the white flag, borrowing from it at 5% rather than the 7.4% charged by the bond markets yesterday may be better.

We sometimes mislead ourselves into thinking there is a global economic recession when it is really a north Atlantic one. The economies of China, India, Brazil and other south-east Asian countries are growing at rates of between 9% and 15% per annum. Europe needs to stop navel-gazing. While the proper economic policy responses need to be put in place, Europe must also avail of the opportunities elsewhere in the global economy.

It was interesting to note from the Taoiseach and Deputy Kenny that the prospect of further constitutional referenda for EU treaty changes is not out of the equation. It may be time for the Taoiseach to consider Fine Gael's proposal, made during the last Lisbon treaty and requiring a constitutional amendment, to have the Supreme Court adjudicate on what specific aspects of future European treaty changes could be in conflict with the Constitution and may require referenda. There is a debate, an academic one at this stage, that substantial parts of the Lisbon treaty may not have been in conflict with the Constitution. Enabling the Supreme Court to play a part in that regard would be important.

Every communiqué issued after a European Council meeting refers to the Doha development round and greater liberalisation of world trade. While I welcome more liberal and free trade, a cornerstone must be fair trade. Fair trade cannot always be about coffee and bananas. It is about Irish beef producers competing fairly with other beef producers. Equivalence comes into play in this regard. Irish agriculture will take on any other producers but only if they are operating on a level playing pitch. If Brazilian beef is to be allowed on our supermarket shelves, it must be produced to the same standards to which European farmers adhere. This must be kept in mind for future world trade agreements.

In economic crises, the bigger players tend to have the stock response of calling for greater liberalisation when they are the very ones which resort to anti-competitive practices. For example, the United States introduced quantitative easing for its economic problems. The consequence is a currency war between the US and China which is on the brink of bringing around a double-dip recession in the European economy. It is also important to point out the US subvents its agriculture sector three times more than the European Union does. While being vigilant in respect of greater liberalisation of trade, a principle which I support, it must also be fair.

Deputy Brendan Howlin

The Taoiseach indicated four areas were covered at last week's European Council meeting, the most important of which, and the one which received most attention, was the report of the task force on economic governance. It was established by a decision of the Council in March this year when economic matters were not as bad as they are now. Mr. Van Rompuy, the Commission and the European Central Bank focused on important matters which were set out in the task force's report.

The task force aims to increase fiscal discipline, something which we know all about, and to broaden economic surveillance. While the word "surveillance" is a discordant one, we must ensure every member state is playing according to the rules and, specifically, data on returns to the Commission are actual and real. As we saw with the unfortunate experience of our Greek colleagues, their previous administration's returns could not be relied upon to be a fair and accurate assessment of Greek economic performance.

The task force also aims to deepen co-operation, which I welcome, and establish a robust framework for crisis management and stronger institutions. While no one will have a difficulty with these objectives, the difficulty is how they are to be implemented. As always, the devil is in the detail. We must wait until later when the specifics are brought forward to see exactly the reporting mechanisms in question and the degree of and timing for the oversight of each eurozone member state's budgetary requirements. We also must wait to see the specific nature and architecture of these institutions. It is interesting the European Union has used the term "crisis management" in all of this. It does not shy away from the fact we are living through an economic crisis.

In advance of the summit, there was much comment about some of the remarks made by the German Chancellor, Ms Merkel, many with which I agree. I agree with her that it should not only be the taxpayer who should bear the costs of any future banking crisis. The same logic applies to the current crisis too. Ms Merkel went on to say that there was a justified desire to see that not only taxpayers but private investors should be liable. In so far as she has that viewpoint, I agree with her.

However, it was unfortunate that a joint Franco-German statement was made at Deauville in advance of the European Council meeting. It gave the impression that there was a central core, particularly of the eurozone states, that was going to drive a specific agenda that suited their needs, rather than the collegiate approach that has underpinned the basis of the European Union from its inception. The mechanisms they are talking about include more extreme proposals that the Taoiseach says were discussed, but which did not enjoy very much support, although they are still on the table, such as denying voting rights. It is unfortunate that level of debate was put on the table.

I wish to mention our own domestic situation on two fronts. In terms of fiscal discipline we know what we have to do and we know how Herculean a task that will be for us. We also know that we need the support and help of the European institutions, most specifically the European Central Bank which has been extraordinarily helpful to us in recent times. It is bizarre that some of the comments being made — even by people appointed to important State boards, to the effect that it would be desirable for us to withdraw from the euro — could have any currency, if the House will pardon the use of that word, in the current debate. We need the euro and the support of the European Central Bank. It is unhelpful to us currently for talk of withdrawing from the euro to be made, particularly by people who have been given a new economic role in our State.

We had difficulty in terms of the Lisbon treaty being accepted by the people of this country. There was a plethora of reasons for that, which were extraneous to the contents of the treaty. However, we did have a pact with the people in the course of those deliberations to the effect that this was the last round of institutional change and we were not going back. We were actually going on to bread-and-butter issues such as jobs, the creation of stable growth, a better environment and better social institutions within the Union. That was our next phase of work and focus, so it is somewhat jarring that we are back to the suggestion that we need to tweak institutional matters again.

It is understandable that the Germans have a difficulty concerning their own courts. We are mindful of our courts and our Constitution, so Germany must be mindful also of its corresponding judicial and legal framework. I fully accept the German concern that the existence of a stabilisation mechanism and funding system needs to be legally underpinned to be in accordance with German law. While I do not want to overstate that point, because I am not a legal expert in either domestic and international law, I do understand the concerns the German authorities have expressed on that front. We must be mindful of those concerns.

Given the Taoiseach's comments in Brussels last week and his statement to the House today, I understand that it must be done in a way that does not give rise to concerns that, when Germany or France require it, we are unravelling the settled institutional mechanisms that we had such difficulty in framing and getting passed in the second Lisbon treaty vote here.

This morning, people have been watching the election results coming in from the United States. Some two years ago, we were all carried on a wave of euphoria when President Obama was elected. He spoke a poetic rhetoric of change and gave people heightened expectations in terms of what could be done, certainly in the short term. The disappointment of that is now evident with the outcome of the congressional elections in the United States. I do not believe the American people are all that different from the people of this jurisdiction, particularly as it is clear there is a clamour for a balanced budget in the United States, but not for its own sake. If we are to believe the commentariat in the United States, what is at the core of the conclusions is the need for jobs. There is also fear because US unemployment has increased by more than 2% in the last two years, despite the message of hope that was presented.

One of my fears concerning the published conclusions of last week's European Council meeting is that they are heavy on the fiscal focus, as virtually all our debates in this House have been over a long period. There is every good reason for that because if the fiscal parameters in which we work are so askew, then nothing else will work. We understand that and that is why my party has signed up to the 2014 target. We must go beyond that, however, if we are to learn the lessons of the United States, and talk about what it is for. It is not a balanced budget or a 3% deficit for its own sake, because it is neat or has some sort of synergy that we have clutched out of the sky; it is because it enables us to create jobs and have better social institutions. The rhetoric from European Council meetings should be less fiscally focused and instead offer, not the Obamaesque idea of unbridled hope and a new horizon but a plan to map out what we want to achieve. That is something we could do for our own sake as well.

The corrections therefore must be made for a social purpose. We should remind ourselves constantly that the European Union is not simply an economic union, but is also a political and social union. Its founders came together after the Second World War with the purpose of building a better Europe for its citizens, with better prospects for the environment as well as improved living and working conditions. When we are making hard decisions those elements must always be included.

In the economic context, I also wish to talk briefly about three other matters. I strongly agree with the previous points made concerning the ratings agencies. The notion that we are now slaves to those agencies grates on everybody. They gave triple-A ratings to rotten bonds, sold them on and encouraged people to invest in them. These same people who have patently failed are now setting the criteria that we have to dance to, whether we like it or not. They are affecting the rates at which this country can borrow. There is a strong case to be made, which I would like to see front-loaded, for a European ratings agency that is independent of Government. I am not sure the existing ratings agencies are independent and one must ask who is paying for them.

I also wish to mention the G20 summit in Seoul, to which the Minister of State, Deputy Roche will refer in due course. As Deputy Barrett said, it concerned world trade. I was in Brussels last week and met with the South African and Namibian ambassadors to the European Union who feel they are being bludgeoned into trade agreements. They are both members of SADC, the Southern African Development Community. A number of SADC countries have already been arm-twisted into signing interim economic partnership agreements. They have all been told that they must have permanent agreements signed by the end of this year. We have a good record in this area as a country and we should seek fair trade as well as open trade. We have an open economy but we must do this on the basis of fairness. Ultimately, the notion that one can bully someone into a good deal for oneself never works. The Minister of State will be aware that I come from a trade union background and that in such an environment one always leaves the other side believing they have not been done down.

I refer to the Cancún conference on climate change. As Deputy Barrett noted, it will be affected by the congressional results. I recall the lead up to the Kyoto agreement, when the Clinton Administration was very much in favour of the proposals. However, the subsequent Bush Administration effectively dissolved the United States Environmental Protection Agency, the chief executive of which was the chief USA negotiator at Kyoto.

I had the privilege of the chairing the preparation conference for Kyoto as president of the EU Council of Environment Ministers. Ireland played a very important role in that process. I seek clarity with regard to what role we are playing now especially if Cancún falls the same way as the Copenhagen conference. Let us not gild the lily; Copenhagen was a failure. If Cancún is another failure, which is possible, what will the European Union do? It declared it would reassess its position post-Cancún, but what is Ireland's position? This morning, my colleague referred to the climate change Bill, which, effectively, has not seen the light of day. We must make progress in this area, because there is an economic advantage to our doing it right in this regard. Unfortunately, I do not have much time to develop the point but perhaps the Minister of State will refer to it in his contribution.

Acting Chairman (Deputy Charlie O’Connor)

The Deputy will have question time as well and I would be happy to facilitate him. I call Deputy Aengus Ó Snodaigh.

Deputy Aengus Ó Snodaigh

Ba mhaith liom an deis seo a thógáil chun labhairt ar Chomhairle an Aontais Eorpaigh seo atá ríthábhachtach.

Tá sé spéisiúil an tslí go bhfuil sé curtha i láthair go dtí seo agus na cinntí atá an Chomhairle ag iarraidh a ghlacadh gan díriú isteach ar an ghá le reifreann, sa tír seo ach go háirithe. Tá na tiortha móra is láidre san Aontas Eorpach ag iarraidh ath-smacht a chur ar na tiortha beaga. Cad a bhí i gceist san Aontas Eorpach ach go mbeadh tiortha ar chomhchéim ag obair i bpáirtíocht lena chéile? Arís agus arís eile, le conradh i ndiaidh conartha, feictear dom agus d'a lán daoine eile go bhfuil smacht á tharraingt isteach i lár an Aontais Eorpaigh chuig na tiortha móra láidre, na tiortha a raibh impireacht acu roimhe seo agus atá fós sa tóir ar an impireacht sin. Sin an fáth go bhfuil mé buartha faoin treo ina bhfuil an Rialtas ag bogadh faoi láthair, nach bhfuil sé sásta seasamh suas do féinmheas na tíre, i gceisteanna eacnamaíochta agus airgeadais ach go háirithe. Ba chóir go mbeadh sé de láidreacht agus de chrógacht ag aon Rialtas seasamh suas i gcoinne gluaiseachtaí ar bith a cheanglódh sinn isteach sna hathruithe atá á moladh faoi láthair ag an bhFrainc agus an Ghearmáin.

The key focus of the European Council last week was a move by France and Germany to further amend the European Union treaties. This comes a little more than one year following the passage of the Lisbon treaty in this State, albeit at a second attempt. The two member states in question sought to reform the EU treaties to provide a permanent crisis resolution mechanism within the eurozone and expressed a desire to punish countries which breach the Stability and Growth Pact, with proposals that such countries should be deprived of voting rights in the EU Council. Those countries would not expect to be punished in the same way, although they have been serial breachers of the pact in the past. I doubt they would allow their votes to be suspended in future were they to breach the pact once again. However, they are holding the cards at the moment. What stand did the Taoiseach take on behalf of the State to oppose these further attempts to limit the economic and political sovereignty of member states, Ireland in particular? Did the Taoiseach seek allies? Have the Taoiseach and the Minister of State begun the process of gathering allies among other countries in a similar position to Ireland which may or may not find themselves on the right or wrong side of the pact and this new proposal to punish countries? Many of the new accession countries and many small countries may face the wrath of France and Germany in future. Did the Minister of State make the argument or did he simply capitulate? The media coverage to date carries no expression that Ireland and its representatives had the balls or the backbone to stand up to these demands. The reality has become a good deal clearer as the crisis has unfolded and Ireland's economic sovereignty has been seriously undermined by successive Governments, including this Government, and by the EU treaties which they encouraged or rather bribed the people to agree to.

The policies of the current Government risk consigning Irish economic sovereignty to the dustbin of history. The move discussed at the EU Council represents a further step that this Government is taking along that dangerous path. There is a consensus on the proposals for cuts among all parties in Opposition except for Sinn Féin. This is based on the acceptance of a deadline, arbitrarily set in 2014, for the reduction of the budget deficit to 3% of GDP, which would fall in line with the Growth and Stability Pact. This is an arbitrary deadline set at a time when, according to the Government's account, it held a radically different view of what the commitment entailed. It seems when the target was agreed, the Government envisaged an adjustment of the order of €7 billion. However, we are all aware of what has happened since, that is, this figure has doubled. However the timeframe for addressing the deficit has not doubled despite the fact that the adjustment has changed substantially. Given the circumstances facing the country, now is the time for the Government to take decisions in the best interests of the country.

Although nothing is finalised, no decision with regard to the proposals by Angela Merkel and President Sarkozy is in the best interests of the country at the moment. We must ensure that in future we take back sovereignty rather than lose it further. We must hold political leaders to account and develop the economy in a way that benefits the mass of people rather than the banks and the wealthy. Instead, the Government appears to be going to Brussels, cap in hand, capitulating to the Franco- German demands. Any demands from the EU to the effect that Ireland should reduce its deficit from 32% to 3% of GDP in four years is plainly bonkers. Both Germany and France broke the Stability and Growth Pact during the boom years. How can political leaders or institutions credibly expect any member state to deliver such a mammoth fiscal correction in the current crisis and in the timeframe which the Government proposes?

The EU or other institutions do not expect that. Agreeing to a deadline one accepts cannot be met is deeply dishonest. All of the parties in the consensus for cuts are implicated in that dishonesty. The Irish Government has agreed with Chancellor Merkel and President Sarkozy that the structuring of EU member states' fiscal policy should be done in line with their proposals. The EU can play a positive role but not one that is proposed at present. The focus of the European Council could and should have been on job creation, stimulating economic growth, improving the living standards of all citizens in each member state and taking moves to curb the recklessness of the banking and financial institutions responsible for causing the economic crisis. Much of this was set out under the Lisbon strategy. That has not been delivered on and has been changed since. We had a debate on this point not so long ago. We have heard nothing about progress in these areas.

Where are the jobs promised to the Irish people last year? In the event of the passage of the Lisbon treaty we would achieve Nirvana, according to the Minister of State. It was an illusion, as I argued at the time. It is a pity I was not listened to because then we might not be in deep crisis to the same extent. The situation is worse than when the Lisbon treaty was put to the Irish people for a second time. The surrender of sovereignty is far worse for us. Now we have another proposal that the Irish people surrender another degree of sovereignty and control over our futures. If the Government is as reckless as the Government has been in recent times, future generations will have to suffer consequences and we will be punished without any democratic rights within the EU. That plays into the hands of those who said the EU is the opposite of a democratic institution.

In spite of the fresh moves to change the treaties, there is no move to consider the insertion of a social progress clause, which we debated during the Lisbon treaty debates. It is a long-standing demand of parties of the left in Ireland and throughout the European Union and a demand of the trade union movement. Instead, the European Council endorsed an approach that seems certain to aggravate the budgetary problems it seeks to resolve in this and other EU countries. A slash and burn philosophy has not worked in this country over the past two years and is unlikely to work in any EU countries in the time ahead. The EU leaders should be listening to people across Europe who took to the streets in many cities of Europe, including Dublin and Brussels, on 29 September to demand social protection be improved, that the Government take initiatives to stimulate the economy and that the focus be on job creation and protection of public services and those who are vulnerable.

There is a better and fairer way to get this country and other countries across Europe out of recession. In this country, Sinn Féin's proposals in the pre-budget submission on Monday should be examined by the Government. It shows there is an alternative to the slash and burn proposals and policies pursued by the Government in the past number of years. In the time ahead we will see further protests across Europe and in Ireland. I encourage people to join Sinn Féin on Saturday, 4 December at 1.30 p.m. to oppose the Government's proposals in the budget the following week. I hope they will join the community protest on the day of the budget because there is a palpable sense of anger in our society. This will be vented one way or another and it should be vented in a constructive way to demand that the Government, at the very least, does not pursue the policies it intends in the forthcoming budget and that there is a general election so that every party's proposals can be put to the people.

The EU is proposing to give more power to the people who got us into this mess in addition to the power grab by the EU. This risks locking the EU into an unsustainable and unjust social and economic logic whereby the less well-off are paying for a crisis not of their making. This cannot be accepted. From the conclusions of the Council and from what the Taoiseach said, I note that it is agreed that the President of the EU Council, Mr. Herman Van Rompuy, is to consult with member states in respect of the proposals to amend the European treaties and will report back in December. It is incumbent on the Government in the meantime to withstand and uphold the long-standing tradition in this country set down by the Supreme Court in the Crotty case that if there is to be a further transfer of sovereignty from Ireland to the EU, it needs to be done by referendum. I will personally oppose any attempt by this Government to adopt any change by sleight of hand. There must be a referendum in any dilution or surrender of sovereignty.

Acting Chairman (Deputy Charlie O’Connor)

By order of the day, the Minister of State shall take questions for a period not exceeding 20 minutes and shall then be called upon to make a statement in reply, which shall not exceed five minutes.

Deputy Seán Barrett

Would the Minister of State like to make a statement first?

Acting Chairman (Deputy Charlie O’Connor)

I am following the order of the day.

Deputy Brendan Howlin

It would be helpful so that we could then ask questions on it.

Acting Chairman (Deputy Charlie O’Connor)

Would Members like me to take questions together or singly?

Deputy Brendan Howlin

I propose a change in the order of the day so that we take the statement of the Minister of State for five minutes, followed by questions.

Acting Chairman (Deputy Charlie O’Connor)

The Minister of State must propose that.

Deputy Dick Roche

I propose that, as it is a more logical sequence.

Acting Chairman (Deputy Charlie O’Connor)

Is that agreed? Agreed.

Minister of State at the Department of Foreign Affairs (Deputy Dick Roche)

I want to address some of the issues and members can then focus questions on the specifics. The discussion was logical until the last contribution. The Van Rompuy report and the discussions in the European Council were not about trying to force any member state into a difficult position. If Deputy Ó Snodaigh had taken the time to continue reading the conclusions, he would have seen that the point made by Deputy Howlin in his excellent contribution is addressed in the final sentence of the paragraph on economic governance. As Deputy Howlin said, the measures proposed in the Van Rompuy task force reports are not being taken to punish someone. Rather, they are taken for a purpose and it would be far better if the focus on the debate was on the purpose. He stated: "The result [of implementing these changes] will be a substantial strengthening of the economic pillar of EMU, enhancing confidence and thus contributing to sustainable growth, employment and competitiveness." This was the point made by Deputy Kenny, enhancing confidence and contributing to sustainable growth, employment and competitiveness. That is the objective of the main political parties in this country. That is why the political parties have an unusually high degree of consensus on the imperative of the 2014 date and the 3% target. Deputy Ó Snodaigh is entitled to take a view on that but it is an occasion when he is out of step with reality rather than reality being out of step with Sinn Féin. He is used to this.

Three contributions made reference to the rating agencies. My views on these agencies and their borderline criminal activities are well known. Deputy Barrett raised a specific question, as did Deputy Howlin. The European Commission is working on proposals in that regard. That is something positive. Deputy Ó Snodaigh made reference to it also. It is extraordinary that agencies that were registering junk bonds at AAA rating should still be allowed to make judgments on sovereign states.

The other big issues that arose in the meeting were the G20 Summit, the Cancún conference and preparations for summits with third countries. These issues were extensively discussed not just during the course of the Council itself but they were more extensively discussed earlier in the week in the General Affairs Councils and Foreign Affairs Councils which I attended.

The European Council prepared the EU's position for the G20 Summit due to take place later this month in Seoul. The EU will be represented by President Van Rompuy and President Barroso. The European Council discussion was intended to offer them orientations on the issues of greatest priority to the EU. While Ireland is not a member of the G20, the EU participation provides us with a useful window and an opportunity to put our view forward in terms of the upcoming deliberations.

The European Council conclusions highlight the need for the G20 Summit to send an ambitious signal concerning the concrete and timely implementation of measures agreed in the framework for strong, sustainable and balanced growth. The conclusions also underline the continued need to keep markets open. One of the important points in that regard was to inject momentum into the Doha trade negotiations and to avoid all forms of economic protectionism. The European Council also signalled openness on the part of the EU to comprehensive reform of the International Monetary Fund, IMF, and expressed its support for the recently adopted Basel III agreement on the capital requirements applying to banks, which will be beneficial if adopted in Seoul.

The European Council finalised the EU's position for the forthcoming Cancún conference on climate change, which was mentioned in a number of contributions, in particular by Deputy Barrett. The Council confirmed the willingness of the European Union to consider a second commitment period under the Kyoto Protocol, provided that other developed countries commit themselves to comprehensive emissions reductions as well. That is the whole point of the European Union stance. It is willing to go beyond 20% but it expects other states, emerging and developed, to make their contribution too.

The other issue related to preparation for EU summits with third countries. Specifically, we are looking forward to the summit with the United States that will take place on 20 November. A particular issue for discussion is the Transatlantic Economic Council. The European Council noted that the summit with the Ukraine will be a useful opportunity to engage the new administration on the reform process. That will be followed by a summit with Russia. I look forward to taking specific questions on other issues of concern.

Deputy Seán Barrett

I thank the Minister for his support on the establishment of an independent rating agency that would not be seen as a political vehicle but that would be respected for its independence. I hope the benefit of having an independent agency would be followed up with the recommendation I made that it would help us to borrow money. In terms of borrowing money big is helpful. First, people listen to one. Second, one is more likely to get one's money at a lower interest rate than if one goes in on one's own. There is much to be said for a combined approach to borrowing money on behalf of EU member states. The value of having a rating agency is that it would then decide that because we would be in, for example, division three or four, we would have to pay a higher rate than whoever is in division one but it would still be cheaper and we would be guaranteed availability. That is something on which the Government should lead. This country should put it on the agenda for future meetings. It would be well worthwhile.

I note the continuing politeness of the European Union when it comes to the climate change conference that we would be prepared to go beyond 20% if other states show willingness. Let us be practical; the reality is that the Copenhagen agreement failed simply because the US Senate and Congress could not agree not alone on a target but on any legislation that is required in the United States. As Chairman of the Joint Committee on Climate Change and Energy Security I travelled to the United States with Deputy McManus. We reported to the Government that an agreement would not be reached in Copenhagen. That was obvious. Since then the changes that have taken place in both Congress and the Senate will make it impossible to get an agreement. We are codding ourselves going to Cancún expecting that we are going to get agreement on reductions of 20% let alone 30%. Does the Minister of State agree that despite the United States, because of the importance of the issue and the difficulties being caused especially in the African Continent as a result of climate change and hunger, we should plough ahead with other parts of the world in trying to deal with the issue and by doing so embarrass others into some agreement? Hanging back and waiting will not solve anything.

Deputy Dick Roche

I agree with Deputy Barrett. He and I have an unusual degree of consensus on rating agencies. It would make sense for the Commission proposals to be fast-tracked. There is something fundamentally bizarre about the existing rating agencies, in particular the major ones who were all involved in the crash in the United States and who were all saying up to a few days before Lehman Brothers went through the floor that bonds which they had to know had no value or substance were AAA rated. Court actions are being taken in that regard and there have even been suggestions of criminal activity against some of those agencies. That is the past. Deputy Barrett has made a good point about the necessity for Europe to have an independent approach to rating where sovereign debt in particular would be examined not through a prism of hysteria but with more clarity.

I assure the House that this country's position is clear and the boundary has been set out. Given the Crotty judgment and other judgments, it is clear that we will not find ourselves making a significant constitutional change through the back door.

Acting Chairman (Deputy Charlie O’Connor)

Instead of just telling Deputy Ó Snodaigh, I want to inform all Members that nine minutes remain in this slot.

Deputy Aengus Ó Snodaigh

I will not go on too much. I raised a question during my contribution. In the event of the wording being proposed and accepted in December by the other member states and in light of the Crotty judgment, which I well understand related to a fundamental change in the scope of the EU, if the wording requires an amendment to the Constitution, there is no doubt but that there would need to be a referendum even though the Government has previously tried to avoid referendums, which led to the Crotty judgment in the first place.

If the wording is not acceptable or the Attorney General's opinion is that it would require a referendum, would the Irish representatives at the December Council meeting demand a full re-opening of the treaty, a convention as Deputy Howlin called it? In that event, has Ireland considered pursuing the social progress clause to which I referred and which was a demand by the trade union movement, social support groups and many on the left or in the centre of politics in the EU? Would the convention be able to address the concerns raised by the Chancellor, Angela Merkel, and the leaders of other countries that might have problems with some of the EU's past or future activities in respect of an undemocratic move to deny voting rights, if that is the proposal accepted in December? The removal of voting rights is a fundamental matter. Any suspension of any of Ireland's rights within the EU would constitute a substantial change and be contrary to the Crotty judgment. This was the context of my statement. If any attempt were made to use the simplified treaty change and method, I would oppose such a change.

Deputy Dick Roche

In brief, as I sought to outline, this country's position is clear and unequivocal. It was set by the Crotty judgment although we have never tested the extent to which that is the case.

First, there was virtually no enthusiasm for the proposition that voting rights should be removed; rather there was a significant amount of opposition to it. Second, if that were to be the ultimate decision, which would surprise me, it is very clear that if there were to be a major treaty change it would be necessary to take the convention route. There would then be a series of ratification issues across the member states. A treaty change would have to be ratified in any case, but whether this would be by referendum would depend on whether it crossed the line drawn in the Crotty judgment.

I do not wish to disrespect the Deputy's concerns but I do not see the basis for them. It is very clear that if very significant changes were to be proposed which would have subsequent major impacts on the treaty, there would be a convention. Members states simply do not want that. If one opens a convention, one opens up everything and finds oneself in grave difficulties. The argument was made during the course of the Council and the current position of President Van Rompuy is to see how it is possible to accommodate these concerns, which are valid. We all want to have a robust mechanism which will not fail a constitutional challenge. The almost universal belief is that this can be accommodated within the existing treaty arrangements and will not require opening up a convention.

Again, we cannot make that judgment until the final wording becomes available in December. It would be imprudent to get over-excited about it or to be absolute in our view of it until we see the final wording.

Sitting suspended at 1.35 p.m. and resumed at 2.30 p.m.

Dáil Éireann debate - Wednesday, 3 Nov 2010

European Council: Statements

Dáil Éireann debate -
Wednesday, 3 Nov 2010