Last week's meeting of the European Council focused on a number of issues of vital interest for the future of the Union and its citizens. On Thursday evening, the Council discussed economic matters, with discussion falling into three broad areas — economic policy co-ordination under the European Semester and Euro Plus Pact; implementation of the package of measures that were agreed in March; and the ongoing crisis in the eurozone, including the situation in Greece.
We brought the first European Semester to a close. This process began in January with publication of the Commission's annual growth survey. Based on this, the spring meeting of the European Council in March agreed a set of priorities for fiscal consolidation and structural reform across the Union. Based on these priorities, in April, member states submitted national reform programmes and stability or convergence programmes. Having assessed these, the Commission then made a series of recommendations to each member state, and these were adopted by the European Council last week. These recommendations should now be reflected in member states' national budgets and in their programmes of structural reform for 2012.
In Ireland's case, it was recommended that we continue to implement the EU/IMF programme as the best means of securing our economic recovery. I was happy to reiterate the Government's commitment to this vital task. Recent events have demonstrated how interdependent we are within the European Union. An economic setback for one is an economic set back for all. The European Semester process is a significant step towards enhanced economic policy co-ordination and, as such, it is to be welcomed. Of course, individual member states remain responsible for their own budgetary choices, and that is as it should be. However, there is now a shared understanding of the steps each needs to take and a political commitment to implementing what has been agreed.
President Van Rompuy welcomed the fact that the country-specific recommendations were adopted without having been watered down. I agree that this sends out a strong message that we are ready to do what needs to be done. It goes without saying that the case for closer co-ordination is even greater in the case of a shared currency. For that reason, in March it was agreed that countries in the eurozone, and any outside that chose to join, would aim to go further through the Euro Plus Pact in order to boost competitiveness and foster growth. A total of 23 member states are now part of this process and have submitted a range of commitments. In Ireland's case, they are part of our EU/IMF programme or the national recovery plan.
At the meeting we agreed that these commitments were a step in the right direction. However, there was also acceptance that in their next round of commitments member states need to ensure a broader scope, a more concrete approach with more specific and measurable commitments, and a higher degree of ambition. On the pragmatic co-ordination of tax policies under the pact — through which we will work on the exchange of best practices, the avoidance of harmful practices and proposals to fight fraud and tax evasion — we agreed to hear a progress report from Finance Ministers and the Commission at the next meeting in December. We also took stock of progress on the comprehensive package of measures adopted by the European Council in March. This package has been now almost fully implemented.
Agreement has been reached on the European Stability Mechanism and on amendment of the European Financial Stability Facility. All member states will now take the steps necessary to ensure ratification of the Treaty by the end of 2012, to allow it to enter into force in 2013, and to provide for the rapid entry into force of the amended EFSF.
As I have previously informed the House, now that the final details are known the Attorney General is examining what will be required in legal terms to allow Ireland to proceed to ratification. Without prejudice to the outcome of this examination, it is worth recalling that the previous Attorney General was satisfied that the proposed change to the Union's Treaty, which will allow for the establishment of the ESM, had no constitutional implications and that, therefore, no referendum was required.
We welcomed progress on the package of six legislative measures which will strengthen economic governance within the Union. These will strengthen the Stability and Growth Pact and reinforce macroeconomic surveillance. There was some disappointment that it has not yet been possible to secure final agreement with the Parliament to allow adoption of the measures on first reading. President Van Rompuy urged the Parliament not to let the better be the enemy of the good. This was good advice which I hope will be heeded.
In considering how best to realise Europe's potential for growth and job creation we agreed that the administrative burden on SMEs needs to be further reduced and that, where appropriate, micro-enterprises, which are the smallest of the SMEs, should be exempted from certain future regulations, or at least, be subject to a lighter regime. In this regard, we welcomed the Commission's intention to assess the impact of future regulations on micro-enterprises and to screen existing laws to identify existing obligations from which they should be excluded. We agreed to come back to the matter in December. Given the critical importance to our recovery of the SME sector in Ireland, I very much support and welcome this work and I look forward to its being taken forward as a matter of urgency.
Finally, our economic discussion looked at the situation of member states currently under an EU/IMF programme. Naturally, this part of our discussion focused on Greece, where events continue to unfold. We welcomed the progress that has been made, particularly in the area of fiscal consolidation. The extent of the effort of the Greek Government and people to get back on track is sometimes overlooked in the heat of debate, and this is not fair. Of course, a great deal more remains to be done. There was strong support for Prime Minister Papandreou's efforts to secure the agreement of his Parliament for the programme of austerity measures which is necessary if the fifth tranche of funding under the Greek programme, amounting to some €12 billion, is to be released in time to meet the country's funding needs in July. Adoption of these measures will also open the way for the elaboration of a new programme of funding for Greece, which the Greek Government has now requested.
The Heads of State or Government of the euro area agreed that the required additional funding will be financed through both official and private sources. We endorsed the approach agreed at the eurogroup meeting on 20 June, under which voluntary private sector involvement would be pursued through informal roll-overs of existing Greek debt, avoiding a selective default. We asked finance Ministers to continue their work to allow the necessary decisions to be taken by early July. We also called on all parties in Greece to support the programme's main objectives and key policy measures.
It is difficult to see Greece emerging from its current predicament unless some form of political unity of purpose is achieved. There is a mountain to be climbed and all must play their part. In saying this, and in setting out what now needs to be done, the European Council made clear its appreciation of what the adjustment effort means for Greek citizens. Nowhere is this more keenly felt than here in Ireland. I extend my very best wishes to the Greek Government and people, who must make some exceptionally serious decisions about their future direction this week. We offer them our support and solidarity.
There was no detailed discussion of the situation in Ireland, though in its conclusions the European Council welcomed the progress we have made in implementation of our reform programme and agreed it was on track. I stressed again to the Council the need to ensure that every element of a programme, including pricing, contributes to the prospects of early recovery and a positive outcome. Ireland wants to return to the markets as soon as possible.
As the House is aware, in my conversations with President Sarkozy I again took the opportunity to explain the importance of the issues involved for Ireland, both the rate attaching to our loans and our rate of corporation tax. On the latter, he is fully aware of our situation and that we will not be moving. We agreed that our finance Ministers and officials should continue their work together with a view to reaching a mutually acceptable outcome. I hope this can be done as speedily as possible.
The meeting also welcomed the new Portuguese Prime Minister, Pedro Passes Coelho, to his first European Council, and welcomed his Government's strong commitment to implementing the Portuguese programme of reforms.
The question of migration was central to our discussions on Friday. The free movement of people under the treaties is one of the most tangible achievements of European integration. It is most obviously given effect through the Schengen arrangements in which most member states participate. For the arrangements to work as they should, there must be mutual trust between member states, and external borders must be properly managed.
At our meeting last week, decisions were taken on four key issues. First, we agreed that the best way to decrease migratory pressure from the south is by helping young people in north Africa and the Middle East to build a future in their own home countries. Therefore, the new partnerships we intend elaborating with the countries of the region will include migration, mobility and security dimensions. Second, on asylum we said we consider the recent Commission proposal on procedures and reception conditions as a basis for future negotiations. We confirmed the 2012 target date for the establishment of the common European asylum system. Third, on Schengen we agreed that, without undermining the fundamental principle of free movement, the system could be improved. We agreed that, as a last resort, there could be a safeguard mechanism to be invoked in response to exceptional circumstances which were putting at risk the overall functioning of Schengen. This would allow the reintroduction of internal border controls in a genuinely critical situation. Any decision in this regard would have to be taken on the basis of specified criteria, and would be limited both in time and scope. The Commission was asked to table a proposal for such a mechanism in September. Fourth, the European Council welcomed the recent agreement on strengthening Forex, the Union's agency for external borders. We agreed that the European border surveillance system will be further developed as a matter of priority to be operational by 2013. We also agreed that work on, so called, smart borders should be pushed forward rapidly to ensure we fully realise the potential of technology to assist in this vital task.
For reasons with which the House is familiar, Ireland does not participate in Schengen. However, our people do benefit whenever they travel in the area and we have a strong interest in ensuring the system operates as efficiently and effectively as possible. The decisions taken last week are an important step in that direction.
Our discussion of international matters focused on recent events in the southern Mediterranean region, including Tunisia, Egypt and Morocco, where there are grounds for cautious optimism, as well as Libya, Yemen and Syria, where signs are more worrying. The High Representative, Cathy Ashton, briefed us on her recent visits to the region, including the current outlook.
I raised concerns on the situation in Bahrain in particular, and proposed that a reference be included in the Declaration on the Southern Mediterranean to be adopted by the meeting. This was agreed, and the declaration now notes that the European Council expressed its concern about "the process surrounding the trials and sentencing of opposition members in Bahrain" and "encourages Bahrain to ensure full respect for human rights and fundamental freedoms".
The changes under way in the region highlight the need to break the current stalemate on the Middle East peace process. The European Council called for all parties urgently to engage in negotiations as the only realistic prospect of improving the situation on the ground and as a means to secure a lasting and comprehensive solution. The meeting of the Quartet, now scheduled for 11 July, will be important in this regard.
We also expressed support for the convening of a conference in Paris to provide economic support for the construction of the Palestinian state in the framework of a re-launched peace process.
On Croatia, the European Council took stock of progress and agreed that accession negotiations should be brought to conclusion by the end of the month, with a view to signature of an accession treaty with Croatia before the end of the year. As someone who has strongly supported Croatia's progress toward membership, I very much welcome this significant development. There is no doubt that the prospect of membership of the European Union is a strong anchor for peace and progress in the western Balkans, a region where stability cannot be taken for granted. With this in mind, the European Council agreed to return to the question of enlargement in December. We also expressed our welcome for the arrest of General Ratko Mladic as a positive step for international justice and for Serbia's EU perspective.
President Van Rompuy set out for the meeting his plans for our work in the six months ahead. At our meeting in October, he expects that we will prepare for the meeting of the G20 that will take place in Cannes on 3 and 4 November. We will consider the external aspects of our economic policy, building on the work of the European Council meeting in September 2010, and prepare for a number of summits with key partners, including China, India, Russia and the US. In December we will consider the question of enlargement, the results of the nuclear stress tests now under way and follow up to the energy summit earlier this year. We will also return to commitments made under the Euro Plus Pact, notably on employment, ahead of the launch of the next European semester.
The leaders of the Council and other countries in Europe were very responsive to the decisions taken by Ireland and the progress made by this country and our people in meeting our commitments under the IMF-EU bailout deal.
