The first part of this morning's meeting is a discussion with a delegation of members from the Icelandic Parliament's committee dealing with EFTA and EEA parliamentary issues. The delegation is led by Mr. Gunnar Birgisson, the chairman of the committee. The Icelandic delegation is very welcome and we are delighted to have the opportunity to meet with them. Members of the committee will be interested to hear the delegation's views on the European economic area, which we do not often touch on. We would be interested to know if this is still relevant to Iceland, Norway and Liechtenstein and how it is operating in comparison to the European Union. We may be able to say a little about what we have been doing as a European Affairs committee in monitoring the inter-governmental conference and pro-actively scrutinising EU issues. I welcome the delegation and hope they enjoy their visit. Following the opening remarks there will be an exchange of views.
Visit of Icelandic Parliamentary Delegation.
Mr. Gunnar Birgisson
I thank the Chairman, his colleagues and friends. We are happy to visit Ireland, which feels like home. According to new research we are blood related.
I thank the Chairman and his colleagues for taking time from a busy schedule to meet with us. I am aware you have been busy preparing for Ireland's Presidency of the EU and, therefore, we greatly appreciate this opportunity. I wish to note that relations between Ireland and Iceland are excellent, not least at a parliamentary level. The Leas-Cheann Comhairle, Deputy Pattison, visited Iceland twice, once for a millennium, Christian and ET festival and once on an official visit to our parliament with the current speaker. We are fortunate to be on a delegation with our speaker, Mr. Blondal, who visited Ireland in 2001. We had a marvellous time in Kilkenny and Dublin. I am delighted to have an opportunity to visit Dublin again. I know I speak for my colleagues when I say it feels very much like home.
With the permission of the Chairman, I will introduce our delegation. I am a member of the Independence Party, which covers a wide political spectrum. Together with chairing this delegation, I also chair the committee on education and arts. I am a member of the environmental committee and the committee on economics and trade. The Independence Party is in coalition with the Progressive Party, which forms a right of centre government. This has been in power for more than eight years. We recently began our third term in government following the election last May. I will ask my colleagues to introduce themselves.
Mr. Ossur Sharphéöinsson
I am the leader of the Icelandic Social Democratic Party. We are the second largest party in parliament with 20 of the 63 seats. My party is three years old. I worked as a counsellor to the fish farming industry in Galway and also to the insurance industry, in co-operation with Hibernian Insurance. I am very happy to be here as it is a long time since I have been in Ireland.
Mr. Birkir Jónsson
I am a member of the Progressive Party.
Mr. Goulaugur Por Póröarson
I am a member of the Independence Party. I am a member of the committees of fisheries, social affairs and the environment and I am also a member of the City Council of Reykjavik.
Mr. Lúövík Bergvinsson
I am a member of the Social Democratic Party. I am a member of the committee on economics and trade and also agriculture. I am also a member of a city council in a small town in the south of Iceland.
Mr. Birgisson
Ireland will be leading the EU for the next six months, which will include leading parliamentary co-operation. In recent years we have made an effort to meet with the Committee on European Affairs of the country taking over the Presidency. We feel it is important to remind members of our existence to ensure our EU colleagues are aware of the substantial links between the EU and Iceland due to the EEA agreement. Under the EEA agreement, we are full members of the internal market, covering the four freedoms, taking over approximately 80% of EU legislation.
Another important factor is that Iceland is a member of Schengen, making us more integrated in the area of European co-operation than some EU member states. While Iceland is not a member of the EU, it is very much a European country that values its strong relations with the EU. It is safe to say that almost all politicians in Iceland recognise the value of the EEA agreement which has been functioning well. There are no major problems and now the agreement is set to include the EU enlargement.
EEA enlargement negotiations took place in the first half of 2003. The enlargement instruments were signed on 11 November. The aim is to have EEA enlargement instruments and the EU accession treaty enter into force simultaneously on 1 May 2004. It is important for the parliaments of the EU countries to ratify the EEA enlargement instrument at the same time as the EU enlargement agreement. It is vital, therefore, that the two enlargements take place simultaneously in order to maintain unity in the EEA area. I hope we can count on the Irish parliament in this respect. Any function Ireland can play in this regard will be much appreciated.
We have agreed to continue to contribute to the cohesion of the European Union through the EFTA financial instrument to the amount of €600 million from 2004-9. However, I stress that these payments are not based on any legal obligation. These funds will go to the accession countries as well as Greece, Portugal and Spain.
The appropriate forum for co-operation with the EU and participation in European integration has been much debated in Iceland, although currently this matter is not a high priority. The Government has stated clearly that EU membership is not on its agenda. The Government firmly supports the EEA agreement as a basis for Iceland's relations with the EU and holds the view that the agreement is functioning well. The Government points to certain instances that make EU membership, or any meaningful discussion of membership impossible under current conditions. On the other side there are those who feel that Iceland should apply for membership with a view to taking part in the European integration process. They believe that satisfactory solutions to Iceland's concerns could be reached through negotiations.
The single most important factor behind the reluctance of many Icelanders to EU membership is the Union's common fisheries policy. Members must remember that Iceland is a small country in the middle of the North Atlantic, which is highly dependent on fisheries. Control over the catch in Icelandic waters is of supreme national interest. Fish and fish produce account for approximately 75% of Iceland's total merchandise exports. Iceland depends on fisheries to a greater extent than any other country in Europe and, therefore, this is a united position. It would not be possible to hand over control of the mainstay of the economy to the EU. The common fisheries policy of the EU is governed by regular policy considerations that do not apply to Iceland. Measures that the EU considers necessary would have a detrimental effect on the efficacy of the Icelandic fisheries sector. Those are the points I wished to make, Chairman, and we will be happy to answer questions.
Thank you and, again, welcome. Let me say a little about our committee. This is a joint committee of the Dáil and Seanad and Members of the European Parliament have the right to attend and participate, which they do quite frequently. Senator Ormonde is a member of the Government party in the Seanad; Deputies Carey and Andrews are members of the main Government party in the Dáil; Deputy Sexton is a member of the second Government party in the Dáil; Deputy Quinn is a member of the Labour Party in opposition and I am a member of the Fine Gael Party in opposition. This is an all-party committee of both Houses. We, traditionally, try to do our business by consensus and rarely do we break down on a voting basis.
Two changes we have made in our work practices might be of interest to you. Our terms of reference are derived from two sources. First, we have broad terms of reference from both the Dáil and Seanad to look at almost anything to do with Europe and, second, legislation passed last year empowers us to examine all draft EU legislation, which must come to us within four weeks of being received as a draft regulation or directive from the EU Commission. We do this through a sub-committee of this committee.
Also, each month, before the Minister for Foreign Affairs goes to the General Affairs and External Relations Council he appears before this committee and we go through the agenda with him. We will be reporting to the Dáil and Seanad at the end of this year on how this new scrutiny process has worked and pointing out its strengths and weaknesses. One of the reasons for this is that when the Intergovernmental Conference is complete and there is a treaty, we will be obliged to put that treaty to the people in a referendum. Therefore, it is important to us that we are proactive in seeking to cover EU issues in as much detail as we can. The difficulty is that the issues we cover are, generally, very serious ones and it is hard to get media coverage for serious issues, except in certain newspapers and on certain radio and television programmes. Nonetheless, we will be able to point to the work of the committee and say that we have been addressing the democratic deficit.
We also have a forum on Europe, which is chaired by a Member of the Seanad and which involves all the political parties and civil society. That meets in Dublin Castle and is addressed by guest speakers and so on.
It is interesting to contrast the interests of Iceland and Ireland. We are both small islands but we are about to take on the Presidency of Europe for the sixth time. If the people who founded our State 80 years ago could see that we are about to take on the sixth Presidency of the European Union I believe they would be very proud. Our membership of the European Union has, in many ways, strengthened our sovereignty and given us a say in the world, which is much more than an economic role. Clearly, fisheries are important for Iceland and you have a different priority at this stage. At the time of our joining the EU most of our exports went to Britain; our economy was largely agricultural and we had a constant stream of emigrants. Now we have immigrants; we have diversified our exports and more of them now go to mainland Europe than to Britain. We are no longer an agricultural economy and last year we exported more business software than the United States. We have a pharmaceutical industry, a growing services sector and financial services have become an important part of our trading sector. Our economy has changed greatly and our attitudes have also changed.
I would like to ask you some questions about your experience in the European economic area but, first, I invite my colleagues to put questions.
I join you, Chairman, in welcoming the delegation. It is important that we have an exchange of views with our colleagues from Iceland.
How does Mr. Birgisson see the significant enlargement that will take place on 1 May next impacting on Iceland's agreement with the European Union, whether positively or negatively?
Mr. Birgisson
The enlargement of the EU to include the ten new countries is important for us. That is why we are here at this time. Enlargement will be important for our exports to those countries, especially our fish exports.
The Irish Presidency will have much to deal with in the next six months. There will be enlargement and the draft constitution in addition to the more normal work, including justice and home affairs and the Lisbon process. What do you see as the main goal of the Presidency? Is it enlargement or the draft constitution? We visited the Italian Parliament last month when they were trying to draft the constitution. It has not been finished yet. What is the main aim of Ireland's Presidency for the next six months?
The agenda for the next six months is, more or less, set. This committee wants to see other issues, such as third world issues, on the agenda. The main agenda for the coming six months will be enlargement, which will take place. That has been decided. We must handle that competently and ensure it takes place efficiently. There is the question of whether there is a will to finish the Intergovernmental Conference. This question is complicated to the extent that a general election is due in Spain. The real difficulties at the weekend concentrated on the concerns of Spain and Poland. The Taoiseach made a statement in the Dáil yesterday. It is traditional that the Taoiseach makes a statement when he returns from the European Council and other parties make statements in reply. I do not know if there will be a window of opportunity between now and March to conclude the business. It is not a question of re-opening all of the discussions that took place during Giscard's Convention. During the Convention process, and Deputy Carey was one of our members there, we met almost on a weekly basis with our Minister and parliamentary representatives before they went and after they came back. Most of our questions were dealt with in a reasonable fashion. I think that is the feeling generally.
While 5% of the business remains to be concluded it might be a different 5% for each member state if certain questions are re-opened. If a solution could be found to the double majority problem or the voting arrangements for Spain and Portugal it may well be that the Intergovernmental Conference could be brought to a conclusion very quickly, but it depends on there being a will. Unlike previous treaty arrangements, I suspect there is not a willingness for any old compromise. Some of the larger member states see this as an important question that has to be resolved because we are going to be a Union of 25 states and these are not questions that we can open again.
Leaving aside issues, like taxation, which do not appear to be on the agenda, among the important questions is that of institutional arrangements. We must ensure, for example, that the role of the Commission, as defender of the treaties and initiator of legislation, is maintained. We have a very small presence in the parliament and this is reducing as the parliament increases in size. Because we have one seat at the Council of Ministers and our vote there is very small, our role in the Commission is important to us. We believe representation helps to keep the balance. The House of Representatives operates a different format. By comparison it is important the institutional arrangements are maintained.
Mr. Ossur Sharphedinsson
The Chairman spoke of how proud Ireland is to host the Presidency of Europe for the sixth time. Many small nations such as Iceland look upon Ireland as a role model. It has shown that as a small nation it can lead quite successfully and can be defined as one of the economic miracles of Europe. Some ten or 15 years ago Ireland had a great deal of unemployment and emigration. Almost half of every generation who did not emigrate to the United States wanted to do so. The reverse is now the case. According to ongoing debate there are two reasons for that, American-style tax cuts or, as stated in today's newspapers, membership of the European Community.
We have always felt that Europe assisted Ireland in becoming successful. Those of us who strongly support membership of the European Community for Iceland look upon Ireland as a role model and an example of successful membership. I would like to hear more about the driving motor behind Ireland's success. On our views regarding enlargement, we welcome it because it increases the market but other things happen when Europe is enlarged. We are members of EFTA, which places great emphasis on creating free trade agreements, but when we enter the EU such free trade agreements fall flat. We feel it was grossly unfair of the European Union to force us to pay a great deal of money to retain access on which we had negotiated earlier. I wish to reiterate that EFTA countries will undoubtedly approach the Irish Presidency with a request for more say in how the money we put into the Cohesion Fund will be spent.
On fisheries and our general attitude to the EU, we are quite happy to support the manner in which the EEA operates. I was a member of the Government that negotiated that deal for Iceland. It has been very successful. My party feels that as it is not a dynamic contract we cannot change it in the same way as the European Union does. There is an increasing gap between us. I must stress from a democratic point of view - members spoke about democratic deficiency - that we take up 80% of the EU directives with almost no say and we feel membership for us will be quite difficult in the long run.
Fisheries are an obstacle not so much in terms of the Common Fisheries Policy but rather the manner in which the EU has treated our fishing stocks. Members may be aware that Iceland has been quite successful in retaining its fishing stocks though we would wish them to be better than they are. The way fishing stocks within the European Union have dwindled and disappeared has been tragic. One is now forbidden to catch some of ones stock fish in the North Sea.
Iceland is a member of NATO, one of the cornerstones of our foreign policy. We follow all developments within the European Union with regard to security. It is obvious the EU is gradually building a defence pillar. Whilst we welcome that move, we feel all matters related to defence and security within Europe must be based on the strong angle of the Atlantic treaty.
Deputy Quinn, as a former Minister for Finance, might like to reply to the economic question raised. We have a different experience of NATO. If neither of my colleagues touch on that subject, I will comment on it later.
I welcome the delegation to the meeting. There is a similarity between our two countries. It always struck me that Ireland's compliance with the fisheries policy resulted in quite a loss to this country. While we have received a great deal from the European Union we have also sacrificed a great deal. We are not net contributors nor shall we be for many years. One cannot measure the cost of compliance with the fisheries policy. It is not measured or quantified at any time.
I am interested to hear, if that is what forms the general view in Iceland that membership of the European Union would be costly to it and would result in Iceland being net contributors almost immediately. Are there other issues in terms of fisheries? I met with Mr. Vigfusson from Iceland who is campaigning in Ireland to prevent netting of salmon and sea trout. I would like to hear the delegation's view on the success of this policy in Iceland in terms of inland fisheries in particular and tourism. Has it had an appreciable effect for those fishermen who had to cease operating in that area?
I, too, welcome the delegation. I have not yet had the pleasure or honour of visiting Iceland but it is something to which I look forward.
I will try to respond briefly to Mr. Sharpedinsson's questions. Ireland has been politically independent for approximately eighty years. It would be fair to say that the first 60 years were politically and economically a disaster in terms of providing economic support for our population. So much so that in the early 1950s many people associated with the Independence movement privately and publicly questioned whether that movement was a correct political strategy. In the words of a famous Irish entertainer, we became an overnight success after 20 years. On the reasons for our success, the first ten years of our membership were not characterised by dramatic economic and political success. I use the word "political" in an economic sense.
The crisis in Northern Ireland created particular difficulties for us. It was not until the mid-1980s that we began to adjust. There are six parties in our national Parliament with a left and right spectrum by and large. Despite the political differences there has been consensus on a number of key issues, which has been maintained irrespective of the change of administration. There has been consensus on the attraction of foreign direct investment and the promotion of Ireland as a business friendly environment in which companies can do business. We have a very short link between the commencement of an entrepreneur's business and the completion of the regulatory environment. Our bureaucracy is much more business orientated and there is little red tape in comparison with the Napoleonic code of the rest of the European Union.
IDA Ireland has been uniquely successful in not just attracting foreign direct investment, but also in facilitating the location of that investment and identifying core leaders wanting to locate here, primarily the information technology and pharmaceutical companies. Every major pharmaceutical company in the world has a significant presence in Ireland. Our capital investment is such that they take a ten to 20-year view of location. Against that background, the strategy of having a corporate tax policy of 10%, which will become 12.5% next year for all businesses, was seen as a major factor.
When I was Minister for Enterprise and Employment, representatives of a pharmaceutical company told me they were able to successfully bid to their parent company in the US for the manufacture of a new product, which had emerged from the research process into commercial production. They had been more successful than their rivals in either Singapore or Puerto Rico because they could give certainty about the taxation code, business and political climate and the unit costs of labour because of our rolling three-year programmes of social partnership.
Earlier a contrast was made between EFTA and the European Union. I understand that EFTA was established in opposition to the European Economic Community. It will continue to diminish if it has not already disappeared. While people may work and trade in markets, they live in communities. The socio-economic superiority of the European Community, now the European Union, is that it was more than just a market. It is a matter for Iceland as to whether it joins. However, it would be in the interests of the whole of the European Union if Iceland could join while safeguarding its own strategic interests of which fishing is one.
I share the view of Deputy Andrews that we surrendered the potential wealth of our large fisheries as members of the European Union, largely because we were not able to properly exploit it ourselves. We had no export market or industry infrastructure - it was a peasant fishing industry. We did not have the capability to do as Iceland has done with its fisheries. Despite many efforts by the Government to assist different types of intervention, we were unable to do so. While Deputy Andrews is correct in saying we gave away a potential wealth, we also demonstrated in the previous six years that we were totally incapable of exploiting the potential of that wealth ourselves.
I wish to refer to the NATO question. The whole raison d’être for the European Union is peace and stability, and the integration of the Union not the assimilation. In many ways we have grown more confident in our national identity by being members of the Union. For example, the Irish language has increased in popularity in Dublin, where it was not widely spoken in the past. As shown by their actions, people want to keep the language.
The Treaty of Nice, recognising there were some neutral and non-aligned members as well as NATO members, set out to respect both. The genesis of our difficulty with NATO lies in the partition of the island and the fact that our neighbour remained in part of the island. Public opinion has moved on from that. A tradition of neutrality has become established. Some people believe this is guaranteed in the Constitution. The only guarantee in the Constitution is that we will not join a European Union defence entity without a referendum. It is debatable whether we could join NATO - I have not seen legal opinion on this. There is no major demand, push or desire for us to join NATO, nor is there a public rush to do so. However, there is a respect among the majority of parties here that if the NATO members want to co-operate, we should let them do so, but with respect for the traditions of others. Iceland's position is very well outlined by the NATO members in Europe who want to see the transatlantic arrangement continue. Even in the common defence areas there is nothing in the treaty that will weaken the transatlantic arrangement for those members, which wish to remain in NATO and retain that contact.
Mr Póröarson
It is very pleasant to be here to exchange views. I am pleased to hear that you have met Mr. Bergvinnson, who is an enthusiastic fighter for the environment. He has been very successful with his policy, and in my view, and that of everyone in Iceland, his campaign and what he has done is magnificent. This is probably the best way to protect salmon and other species. He has been very successful both in Iceland and in the other places he has been working.
I will now speak about Iceland and the European Union. There are different views among the political parties in Iceland. We do not have much discussion or public debate about joining the EU. If there is little or no discussion about membership for some time, the polls show many people are interested in joining. When we start to discuss it, it usually ends up that most of the people are against membership.
There are many similarities between Iceland and Ireland. At the beginning of the 20th century Iceland was the poorest nation in Europe, something like Albania is today. However, this changed dramatically, especially after the Second World War, and the past decade has been quite successful. When measured against other nations we are usually among the richest. If we were to join the EU, we would be a net contributor from day one. We have used similar methods to Ireland in the past decade or so. We have introduced what we would call US style tax cuts for the firms, budget discipline and we have a sensible fisheries policy.
Some 50% of our exports come from fisheries. This is not a small matter, which we can sacrifice to get something else instead. This is a big part of our economy even though it has reduced in recent years because we are getting more diversity in our economy and are getting quite big in aluminium, software, tourism, etc. When we look at the enlargement and the effect of EAA, the first thing that comes to mind is that larger markets will present opportunities for Iceland and Icelandic firms. We must look at the negative side and whether this will weaken the EFTA pillar. It could get more complicated with 25 nations rather than 15. It is our duty to maintain our interests.
I am pleased to have this opportunity to ask questions. I asked similar questions of the Italians when were there a few weeks ago and discussed the situation in Europe. The current position is interesting and no one can say for sure how it will develop. This is the most optimistic view on the constitution I have heard for a long time, if I understood the Chairman correctly and his view that it will be easier to find a solution after the Spanish election. However, if one looks at the problems, such as voting rights and taxation, in which the Irish are interested, one will realise it will be extremely difficult to enlarge the Union at the same time as becoming more integrated.
Much has been said about the two-speed Europe, led by Germany and France, and the founding nations. It surprised me that the Italians were quite positive and they said it would basically be that way in the near future. It looks as if it will be very difficult to integrate the 25 nations more than they are now. Does the committee think the constitution will not be a problem? Does it envisage a two-speed or three-speed Europe.
What I meant to say is that there is a window of opportunity for the Irish Presidency between now and the general election in Spain in March and before Aznar leaves office. Thereafter, a new Government will have to settle in and the matter could well pass to the Dutch Presidency. However, whatever settlement is made on the treaty, I do not envisage any major change to the draft. Maybe others will have a different view on that. There are small remaining issues to be addressed but all the issues that took Governments and representatives of parliaments a considerable time to agree on will not be revisited.
I was making the point that if each member state has a 5% reservation about the content of the treaty, each might have reservations about a different 5% of the content than the others. To open any issue would open all issues. However, we are not operating in a vacuum because of the ratification of the Nice treaty. It makes certain provisions, for example, for the size of the Commission. Therefore, progress continues.
It is very likely - other members might disagree with me - that the final version of the treaty, with some finishing touches, will be agreed either during our Presidency or during that of the Dutch, after which the ratification process will begin. Enlargement will go ahead and the Nice treaty has made initial arrangements for this in any event. Integration will go ahead; it is just a question of how the treaty will be formulated and of how the ratification process will proceed thereafter.
Mr. Birgisson
The main opposition to EU membership concerned the fisheries policy of the European Union. Having visited the Irish fishing board on our last visit and having met some members of the Scottish fishing board, we noted that they were not very happy with certain developments in the fishery business. The Spanish fleet is off the Scottish coast and we are very afraid of this. This is the main cause of our opposition.
Second, we were asked how much we would pay. We are relatively well off but we would have to pay high amounts by our standards into the Union Cohesion Fund due to the enlargement process. Those are the main reasons for our opposition. If we could get a clear answer that we could control our fishing waters, we would join. That is the issue.
I have a question on the ten new nations. They are much poorer than the existing 15 member states and I should like to know how will this be addressed. I believe it will be very difficult and that many problems will arise.
Furthermore, there are many criteria to be adhered to in the Union, such as the budgetary deficit upper limit of 3%. However, the Germans and the French are exceeding this limit. Are new rules being made just for them? Are there special rules for the Baltic countries, Hungary, the Czech Republic and the Slovak Republic? One German friend of mine said this will be very good for the Germans as all the Polish women working in nursing homes will take the money back to Poland and buy German cars, refrigerators, etc. Is that what will happen?
The first thing we say is that 60 million Europeans died in the first half of the last century. We got it completely wrong and now we are getting it right. Nobody is killing each other. Peace and stability comprise the first objective. It is not a matter of a Kaiser, king, president or prime minister dictating to the people as we now do everything by negotiation. Negotiation is not perfect, but when one examines other systems one will realise it is probably the best approach. The Council of Ministers, Parliament, Commission and courts are all part of the process. We cannot sit down and write a constitution on a blank page, as was done in the United States. We are writing it as we go along but we are doing so by agreement. This is probably the most exciting development in the history of Europe, yet it is hard to become excited about it because there is no drama. Everything is happening by discussion, consensus and negotiation. It is not a question of assimilation but of integration and of Irish and French, Catholic and Protestant, non-believers and Jews, big nations and small nations existing side by side.
We had a special meeting on the stability pact last week. I was criticised when I raised questions as late as yesterday in the Dáil about joint Cabinet meetings between Germany and France; about President Chirac standing in for Chancellor Schröder at a European Council meeting and about their attitude. We raised this with the European affairs committee of the Bundestag some weeks ago and I raised it with the German Minister with responsibility for European affairs. Of course there are issues we need to raise and developments we need to watch, but the French and Germans are as entitled to discuss each other's bilateral concerns as we are with Britain in respect of Northern Ireland or as the Baltic countries are entitled to do among one another. What we can and cannot do is set out in the rules.
The Commission states that France, Germany and maybe Italy, through window-dressing, have broken the stability and growth pact. We received a warning a couple of years ago. However, the Council of Ministers and the Minister for Finance said last week that there is a legal basis for this, based on the use of the words "shall" and "may", and that we are entitled to adopt our approach. The Commission says it does not agree and that the court could ultimately rule differently but the reality is that there is room to relax the rules of the pact. Some of us have concerns about how this relaxation was effected and that larger member states were allowed to change the rules because they did not suit them. However, logic would probably ordain that, by agreement, it was the thing to do in any event. Our Minister for Finance certainly made a very good case for it last week. If France and Germany step out of line, we have a Commission, a court and Council of Ministers to address the problem. We did not have anything 50 years ago and if Britain caught the cold, we caught the 'flu. It has been a huge advance from the perspective of a small nation.
I have a slightly different view. There are different rules on the currency for big countries and small countries. I predict that the Netherlands will reject the constitutional treaty in a referendum unless the finance ministers get back on track and observe the rules. At the November ECOFIN meeting, the players on the football pitch beat up the referee. They kicked Pedro Solbes around the place and came to a political agreement. At his meeting with this committee, the Minister said that they came to the same conclusion as the Commission would have and gave Germany and France another year to get back on track. In the process, they tore up the rulebook. The Dutch finance minister was one of those who negotiated the Stability and Growth Pact in 1996. The Netherlands has never had a referendum on the EU project. The single currency is an exciting but dangerous adventure. How do 12 sovereign states pool a currency yet retain their sovereignty? Unless the rules are applied and are seen to be applied, we are heading for the dark side of the moon.
The rules probably need to be changed as they were originally designed to create a sense of credibility for the currency. However, the rules cannot be changed by abandoning them, they can be changed by accepting that we need a new framework. I cannot see Poland or Spain changing their positions and I think the constitution will be put off by a year or two. The real issue for the Irish Presidency will be the Stability and Growth Pact and what we do about it politically. If it is not addressed then Protestant Europe - I use that phrase culturally rather than spiritually - that respects the public observance of rules, as distinct from Catholic Europe which finds a way to go through rules, will reject the constitutional treaty.
I had the pleasure of visiting Iceland as a member of a parliamentary delegation about 14 months ago. We left understanding the significance of fisheries to the Icelandic economy and the reasons it does not wish to be a member of the Union. The delegation has raised a point about where the accession countries stand economically. I accept what Deputy Quinn said and agree that there is a difficulty with the signal we have sent to those countries by virtue of what has happened in the Growth and Stability Pact. Our experience of bridging the gap for the accession states is instructive. Ireland came from a low base, although admittedly not as low as that in some of the accession states. Provided there are convergence rules and they are abided by, it is possible to close this gap through trade. The accession states must have taken a negative signal when they saw the bigger countries breaching the rules.
There is also a view that the Commission is seeking to overreach itself. There is a view that the Commission wants to intrude itself into taxation. It is not as clear-cut as has been outlined. I do not share the view that it is going to take two years to agree the treaty; if that happens it could unravel. The gratification process will certainly take a couple of years. I will be surprised if the treaty is not concluded during our Presidency or by the end of the Dutch Presidency.
Mr. Birgisson
When I last came here I arrived a day later than planned. I took a train from Dublin to Kilkenny and met a group of businessmen at the railway station. I spent two hours with that group and found it quite interesting. They told me that the European Union was good for building infrastructure but the Irish tax regime did most for Ireland. They explained that many companies from Europe and the US had located here to avail of the low corporation tax. They told me the low corporation tax was the stimulus for this economy. I told them the politicians did not agree with this. They told me not to take the politicians too seriously.
Ireland will soon assume the Presidency of the EU. What would Ireland do if in February, Iceland were to apply for membership of the Union but asked for control of our fishing policy and our territorial waters?
Ireland had a 10% manufacturing tax rate for a long time and it helped create jobs. However, that was not the main reason for our success. Education played a part in it; we have a widely understood common law system; we speak English; we are committed to the euro and the European Union; we have a good working environment and there is good access to Government. Many issues combined to stimulate our economy.
I had responsibility for the international financial services centre when I was in Government. One thing that struck me was that Americans saw a work ethic here that they had not seen in the United States for about 25 years. The reason for this work ethic was that there suddenly emerged well-paid jobs and people were prepared to rise at 6 a.m. to do them. If one looks at the tax regime in other countries, one will see that some countries have a tax base that means the virtual rate of tax is nil and bilaterally negotiated write-offs determines the rate. The tax regime on its own was not the only issue.
The EU is open to any democratic European state and membership is negotiated. Transition arrangements are made to take into account the concerns of member states. Each state has particular concerns. For example, my constituency once had a major car assembly business that is now gone and we knew it would go when we joined the EEC. The number of people working on the land has greatly decreased. We have certainly made sacrifices as well as gains.
I think our experiences in agriculture would be instructive. Agriculture was dominant in the economy and we got special concessions when we joined the EEC. I think the same could apply to fisheries. By pooling our sovereignty we have gained a certain influence. Where we have had particular national problems, it has been possible to deal with them. I understand that Iceland has a particularly acute problem. While I would not like to tell Iceland how to conduct its business, the way in which it manages it fish stocks, particularly cod, is a model for the way the EU should manage its stocks. Perhaps Iceland could bring the EU to its point of view rather than having to move to the EU system.
I am from a fishing community, Killybegs, where there is a large fishing fleet. While membership of the Union has been good for agriculture and the country as a whole, we have not had a fair deal on fishing and we have negotiated badly in this area. If Iceland were thinking of negotiating it would need to do so carefully. We negotiated on the basis of our historical catch and it left us short. We have seen the huge Dutch and Spanish fleets fishing all over the place. I can empathise with Iceland as regards fisheries. As Senator Dardis said, our experience is that one can negotiate, but it must be done carefully when it comes to fish.
In Ireland, fishing has been sacrificed to agriculture. The concessions agriculture got have been paid for by fishermen.
Mr. Sharphéöinsson
It is better for us to compare our fisheries to Scottish fisheries because the common fisheries policy, which is the main obstacle, is based on the word "common". It is based on common utilisation and stocks, which is most important within a common economic zone. We do not have a common economic zone with the EU like the Irish, English and Scottish. We have no common fish stocks other than migratory species that have already been negotiated for. We must also be aware that the whole issue is based on past experience. Even when Spain applied for membership of the EU, it was not allowed to use its fishing experience in areas that later came within the 200 mile zone of the EU countries. On that same principle, no country on earth should be able to claim fishing rights within our economic zone. The Spanish armada will never be able to come within our economic zone and I am not afraid of it. Our main exports to Europe are a model of how to protect our stocks.
Nevertheless - and this is a matter of sovereignty - if we were to become members of the EU, Brussels would have to decide upon the quota for the country. However, we have also put forward the view that it would be possible for the nations in the North Atlantic to have anaddition to the treaties in such a way that those nations could take care of the stocks that are not common. If that was applicable, all of the problems would be solved and Ireland could learn from us how to manage its own stocks.
Unfortunately, Deputy Quinn has left us, but he touched on the question that we have come to broach which is the future of the EEA. He correctly pointed out that it is dwindling in importance. What we call the European Economic Area is based on two pillars, namely, the European Union, which continues to grow and the other pillar that continues to be reduced. We lost out in recent years as Sweden and Finland joined the EU. It is difficult to maintain this. When the EU is being constantly enlarged, it tends to forget the EEA and smaller nations such as Iceland, which have an accessory partnership with the EU. This is why we have come to emphasise these points.
We do not have access to Schengen and Ireland is a member of the EU, whereas Icelandic citizens have greater access. That is your decision which you negotiated. We must use a passport while travelling in the EU because we are in a common travel area with Britain. We must all put up with the rules of the game.
We must bring this meeting to a conclusion shortly because we have another meeting at 11.30 a.m. and some of us must go to the Dáil Chamber as the House has commenced its sitting.
Mr. Pór Póröarson
I am not sure that if we could solve the fisheries problem it would ultimately be in our interest to join for a number of reasons we do not have time to discuss now. European politicans and officials talk much about integration and how successful it is but when it is put to the people, they reject it. Polls of people in EU countries in recent years demonstrate that people have become more negative towards further integration. I read an interesting article in an English newspaper a few days in which a female German-born Labour Party MP in the UK said that, in 14 months, the people had not been asked whether they supported European integration.
I ask the members of the committee why people do not seem so enthusiastic. Will it cause problems?
We make an effort to try to inform people about the European Union but it is like dropping a pebble in a pool. It is serious business that is difficult to communicate. If one asked people whether they approve of the Treaty of Nice, they will answer that they do not like politicians getting a pay increase or whatever the issue of the day happens to be. If one were to take your argument to its logical conclusion, there would have to be a referendum across Europe. In that case, if 51% of Europeans pass it, is it carried, or must we get 50% in Luxembourg and Malta as well as 50% in Germany?
In any event, Germans do not like referenda because of their own tradition. The idea of what the public wants is irrelevant. The system is that they elect politicians to take decisions and give leadership and we must try to bring people with us. The further one gets away from the war, the more difficult it is to remind people what the whole objective of European integration is. We become more and more selfish and look at our own interests.
When Ireland joined the European Union, our per capita income was approximately 56% of the average of a poorer Union of nine members. We could well pull up the ladder and object to European enlargement to the east because we are doing well with a big enough market. However, the process is not about that. It is a far bigger picture that started with a small number of people in Europe, at the core of which is a number of people who still have that ideal. People respond differently depending on what question they are asked.
How many people in Iceland know what is in the constitutional treaty? None of them, I would say. They are entitled to expect that we will take reasonable decisions on the people's behalf because they are so technical and difficult. That is why we have institutions such as courts, politicians and different systems. I do not subscribe to the notion of a show of hands from people to indicate what they think is right or wrong. Public opinion is very fickle. I would love public opinion to be behind European integration but it is not.
Politicians are there to remind people what the process is about and it is difficult to do so in a country where one must hold a referendum.
There is public cynicism in regard to the EU. However, if it were not a success, there would not be ten countries trying to join the club. In addition, we had to run our referendum on the Nice treaty twice. If one says that one does not want to adopt the Nice treaty and the consequence is that one loses membership of the EU, then the public answer would be different to that which appeared in the opinion polls.
Mr. Pór Póröarson
When they started discussions on a constitution, the idea was to get the EU closer to the people. Perhaps we should not raise this matter because we are not members and we should not worry about it. The EU is mostly based on peace in Europe and in order to achieve peace, one engages in agreements such as the internal market and so on. However, it is dangerous when one gets too far away from the people, and in my view that is what has happened. It could spell some problems. We can see that the train is being driven too hard and the people who are supposed to be on board do not want to join in. When people said "no" to the Nice referendum, which they did in many countries, including Ireland, they were simply asked to vote on it again. Usually when people vote on something and say they do not want it then they are not asked again. When one looks at the new EU with 25 members and the wide spectrum of countries, it would be sensible not to try to get everyone to move at the same speed. I asked the committee if it thought it possible to have a two-speed Europe but I guess that the answer is "no" and that the committee does not see that as an option.
The European Union has decided to make enhanced co-operation available, for example, in certain circumstances for member states that wish to go ahead and co-operate in areas with the consent of others. By and large, however, we are trying to create a Union in which we can all subscribe to certain common principles. Defence, for example, is not one of them yet, although a common defence is coming.
To respond to what Senator Dardis said about members wanting to join and wanting to stay within the European Union, I do not know whether people will be offended by me saying this but I have put it publicly before: We did not become truly sovereign until we joined the European Union. No ambassador wanted to be resident here but when we joined the European Union people wanted our ear and we now have a role. Our people are happy with that role. We are deciding things for ourselves and are not dominated by Britain or anybody else. We have a say now where we did not before.
Look at the currency, for example. We have a member on the committee of the European Central Bank. Prior to that the value of our currency was decided by whatever happened in Britain or Frankfurt. Our sovereignty, and the role of our people, has greatly increased not just in economic terms but also in terms of our say in the world. If one were to put the question that Senator Dardis was suggesting to the people, that we either go with European integration or leave, people would say, "hold on a second; we are not leaving the European Union." The question does not even arise.
It depends on the question that is asked on any given day and how it is asked. Ask people in the morning what they think of politicians and I know what the answer will be ——
Mr. Pór Póröarson
It is probably the same in every country.
However, if one asks them whether we should do away with politicians and introduce a military government they will go out and die for the system. It depends on the question asked. This has been a very useful exchange and I am delighted to have had this opportunity to meet the delegation. I hope they found the exchange useful. As two small states on the periphery of Europe it is very useful for us to have an exchange. We do have many commercial links and we certainly get many tourists from Iceland. Many of our people go to Iceland too so there is an increasing awareness of each other and it is useful for parliamentarians to have this exchange. I have a couple of things I must deal with before we conclude, but if Mr. Birgisson would like to very quickly make some concluding remarks.
Mr. Birgisson
Thank you, Chairman, and the committee members for this informative meeting. It has been of great value for us and, I hope, for you also. We wish Ireland every success in the next six months, which will be quite busy for Ireland. I ask the Chairman to accept a small token of our appreciation for this meeting, a book about one of our most famous Icelandic poets, the bard of Iceland. I understand that "bard" is an Irish word. Finally, if the Chairman or the committee has an opportunity to come to Iceland I can assure everybody that they will be received most warmly.
I will conclude very quickly because we return at 11.30 a.m. It is proposed to note a report on the joint declaration to the European Council by the European Parliament and members of the Convention on the Future of Europe. Noted. It is proposed to send one member to a conference on the EIPA in the event that a member would like to participate. Is that agreed? Agreed. On correspondence, from the Chairperson of the budget and finance committee of Cyprus, it is proposed to ask the ambassador to respond positively to their request for a meeting. Is that agreed? Agreed. One copy of the annual report of the European Court of Auditors has been received. We can note it, have a hearing on it or put it on the agenda for consideration in January 2004.
I suggest we put it on the agenda for consideration. Is that the Turkish ambassador to which you referred, Chairman?
Yes, we have circulated a proposal, though it is not on the agenda, advising us of the visit.
When will it be on the agenda?
In January.
Do we have to send back the bottle of whiskey the Chairman received?
No, but I must make a declaration. Our next meeting at 11.30 a.m. this morning will include a presentation by a group led by Bishop Thomas Finnegan and the Chairman of the Council of the West on the regional development fund in the European context, as requested.