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Seanad Éireann debate -
Wednesday, 1 Nov 1978

Vol. 90 No. 1

Developments in the European Communities—Eleventh and Twelfth Reports: Motion.

I move:

That Seanad Eireann takes note of the Report: Developments in the European Communities—Eleventh Report.

I am pleased that the Seanad should have an opportunity of discussing the Eleventh and Twelfth Reports. I indicated in the House some time ago that my intention would be that both Houses would have an opportunity to discuss these reports as soon as possible after publication. I also indicated that it would be my intention to provide for publication as simultaneously as possible in relation to the events covered in the reports. I said that it had been my experience during our years in Opposition to find that the reports were published long after the events referred to in them and that the debates on these reports took place as much as a year and a half and, in one case, two years after the events covered in the reports.

It is my view and, I am sure, the view of those of you who are involved and interested in this area of our European involvement, that a debate of this sort can only be meaningful if it is conducted as closely as possible to the events described in the reports. For that reason I am particularly glad that within a week of the publication of the Twelfth Report the House now has the opportunity of debating both.

As Senators are aware, these reports are required by section 5 of the European Communities Act 1972. The Eleventh and Twelfth Reports deal with the period of the Belgian and Danish Presidencies of the Community from 1 July 1977 to 30 June 1978. They cover developments in the Community for a period which roughly coincides with the first 12 months of my Government's period in office.

Senators will note that the period covered by these reports brought many significant developments in the Community which have a direct effect on us in Ireland. I would like first to turn to the question of a directly elected European Assembly.

The European Council in Copenhagen on 7-8 April last, selected 7-10 June 1979 as the period within which the first direct elections to the European Assembly will be held in all member states. These elections will bring to fruition one of the basic aims of the Treaty of Rome. In future, members of the European Parliament will be elected for a five-year term of office by direct universal suffrage.

The direct elections will mean that over 175 million voters will have the right to choose their representatives to fill 410 seats in the new Parliament. Ireland will be sending 15 members, five more than our present delegation. These direct elections will confer a greater degree of democratic legitimacy and heightened prestige to the European Parliament. They will give the people a direct voice in Europe. This is particularly important given the wide variety of people and places represented in the Community and a directly elected Parliament should help in forging a stronger sense of European identity. We would hope that this Parliament would push for greater economic integration and a stronger regional policy. This is an area in which Ireland has a vital interest and in which, frankly, insufficient progress has been made. There is a fairly general recognition among the people in the Community that the direct election of the Parliament will bring a new dimension to the Community. A recent poll in Ireland showed that the feeling in favour of direct elections has increased from 45 per cent in 1973 to 71 per cent in 1978. I feel that the people will demand through their Parliament a speedier and more comprehensive response to their problems. In effect, the directly elected Parliament will be a permanent forum for public opinion to influence Community proposals and the elections every five years will, of course, provide a way of measuring how people view the efficiency of the institutions in dealing with their problems.

I should mention at this stage that it will also be particularly significant in Ireland in that, for the first time in our history both parts of Ireland will be directly involved in the same election, namely, that to the European Parliament and we will both be using the same system of election—proportional representation. I share the view with many people, north and south, that the potential for both parts of Ireland in Europe is very considerable. The fact that each of us can look outward to new prospects and new potentials will help to diminish some of the differences that have divided us in recent years.

Apart from direct elections other impending developments should lead to the re-examination of present methods of decision making. I refer in the first place to the expected enlargement of the Community through the admission to membership of Greece, Portugal and Spain. We feel that enlargement must be accompanied by positive measures to strengthen the Community both from the economic point of view and as regards the institutions. We believe that failure to deal with the present regional imbalances in the Community will result in these imbalances being aggravated in a Community of 12. Our aim is to maintain the cohesion of the Community and we have stressed the importance of directing policy towards more effective institutional structures including a greater reliance on majority voting in Council, and expanded powers for the European Parliament and the Commission. Let me say that despite our concerns we have a very positive attitude both from the economic and political point of view to the entry of the three new applicants. However, we do feel that we owe it to them to see to it that the Community they join will live up to their expectations of it.

Another development of potentially great significance is the revival of the concept of movement towards greater economic and monetary integration. Economic and Monetary Union has always been seen as an essential element in the goal of a European Union which the Paris summit meeting of heads of government set forth in 1972. Unfortunately this goal receded in subsequent years due to the climate of economic recession and the serious problems of unemployment and inflation. However, following discussions at the European Council in Copenhagen last April the heads of government meeting in Bremen on 6-7 July last agreed to work towards the establishment of a European Monetary System. The competent Community bodies are currently engaged in working out the provisions necessary for the functioning of the European Monetary System so that decisions can be reached and commitments made at the European Council on 4-5 December.

During the period reviewed by these two reports the Nine met frequently in the framework of political co-operation. On the internal front, agreement was reached at the European Council in Brussels in December as a result of an Irish proposal on the difficult question of how Article 131 of the Treaty of Accession should be applied on the introduction of the European Unit of Account on 1 January 1978. This Article covers the budget contribution of Denmark, Ireland and the United Kingdom.

I turn now in some detail to the proposed European Monetary System which must rank as the development of greatest importance and interest in the Communities at present. Conscious of the part which the Community, as the world's major trading bloc, must play in reducing disorder in the international monetary system, the European Council at Bremen agreed on the outline of a system aimed at the creation of a zone of monetary stability in Europe. The political will necessary for the formulation and success of the proposed system derives in no small way from a strong awareness that continued monetary instability could prove a disintegrating force in the Community. This, coupled with optimistic expectations regarding the positive climate for trade, investment and growth, and indeed the positive evolution of the Community itself, which currency stability will bring, has provided the needed impetus for the proposed system. The knowledge that a successful EMS will, without doubt, enhance the external standing of the Community, promoting in turn an atmosphere of greater cohesion within the Community, has facilitated an undercurrent of support for the scheme among the member states, enabling its formulation to take place in a time-span of unprecedented shortness.

Apart from these political considerations the scheme, in that it would seem to recognise in particular that fixed currency exchange rates cannot be maintained in the long term without simultaneous harmonisation of economic policies involving, we would insist, a reduction in the differences in levels of economic development in the Community, seems to be sufficiently flexible to have more than a reasonable chance of success.

In this respect I would hope that full regard is paid, in avoiding their recurrence, to the conditions which prevented the "Snake" from being a fully durable system. An important consideration in relation to the new system is that it is not simply an adaptation of the present "Snake". An important mechanism will be the use of the European Currency Unit as an indicator of divergent currencies, that is, in indicating which currency is deviating most from the Community average. Moreover the system will enable a country to change its central rate—that is, revalue or devalue against other currencies—if the rate no longer reflects its underlying economic circumstances. While the objective will be to keep these changes to the minimum necessary, it would be unrealistic not to have such an adjustment mechanism in the system. The EMS, unlike full monetary union, will not deprive countries of the freedom to change exchange rates should this become unavoidable.

Discussions are continuing in the EEC expert committees on the technical aspects of the EMS, and the concurrent studies of measures necessary to strengthen the economies of the less prosperous member states in the context of the scheme. It is expected that the report of the Economic Policy Committee on these concurrent studies will be available for the Economic and Finance Council meeting on 20 November. Ireland has mentioned the sum of £650 million as an approximate estimate over five years of the additional investment required in the immediate and narrow context of entry to the system. When meeting with the French Economics Minister, M. Monory, in Dublin on 6 November and shortly afterwards with the German Finance Minister, Herr Matthoefer, and his colleague in the Economics Ministry, Herr Lambsdorff, the Tánaiste will be afforded an opportunity to elaborate on our need for capital transfers of the amount indicated in the context of the system. The package of assistance could include, but not be confined to, subsidised interest on loans.

As regards the technical aspects of the scheme the Committee of Central bank Governors and the Monetary Committee are at present engaged in the finalisation of certain details prior to the ECO. Fin. Council of 20 November. This Finance Council will report to the European Council which has undertaken to take decisions and make commitments on the system at its meeting in Brussels on 4-5 December.

Although a final decision regarding the system cannot be taken by Ireland pending the final outcome of the negotiations it is no secret that we are positive in our approach to EMS. In taking a decision on this matter we will bear in mind, just as we did in 1972 when approaching the question of joining the Community, that it is desirable to be in a position to influence decisions which will in any event affect us. It is important not only to know the Community framework within which our ambitious domestic programme of economic expansion can be implemented, but also to participate in drawing up the framework. To isolate ourselves or remain aloof from a system which will play an important part not only in Europe but on the world stage would surely be interpreted is a sign of weakness, not of strength. Just as we have the confidence to engage in ambitious plans at home we should not be hesitant to participate in, and actively encourage, the development of an improved economic and monetary situation in the Community and beyond. Not only has Community membership proved to be to our economic advantage over the past five years but we would also like to think that our participation has played a valid part in influencing directions within the Community. It is to be hoped that the present negotiations on the EMS will result in Ireland being able to enter the system under conditions which will allow her to remain within it. The demands which we have put forward in the concurrent studies context are very real. In order to emphasise their vital importance to us we have been at pains to point out that they are limited to what we have estimated our requirements to be, solely in the EMS context, and do not go beyond this.

Other than saying that I hope the conditions will be such that all member states will be able to enter the system from its initiation, I do not wish to comment further on the possibility of some member states not joining. As I have in dicated on another occasion, however, if it should happen that we were to enter the system and Northern Ireland were at that stage to be excluded, we would make every effort to ensure that any consequential administrative arrangements would be kept to the minimum necessary.

Whatever decision we take, we will take it in the confidence with which we have approached the European Community in recent times and in our determination to continue to promote the economic well being of our people. I feel that whatever would be the decision taken by other states, observers of economic progress in the south of Ireland will recognise that the confidence and conviction we have displayed and will continue to display will, far from being a cause of further division, be an attraction towards a greater association and a deeper understanding between us in Ireland.

The EMS is to be welcomed both for its own sake and as a milestone on the road to a fully integrated Community. When taken with direct elections and enlargement it could provide the Community with a valuable push-forward towards its ultimate economic and political objectives. Should it fail, or proceed with only some of the member states, it could prove a regressive step.

In the 12-month period covered by these two reports the process of consultation on and co-ordination of the foreign policies of the Nine member states within the framework of European political co-operation has continued. The co-ordination of the Nine's attitude to the issues at the Conference on Security and Co-operation in Europe continues to be an important aspect of Nine solidarity. Our commitment to consult with our partners within the United Nations framework and to adopt common positions where possible is also an important feature of our involvement in political co-operation. Of the topics which have preoccupied the Nine in political co-operation over the past year and which are reflected in these reports, I would like to focus on three in particular, first, the Conference on Security and Co-operation in Europe and détente, secondly, problems in the Middle East and finally, the crisis in South Africa.

An important section of both these reports is devoted to the Conference on Security and Co-operation in Europe. Thirty-five European states together with the US and Canada participated in this conference, which on the basis of the Helsinki Final Act adopted by the heads of state and Government in July 1975, has delineated the principles and formulated a programme of action to promote co-operation between the participant states in the political, economic, cultural and humanitarian fields. As the reports indicate, the Final Act provided for a follow-up meeting in Belgrade in 1977, whose tasks were to review implementation of the Final Act to date and to promote further measures for consolidating security and co-operation in Europe. This meeting took place from October 1977 to March 1978. As far as the first task was concerned—reviewing of implementation—on the whole the meeting was relatively successful. There was a thorough and frank exchange of views in which both the fulfilment of the obligations undertaken by states in the Final Act as well as their failure to implement these commitments were fully discussed.

The Irish delegation along with her partners in the Nine had few illusions about the difficulties involved in this task. It was the first time such a dialogue had been attempted and, moreover, it took place in circumstances where some of the participating states took the view that criticism of their record was an intervention in their internal affairs. Inevitably this restricted the scope and depth of the dialogue. Nonetheless, the review of implementation on the whole was constructive and positive, and gave the participants a clear idea of how promotions of the Final Act are being put into practice and of the problems still facing us in areas where implementation needs to be substantially improved. In the second task of the meeting, that of trying to reach agreement on measures which would give fresh impetus to the process of détente, the meeting was less successful. The concluding document which emerged from Belgrade was disappointing. It records little more than that on the substantive issues discussed at the meeting the participants agreed to disagree. It was a particular disappointment that the meeting did not adopt measures aimed at improving implementation of those provisions of the Final Act which relate directly to the exercise of human rights and the role of the individual. Moreover, the prosecution and sentencing of individuals both in the Soviet Union and elsewhere, who were engaged in monitoring implementation of the Final Act, had a sharply adverse effect on the credibility of the CSCE process in the eyes of public opinion, and as the report indicates, the Nine made their attitudes plain to the Governments concerned.

There are signs that the atmosphere of relations in Europe has somewhat improved by comparison with the situation in mid-summer. It is to be hoped that the improved atmosphere will permit dialogue between all the CSCE participants to continue and intensify so that the implementation of the provisions of the Final Act can be carried forward.

Ireland, together with its partners in the Nine, will continue to consult and coordinate its efforts in preparation for the next scheduled review meeting which will take place in Madrid in 1980. Other meetings in Montreux and Valletta and arising from the CSCE, dealing respectively with peaceful settlement of disputes and co-operation in the Mediterranean, are the subject of close coordination among the Nine.

The question of political détente is closely bound up with the continuing problems of arms control and disarmament. These issues do not fall within the ambit of the Conference on Security and Co-operation in Europe but are treated specifically within the United Nations framework. During the UN Special Session on disarmament, held in New York from 23 May to 30 June, the Nine continued their close co-operation. In addition, during his intervention in the General Assembly on 25 May, the Taoiseach made a number of specific proposals relating to arms control and disarmament. These covered, inter alia, the need for a moratorium on the testing of nuclear weapons, security guarantees for non-nuclear states and a measure aimed at reducing military expenditure. The last proposal in particular was among those included in the concluding document of the UN Special Session for further study.

The Middle East situation continues to be an issue of great concern to the Nine. In a statement issued on 20 November 1977 the Nine welcomed President Sadat's historic visit to Jerusalem, the first step in the peace process which has led up to the Camp David Accords and the current Egyptian-Israeli negotiations on a peace treaty. Along with our partners we continue to follow closely these negotiations in Washington. We would hope that all states in the region would come together so that a lasting comprehensive peace settlement may be achieved.

The Nine are very conscious of the fact that every statement made on any occasion from one or other members of the Nine may sometimes have consequences which are the opposite of what would be desired. For that reason, the absence of public statements in relation to recent developments should not be taken as lack of interest on the part of any member of the Nine or the Nine collectively. I assure the House that each country individually is doing all it can in the framework of bilateral relations to promote the new spirit of accord which has been evident recently in the context of the Camp David meetings particularly.

During the period covered by the reports the Nine continued to stress their firm opposition to and total rejection of all forms of racial discrimination and in particular apartheid. As a result of a study undertaken by the Nine on ways in which the economic weight of the Community could be used to effect change in South Africa, a code of conduct for companies of the Nine with subsidiaries, branches and representation in South Africa was issued by the Foreign Ministers on 20 September 1977. It is hoped that the code will result in an appreciable improvement in the working and living conditions of at least a section of the black population of South Africa. The study on further measures both of an economic and non-economic nature is continuing. The Nine fully support the mandatory arms embargo against South Africa adopted last year by the United Nations Security Council.

The Nine made known to the South African Government their strong condemnation of the detention and bannings of opponents of the apartheid system on 19 October 1977 and refused to recognise the so-called independence of the Bophuthatswana bantustan.

In relation to Namibia, the European Council on 7-8 April issued a Declaration which took note of the proposal for a settlement prepared by the five western members of the Security Council. The Council supported the action of the five and considered the proposal to be a fair and reasonable settlement. Later the Nine welcomed what then appeared to be the acceptance by all parties of the five's proposals.

However, despite hopes that accession to independence in Namibia could come about by peaceful means, the situation has taken a turn for the worse with South African rejection of the Security Council proposals. We would hope it would still be possible to make it plain to South Africa that only a solution rooted in the UN framework is capable of achieving international recognition. We will, of course, support all efforts aimed at a peaceful transition to independence and sovereignty in Namibia.

Although Rhodesia is not referred to in these reports this is another area where the prospects for a peaceful accession to independence and majority rule have been gravely affected by recent events. It is our earnest hope that, even at this late hour, the Smith regime can be brought to see the need for an internationally acceptable solution. The Anglo-American proposals seem to offer a basis for such a settlement.

Finally, I would like to mention the continuing work among the member states of the Nine in the fight against international terrorism. At a meeting of Ministers for Justice on 10 October last Ireland agreed to the opening for signature of an agreement among the member states of the European Community concerning the application of the European Convention on the suppression of terrorism. We also welcomed the French proposals on the possibility of creating a European legal area, which are presently under discussion at official level.

The member states are considering the legal and constitutional implications for each of them in signing and ratifying the agreement which has been open for signature. As soon as Ireland, in conjunction with the others, has completed these examinations we hope to be in a position to ratify the agreement.

Turning now to recent developments and matters of current interest in the Community: agreement was reached on the revision of the regulations governing the use of the European Regional Development Fund at the Foreign Affairs Council of 26-27 June. The most interesting innovation was the inclusion of a provision under which some of the fund would be distributed outside the systems of national quotas. It is envisaged that part of these funds could be issued for cross-Border projects. The same council also agreed to the terms of a resolution relating to the establishment of regional policy guidelines. We have received approvals for £15.6 million from the Regional fund to date this year and expect to obtain a total of £27 million in approvals in 1978.

Much progress remains to be made in the fisheries section. There are now indications that some progress may be possible and the Community's Fisheries Ministers will hold a special council meeting later this month to resume their discussions. A large measure of agreement has in fact been reached on detailed control and conservation proposals and on Community assistance for structural measures for, inter alia, inshore fleets. Agreement has also been reached on a substantial Community contribution to our patrolling costs and a figure of £30 million has been agreed by the Council of Ministers for this purpose for the period to 1982.

An interim "package" for 1978 was proposed and accepted by eight member states in January of this year. The position at the time was that very many matters, on which virtual agreement existed, remained in suspense.

A recent significant development in the fisheries sector has been the negotiation and provisional initialling of a framework agreement on fisheries between the Community and Spain. This, when signed, will mean the termination of traditional Spanish fishing rights in our 6-12 mile zone.

Turning to developments in the field of agriculture, the most significant developments in the past year arose from the agreement on agricultural prices for the year 1978-79. The Ministers for Agriculture at their meeting last May agreed on a price increase of approximately 2.4 per cent and a devaluation in the Irish Green £ added a further 6.4 per cent to the increase. The cumulative effect of these measures has been estimated as being worth over £100 million a year to the agricultural sector in Ireland and the country's balance of payments will benefit by an estimated £70 million in a full year.

Other important provisions for Ireland, particularly in the area of agricultural structures, have also been agreed. The Community intends to implement special proposals to help to alleviate the particular agricultural problems of the west of Ireland. It has been decided that £20 million is to be spent by the Community over a five-year period on arterial and field drainage in the west. The figure of £20 million represents 50 per cent of the cost arising from the programme. The Commission is also committed to introducing proposals which will involve spending in the region of £6 million over the same period on cross-Border arterial drainage projects. Further proposals for the structural improvement of agriculture in the west of Ireland are expected to be announced by the Commission in the near future. These measures together with a special programme to assist the development of agriculture in the Community Mediterranean areas, show the Community's concern to assist with the development of the Community's poorer regions to the north and south. These important decisions in the development of the Community's structures policy go beyond the Agriculture Sector and are particularly welcome. The decision to provide funds for the development of cross-Border drainage schemes is another very welcome basis for increasing north-south co-operation.

Turning to the Community's external relations, progress in the GATT Multilateral Trade Negotiations (MTNs) has been generally encouraging. However, on 13 October 1978 the US Congress went into recess having failed to pass a measure authorising an extension beyond 3 January 1979 of the Treasury Secretary's authority to waive the imposition of countervailing duties on various Community exports. This development has cast serious doubt on the prospect for a successful conclusion of the negotiations by the agreed deadline of 15 December next. Senators may rest assured that Ireland's interests are being upheld in the articulation of Community positions in these negotiations. They will appreciate how important it is that the negotiations are successfully concluded to counter an increasing tendency to protectionism in world trade which it is self-evident would be very, very much against the interests of a small open economy such as Ireland is.

Much attention has been focused on the Community's relations with particular developed countries over the past year. A notable case in this regard is Japan. Frequent high level consultations and visits between the two sides resulted in the Joint Japan-EEC Communiqué, issued on 24 March 1978, in which, inter alia, Japan recognised the need to take action to reduce their overall balance of payments surplus with the Community. I shall have the opportunity to assess at first hand the Japanese view of the current state of EEC-Japan relations during my forthcoming official visit to that country.

Both Australia and New Zealand have been active in seeking improved access to the Community market for their agricultural products. We consider that the issues arising in this context must be resolved within the framework of the MTNs.

A non-preferential trade agreement with China was concluded on 3 April 1978, the first between the Community and a state-trading country. We would hope that Ireland will share in the benefits which should accrue to the Community from the opening up of the Chinese market.

Contacts with the Council for Mutual Economic Assistance continued and a meeting between Vice-President Haferkamp and Mr. N. Fadeev, Secretary-General of CMEA took place in Moscow in May 1978. With a view to a greater normalisation of relations, further meetings are now planned.

The ACP-EEC Convention of Lomé is the Community's main contribution to international development co-operation and it is a prime example of the Community's commitment to a more balanced relationship between the developing and industrialised countries. The convention has shown that this relationship can grow to their mutual benefit through co-operation and goodwill.

The re-negotiation of the ACP-EEC Convention is currently taking place. The formal opening of negotiations at ministerial level was on 24 July 1978. The actual negotiating sessions began in Brussels on 18 September and should conclude in time to permit the new convention to take effect as scheduled in April 1980.

I should say also that I have paid particular attention to developing co-operation programmes within the framework of Lomé, as I believe that both the scope and obligation for a country such as Ireland which has such significant goodwill in the developing countries is one that we are obliged to develop in our mutual interest. For that reason I have attended almost all the development co-operation meetings which are not normally attended by Foreign Ministers. I look forward to maintaining Ireland's role in that vital area of co-operation over the next stages of development.

It is expected that the new convention will not differ substantially from the present one, although experience and changed circumstances will necessitate certain additions and changes.

Features of the new convention will undoubtedly include the trade concessions and arrangements relating to industrial and technical co-operation. The novel system for stabilising the ACP States' export earnings—Stabex—will, of course, continue to play a major role in the re-negotiated convention. The direction of the ACP States' industrial policies will assume a greater importance for the Community in the new convention.

The ACP countries have made considerable progress in industrialisation. This industrialisation may, however, become a cause for concern if the absorptive capacities of the Community market are not recognised in the context of the duty-free access for the great majority of ACP industrial exports to this market.

The non-reciprocal trade concessions granted to the ACP States are an essential part of the convention. The development and encouragement of intra-ACP trade and regional co-operation are equally desirable. The promotion of ACP exports should not be to the detriment of local needs and it should not impair the development of the internal markets of the ACP.

It is evident that the measure of commitment which the developed countries of Europe are showing to the developing States of the ACP is fully recognised and appreciated in these countries. Obviously there is an obligation, if no more than that, to pay back the profits which sometimes have been historically earned in exploitation of these countries. There is an obligation also to the future development of both in the common interest in which we both serve in a new economic world order. I should say that other developed countries have an equal obligation. I reject any suggestion that because a country has not been historically involved in colonial activity in Africa—Ireland certainly has not been—such a country, particularly if it is a great power, has no obligation to contribute to the economic and social wellbeing of the peoples of Africa as distinct from the military upheavals that take place in that Continent. If we can, by our example, even in some small way, show that we, who have shared a colonial experience with these countries, are prepared to play our part, with our relatively un-developed economy, then greater powers have an even greater obligation. I would hope that all of them, from whatever system, will soon begin to act much more consistently in that direction.

Given the various aspects of Community developments on which I have touched already Senators will readily appreciate that the Community is going through a rather critical period in its evolution. What with a directly-elected Parliament, the accession of three new states and the prospect of a European Monetary System the time is now open to decide the shape of the new Europe.

We, in the Government, are committed to the idea of a united Europe and we believe firmly that the developments I have mentioned are inevitable steps on the road to that goal. A directly-elected Parliament will involve all the people of Europe in the activities and development of the Community to a greater extent than heretofore. This surely is an important step on the way to a deeper union than heretofore. This surely is an important step on the way to a deeper union of European peoples. When we speak of European peoples we include the people of Greece, Portugal and Spain. Europe cannot be complete without these peoples. The third development I mentioned was that of a European Monetary System. In taking this step Europe will move towards European monetary union, so fulfilling the aims of the Treaty of Rome.

We all accept that no major achievement can be attained without adequate preparation. Our enthusiasm for this further evolution of the Community is not in any way diminished by our willingness to examine critically the problems it poses. In our opinion the major problem is one of ensuring the smooth transition and efficient running of the Community. We believe that, for these developments to be successful, the institutions of the Community must be adapted to enable them to bear up under the strains which a greater discipline and cohesiveness will impose. In my opinion it is particularly important from the point of view of the smaller member states that the institutions of the Community must be able to function adequately.

In the period under review it has been significant for Ireland also in that while the unemployment levels of most of our partners have certainly increased very considerably in these 12 months, we can point with some degree of satisfaction but not with complacency to the fact that the pattern in Ireland has been the other way. The confidence and conviction with which the Irish people and Government are approaching this challenge is something that is noted by our Community partners in Europe and constitutes a great measure of strength and security to the Government in our associations. Our approach to our various Community responsibilities, at whatever Council we attend, is not on the basis of begging for our cause on the basis that we have a great need, though we have, but on the basis of reminding our partners that there are standards and criteria to which we adhere and that those standards and criteria oblige the Community to offer the opportunities to us, as one relatively undeveloped region in the Community, to fulfil our potential. In doing so we will then be enabled further to make an even bigger contribution to the development of the economic and social wellbeing of the Community and, through the Community, in relation to other countries.

I would like to think that Senators would recognise that, in the period covered by these reports, our approach to our partners has been a positive and confident one, an understanding approach, but one nonetheless based on our rights as members of the Community. I feel confident that the attitude of Senators will reflect that. Nothing can guarantee that we will always get what we want for ourselves. Perhaps the only guarantee one can have is that whatever one does one does with conviction and confidence. The Irish people and Government are confident, committed members of the European Economic Community. There is no doubt where we stand; there is no doubt as to what are our intentions. That, in itself, is a source of great strength to us in our dealings with our partners and is reflected in their attitude to us.

I hope that this debate will allow Senators to comment broadly on the very many aspects covered by this report. Senators will appreciate that were I to go into great detail on the various aspects of our European involvement I would have to detain this House for a very considerable time. I hope that whatever matters will be raised will enable me to take account of these in my reply at the appropriate time. I might ask the indulgence of the House not to dwell too much on what may not have been said in my opening statement, in view of the great detail one would have to go into. I can assure the House that I have endeavoured to give the heads of the involvement generally. If there are any further details needed I would hope to give them in the course of my reply.

We welcome the opportunity to debate these issues concerning the Eleventh and Twelfth Reports on Developments in the EEC. The Minister's speech was comprehensive. I do not think there was any necessity whatever for him to offer an apology with regard to omissions. We may have our disagreements but certainly not in relation to the length of his speech. The Minister's final remarks vis-a-vis Ireland, and our position within Europe, the attitude of our country to its membership of the European Economic Community, the attitude of Ireland to the various institutions and the extent of the participation we have through all of the institutions of the EEC raise a very interesting question. Unquestionably this small country, with its three million people, has a totally disproportionate influence on the affairs of Europe, and in the discussions within Europe in terms of foreign policy a certain influence which is totally disproportionate.

We have this very unique level of participation within our country, which starts at Cabinet level within the Government and which goes down through all of the ranks—the political establishment, the civil service and through the vocational interest groups around the country, such as the IFA and the trade unions who are very deeply involved in industry and the services—in fundamental discussions at every level concerning the affairs of Europe, in particular as they relate to this country. It raises the very fundamental question of the sad state of affairs on this island when we see the growing gulf and the divergence there is in the extent of participation between those of us who are involved in public affairs in the Republic of Ireland by way of contrast with Northern Ireland. We have so very much in common on this island, so much useful and good work we could do together that an ultimate unity of sorts could allow us to get together under a federal system, or under any such system, in which Ireland could be united at these fora outside this island to the ultimate benefit of this country. Indeed the cross-Border schemes and the obvious welcome within the EEC in so far as the encouraging of cross-Border activity within this country is concerned are welcome.

In contrast with this we see the growing gulf within our level of participation and the sad situation that exists within Northern Ireland. In the most practical sense vis-a-vis the EEC, as long as they remain entirely within the United Kingdom—with a population of about one and three quarter million out of a total of about 50 million—participation from Northern Ireland within Europe is minimal. This will be culminated in the direct elections to take place in June next where, within the Republic of Ireland—because of a certain amount of tolerance for smaller countries—we find ourselves in the position of electing 15 members from this country to the European Parliament, with a population of around 3 million people. In Northern Ireland, with a population barely in excess of half of that, they will have merely 3 seats. If one wanted to be generous and give them proportionate representation—proportionate to population—at the European Parliament they should have about six members in contrast to our 15. This kind of striking example of participation within the European Parliament at the forefront of affairs in Europe is merely the culmination of what has been happening in depth. When one appreciates that the Taoiseach sits at a table of Nine at the Prime Ministers' Conferences, that our Ministers sit around the same table of Nine at Foreign Minister, agricultural and finance level; when one extends it even to the Oireachtas and the participation of Members of the Oireachtas in international bodies—I am involved in the Parliamentary Associations for EuroArab Co-operation in which we are discussing matters of peace, trade and finance within the Middle East—that from this very small country is totally in contrast with the position, and the anomaly is growing.

In the most generous spirit we should attempt, when talking about ultimate unity on this island, to point out these facts, to show the very positive senses in which ultimate unity—and again of sorts; we are not talking about the type of unity without due regard to other people's traditions—and how this type of thing ultimately could be tremendously to the advantage of the people who live within Northern Ireland, both unionist and nationalist. It is appropriate that we should say this at this very exciting time within the European Economic Community. When we talk about the issues of direct elections, the EMS and the issue of enlargement it is a fact which we should continue to reiterate in the most positive sense without, in any sense, a gloating spirit.

With regard to the issues of the moment, the enlargement issue, the EMS and direct elections I should like to say, firstly, concerning the enlargement issue that, as a country which has itself benefited greatly from EEC membership and which has been a net beneficiary each year of substantial sums of money because of our membership of the EEC, we cannot adopt a simple, narrow attitude concerning the proposed involvement of Greece, or Portugal or, ultimately, Spain. We must be generous in spirit and be conscious of the fact that there is a very fragile democracy within the three countries in question. Because of the fragile nature of their democracy any bonds which can be developed, or any links which can be made within Europe among the stronger democracies to help these lesser developed countries, lesser developed democratically, obviously is in the particular interest of those countries. Also having regard to the ultimate peace of Europe it is in the ultimate interests of Europe that we endeavour to extend the close links there are within the EEC to the peripheral areas of the Community. In that context we welcome the application for membership of Greece and look forward with interest to developments in both Portugal and Spain.

Whilst we will play our part as one of nine nations within Europe in processing the applications of these various countries there are certain points we must make, and which we are obliged to our people to make. To an extent we must revert to the time of our entry to the EEC when, in a referendum which succeeded in capturing the vast proportion of votes of the people in this island —I think about 87 per cent—and wonder would the vote have been that high at that time had our people known the consequences of involvement within the EEC. I speak in particular of a viewpoint of the EEC from the lesser-developed parts of this country. Quite frankly in the west we do not have the wealthy resources of the larger cities, or of the farmlands of Munster or Leinster to the same extent, and we could foresee problems. We were assured prior to entry to the European Economic Community that there would be a substantial Regional Fund and that although native governments since 1922 simply, at the end of their day, did not have sufficient resources—regardless of what government was in power—to provide us with the infrastructure, roads, drainage schemes and have piers and harbours built, we believed sincerely at the time of EEC entry that we would get what was described as a net transfer of resources into areas such as the west, the southwest and northwest. But it simply did not happen, and there are two reasons that it did not happen. They had to do with the major recession in Europe which had an effect on the attitudes of wealthier nations. They had to do with changed attitudes within Germany, changed attitudes in political leadership, where there was not the sense to apologise for the events of 1939 to 1945. They had to do also with the fact that where the disbursement of the Regional Fund was concerned within this country it has been dispensed throughout the 26 Counties and there has been no concentration of these resources on the poorer parts of the country. Consequently where, in parts of the country, we are dissatisfied with aspects of EEC policy, most particularly the Regional Fund, aspects of the common agricultural policy—to which I shall refer in a few minutes—and where we are singly the only nation of a much lesser level of development than the other eight countries within the EEC, where we have problems even at present in getting the resources that we feel are legitimate aspirations, one can see that we can be, without safeguards, inviting a great deal of difficulty for ourselves if we welcome the admission of Greece, Portugal and Spain into the Community without safeguards being spelled out and without being absolutely clear over the next few months, along with welcoming the enlargement of the Community, and spelling out Irish priorities and needs without any apology.

For example we should recall the Council meeting in I think July 1976 when Deputy FitzGerald as Minister for Foreign Affairs was instrumental in getting a declaration at that time from the Council concerning enlargement, that it would be necessary for the extra resources to be provided, that the needs of the applicant countries would be provided; that we must ensure the protection of the structures of the countries within the existing structure and their legitimate aspirations along with making provision for the funds that will be necessary obviously in so far as the admission of a country such as Greece is concerned. Already in the Portuguese application they are seeking major funds. The Portuguese economy is in a type of shambles. Their pleading will be even greater than ours has been. If there is to be integration of the enlarged Community there will have to be a will within the Community to come up with the financial commitment. The Community must strengthen itself economically and must take measures before enlargement, to promote the elimination of existing regional disparities. What that means in the simplest terms is this, that we must be vocal over the next few months in ensuring that Ireland's interests and legitimate aspirations do not suffer in so far as the enlargement of the Community is concerned. It is more appropriate today to speak about this protection of Irish interests because not only will we be under the obvious pressures from such underdeveloped countries in their needs for infrastructure, their agricultural needs, their fishing needs and their harbour needs, but, on the other front, we have the EMS issue. Without the enlargement issue the EMS issue presents the most enormous problems for which there has to be some type of compensation in monetary terms of some form or other. Despite the fact that we are living in a very exciting and interesting time in so far as the evolution of the European Economic Community is concerned, there are certain pitfalls for our country in some of these major topical issues. We have got to be on guard and see that our ultimate interests are protected.

I mentioned briefly the common agricultural policy. In the broadest sense we have got to be pleased with what has happened in farming in this country since 1973. There has been an enormous increase in income against a background of farmers having lived through very difficult times. Obviously agriculture is in a much healthier state with the combination of the stability of markets—where, prior to that we had been dependent on the British market—and the massive support we have been getting by way of grant and subsidy. There are particular problems in areas of this country which make for a less than satisfactory position. On this whole regional note, if we speak to people in Brussels at present, or did so in the past couple of years, about the inadequacy of the regional policy, there is a tendency, amongst the Germans, French and others who work in Brussels, to suggest that yes, the Regional Fund may not be all that had been intended but at least you have the common agricultural policy and the common agricultural policy is, in effect, a regional policy. One can accept to a large extent that the common agricultural policy is a regional policy provided one gets a satisfactory distribution of the fund. One of the scandals there has been here with the distribution of the common agricultural policy and the funds that emanate from that source has been a very uneven spread of the fund if one analyses it on a problem or county basis. One must accept that a large share will obviously go to our better farm regions. Certain things have happened since the common agricultural policy was instituted. When it was instituted we were living in a time of boom conditions in Europe, great optimism in the air, an age in which we remember Mansholt talking about enormous farms and very few people working on them.

Since then we have gone through an economic crisis throughout Europe. That crisis shook Europe to its roots. The resultant shaking it to its roots has meant a major unemployment problem of immense proportions in every country within the EEC. It seems that priorities should have changed since then. If in times of boom it might have seemed desirable to bring farm income up to a comparable industrial wage—and that in theory these people who could not make the comparable industrial income on land automatically got jobs in the services or in industry in a booming economy—the reality today is totally different. Because of this mass unemployment, because at present we need to create jobs in many areas other than industry for our people it should be a higher priority in this age more than ever before to maintain as many people as possible on land rather than go in the opposite direction and have a minimum number of people working in such circumstances. We saw the recent NESC Report dealing with agriculture, the comparisons between Irish and Dutch incomes, the average number of acres of land, the immense level of fertility and activity in Dutch agriculture on very limited acreages. In this country the evil of the common agricultural policy has been that with the developing farmers status—under which, in my part of the country, 2, 3 or 4 per cent approximately can participate because only they qualify—the vast proportion of all small farmers in this country, and many in the middle category, simply do not qualify for the maximum grants. In other words, where the greatest need is, the least amount of grant is available. If one wants to pinpoint this, one has only to read the recent farm survey of the Agricultural Institute, which shows that the average family farm income in the west amounted to approximately £2,300 whereas the average family farm income in the provinces of Munster and Leinster amounted to about £6,000. The figures are worth repeating because they are significant: approximately £2,300 in the west, £6,000 in Munster and Leinster; a real income increase in the west of 1 per cent, a real income increase in Munster and Leinster of approximately 16, 17 or 18 per cent. I do not say this in any grudging sense. It is marvellous to see our agricultural industry doing as well as it is doing. It is tremendous to see the efficiency in the large farms and the better usage of land in the south and the east. But if we are talking in terms of regional policy and of even-handed development on this island, this fact stares us in the face. We have got to keep seeking a change in that policy to ensure that there is a greater level of participation and greater support in these lesser developed parts.

In that context, I welcome the recent possible change in attitude in which we see that the Community have given grants to this country, and particularly to the west, in so far as drainage schemes are concerned. It is a very welcome trend. The initiation of this change of policy to help the underdeveloped areas did not start with the west of Ireland. It started with Regulation 1361/78 which was concerned with the development of agricultural areas along the Mediterranean; we are talking about the Mezzogiorno, the South of Italy, and of parts of the south of France. This was where it started. It is interesting to note that it had started there before it reached us. It is interesting to note that this regulation in so far as the Mediterranean areas, the south of Italy and the south of France are concerned, is now supporting electricity installation, water provision and farm roads.

I am not aware of support in these three sectors in the west or in any of the underdeveloped parts of the midlands, south-west, or north-west in this country. I would urge the Minister to press this point, to take up this regulation and to look at the specifics of the areas to which aid is being given at present, to make the point that equally in the west we need support in these areas. Whilst the drainage allowance of £20 million is very welcome, there are many other areas affecting the everyday lives of people. None of these affects the everyday lives of people more than do access roads to the homes of the farming community. Whilst my colleague, Senator O'Toole, the Chairman of Mayo County Council, and I differ politically and on the specifics of road policies, we are united in the most general terms in pointing out the level of neglect—the mileage of untarred county council roads, the extent of the mileage of roads that are classified as local improvements schemes for which county council grants are not available. There is a vast background of neglect in those areas in all of the western counties in which money would be equally welcome along with the drainage fund, in addition to money which is extremely useful in attempting to bring the lesser developed parts of the country up to an equal level of development in so far as services and amenities and group water schemes are concerned with the more advanced areas. As a by-product it would improve immensely the level of employment right through rural Ireland by getting more work going in addition to the fundamental improvement that would happen in regard to roads and the general amenities.

We have a commitment to the EEC to pursue greater internal cohesion implying the reduction of regional imbalances as a key objective. I understand the Commissioner in charge of agriculture, Mr. Gundelach, has promised further development along the lines of the Mediterranean aid. It is very important that we follow up this drainage issue most positively and point out that it is merely an element in what is needed and that there are many other areas in which we badly need these funds. We should point out absolutely clearly that the common agricultural policy should not, at least in Brussels, be regarded as a regional fund. If they are concerned about regional inequality or regional imbalance then there are certain parts of this country being neglected today which cry out for assistance and that in the context of the monetary policy which we are talking about, the context of enlargement, the need is there and there is room to swallow vast sums of money very sensibly if they become available.

This question of regional imbalance is as important as ever, because at the present time in certain communities there is a tendency to attempt to treat Ireland as an equal member with the other eight and to attempt to get us to adopt a tougher attitude in many areas and an attempt to get us to dismantle many of the structures which have helped and been instrumental in the development of modern Ireland. I refer in particular to the industrial structure where we have had something in the nature of a miracle in industrial development largely due, apart from stability, to two major incentives, that of large cash grants and more important, the complete relief from income taxation on export sales of manufacturing companies. Frankly, without these types of incentives for a country on the fringe of Europe in the Atlantic the types of development we have seen happen here simply could not have happened because we are, as somebody said, on the periphery of the periphery. Any attempt by the Community to have us dismantle this type of structure or additionally, in the consumer area, the attempts in the Community and the apparent agreement of the present Government to an extent with the ultimate dismantling of food subsidies, can have major effects on our country and must be fought. If there is to be any question of yielding an area such as this then obviously there must be a quid pro quo and there must be a regional policy which has not yet emerged.

On the issue of subsidisation of foods—it merely occurred to me as a side issue and I had not intended speaking about it—it is somewhat in context because I believe the development of a policy of subsidisation of essential foodstuffs was an essential arm of Government policy in the two or three years after entry into the EEC. I believe it had to happen because we lived through an age of very high inflation. We lived through an age in which we were very glad to see tremendous benefits accruing to the farming community. Had we allowed normal market place practice to prevail during that age the price of many of these essential foodstuffs would have gone through the roof. Even though the level of inflation was unsatisfactory it would have been many times greater and those hardest hit, had we not implemented this policy of food subsidisation, would have been the poorest people who are daily dependent on commodities such as bread, milk and butter.

I, for one, would be extremely wary—of course I do not have the power to influence events—to begin dismantling that. I would be absolutely against the idea of dismantling it because the EEC told us that we should do so. There are all kinds of implications for the unique circumstances of our country where we must with such a high proportion of farmers in our community strive for a high food price policy but where along with that we must be careful to see that we protect the urban population against certain implications within that policy.

I do not think we have time for a detailed discussion on food subsidisation.

I would suggest that it is relevant but I have, in fact, finished. I would suggest that it is entirely relevant because we have been reading of views expressed within the EEC, and formal attitudes to the Irish policy of food subsidisation, so that within the context of discussing the Eleventh and Twelfth reports and Irish policy vis-a-vis the EEC, it is in context, but I have said what I had to say.

I can just allow a passing reference to such a matter.

The European Monetary System is of major import and it is something to which we should take the same attitude as on the enlargement issue. There are the broadest reasons why it is welcome. These broad reasons have to do with the weakening of the Community in recent years, a trend which reached its lowest point in the bilateral deals at the time of the oil crisis when each of these European countries went off in its own direction to protect its own interest. There has not been much sign of a consensus or impetus towards economic or monetary union or unity of any sort. There has been an attempt by some of the larger countries in particular to look on the EEC as an adjunct in which they are involved for the lesser of two evils, namely, the difficulties it might cause for a country if it were outside the structure.

In the sense that the European Monetary System—what we call the EMS—represents a will within Europe to get things moving again and to get the various countries within the EEC closer together, to the extent that it represents that will, it is of course welcome if we see the Germans and the French getting together and if we see a consensus building up around this. Any move, in my judgment, towards integration must be more in the interest of the small nations than the larger ones and in that context it is in the broad sense welcome. Having said that, I am no financial expert and I could not begin to assess the merits or demerits in monetary terms of such a system other than to listen to those for whom I have respect in this particular area.

It would seem, to say the least, necessary to take a major look at this and to develop a major study so that we can look at the pros and cons and the pitfalls as well as the better points of it. If something as fundamental as this is going to be decided with limited knowledge or limited public debate I believe it would be undesirable, and I would welcome a major debate. I would welcome the publication of a paper by the Government on the various issues. I do not know if the date suggested, 1 January, is altogether realistic. It would not surprise me if that date were extended from 1 January to June. It might be in our interest if it were extended or if we had the choice of doing so or seeking some type of extension to allow for a closer study of the implications that are in it.

It is interesting to look at the sums that have been cited as being necessary to compensate us. We have had figures thrown about ranging from £500 to about £800 million. No doubt there will be a bit of horsetrading and lobbying in that sector. We must obviously fight for whatever compensation is going because, being an economy in an underdeveloped state as ours in comparison with our major partners, apart altogether from the complications that may arise if Britain chooses not to enter EMS, makes for many difficulties that we should look at with very great caution.

The Minister addressed himself to Middle East issues. As I mentioned, I have been involved to an extent in a parliamentary association concerning that. The Minister used fairly glowing terms to welcome the recent developments in Camp David. I wish I could agree with him and could agree that glowing terms are appropriate but it is difficult to do so. Sadat's initiative was most welcome as an attempt to break through the distrust, the inhibitions and the difficulties there are within the Middle East. His initiative was an extremely brave one because within the Arab world there are a great many reservations about the notion of any one Arab country making a bilateral deal with Israel on this issue. Against this background of hostility in many Arab countries, he was brave in seizing an initiative which has been seen through and which has produced agreement in Camp David.

We should welcome the Camp David agreement not for itself and not just as the ultimate peace—because it is not obviously the ultimate peace—but merely as the first step. Sadat has seen it as the first step towards a more fundamental Arab peace because within the Middle East, until we reach the stage that there is an agreement which is all embracing and which in particular takes into account the interests of the Palestinian people, people who have been displaced and simply do not have a country, there will be difficulty in that area of the world. So that Camp David, whilst welcome as a first step, must not be looked on as a final step in this issue but merely as the first step towards a more ultimate peace in which we will see achieved the rightful place of the Palestinians within the Middle East.

In the context of this Palestinian issue a major blow has been struck against the present discussions taking place between the Israelis and the Egyptians because of the policy decision made by the Israeli Government last week to develop new settlements on the West Bank. Not only is this notion of new settlements on the West Bank unacceptable to Egypt or to other Arab countries, to say the very least, but also to the United States which has been a mediator in the discussions between these two countries. A protest of the strongest nature has been delivered and I do not think we in this country should support this notion of settlement on the West Bank which again, in my view, is going against the spirit of the agreement and will create ultimate tension and great difficulty within that part of the world.

I would like to commend the Minister on the very broad speech he delivered. It is probably impossible for anybody to cover all aspects of the European Community but I think he managed to deal with it pretty effectively.

First, I think that this debate is particularly appropriate because the advent of direct elections in approximately eight months time suggests discussion on the European Community. These elections will help to strengthen the democratic structure of the Parliament and will help to enable the consensus view which that Parliament usually brings into play on the politics and the business of Europe to prevail in the development of ultimate Community policy. In this sense, the Parliament and the committees elected from it help to provide the balance and the stability that are needed to maintain progress and to ensure that European policy continues on constructive lines in the development of relationships with other parts of the world and in the pursuance of a just trade policy.

Here at home and in the other member states the coming elections provide the opportunity to inform people on Europe and on the meaning, in our case, of our involvement in Europe, of the part that Ireland has in Europe and of the advantages to us of membership of the Community. I find that by and large the majority of people are still unaware of what the European Community is about, of what its effects generally speaking may be on us and I find a lack of understanding of what is meant by the Council of Ministers, by the Commission and by the Parliament and its sub-committees. To an extent, I feel that the public have been misled into believing that the Community is just a vast bureaucratic machine issuing edicts all over the place contrary to the interests of member states or contrary to the interests of the Community itself.

The opposite is, in fact, the truth and I believe we will need to make a serious effort to educate the public on exactly what the European Community is for and how it affects us. The Community institution itself has made one good effort in putting what I would describe as a sort of travelling caravan on the road in order to try to inform people. I would regard that as only a beginning. I think that we need a major publicity campaign on radio and television first of all from the Community itself and then, following that up, the political parties themselves in the eventual campaign next year should be directing their organisations towards getting across to the public in simple form what the European Community is for.

For example, I found with some surprise that amongst many people and even amongst some trade unionists there is complete ignorance of the extent to which the cost of retraining facilities for young people through AnCO is being carried by the Community as it is to a considerable extent, as a result of recent decisions in order to help in the alleviation of youth unemployment. That is only a small example of the lack of information that we have here. In the campaign next year I would also urge the political parties to discourage candidates from making outrageous claims about what they will get from Europe for those who will vote for them if they elect them.

By and large our membership of the Community is a considerable asset to us and we are benefiting considerably from it. But we are running our own country. Europe is not running Ireland and we have our own national Government to call upon to undertake the different measures of development that are needed and I would discourage the idea that any candidates going forward for election to the European Parliament should try to imply that by voting for them everything will be done for them.

We heard that before.

I think it is necessary to say it at any rate because our involvement in Europe is a very important thing and we must try to raise our sights a bit. I feel that all electors should, if possible within the next six months, come to understand what Europe is about and how-vital will be the contribution of candidates if elected, on the one hand in Ireland's interests and their ability to reflect Ireland but equally also on their contribution to Europe, to the development of the Community itself, to the development of a better Europe and through that to a more peaceful world.

The Community as it stands at present—and this is perhaps the time to take a look at it—has considerable advantages and some drawbacks. For example, on the advantage side I would say that the development of political cooperation between the Ministers is an important step. Senator Staunton spoke a few minutes ago about Camp David. Although the Minister did say that the fact that you are not talking with nine different voices does not mean that you have not got a view. In my own involvement in the Political Affairs Committee I can say that these matters have been discussed but it is very important that the influence towards a constructive and just settlement in any area should be helped by one European voice rather than having discordant voices. The same applies to other areas of dispute such as Rhodesia, South Africa and so on.

In the area of regional policy there is a good deal that we can be dissatisfied about. Whilst there is some degree of regional disbursement through the regional fund to the less advantaged States like ourselves, the percentage is so low that it cannot possibly be regarded as directed towards reducing the disparities between the better-off and the less well-off. However, on the other hand the measure of regional support which we are getting is something that we should not discount. It can be used constructively to deal with problems such as those mentioned by Senator Staunton in relation to infrastructure and roads and we should not ignore it. But if the overall spirit of the Treaty of Rome is to be observed there must eventually be a change in the approach to the amount of the regional fund.

Some mention has been made of the question of monetary stability. Certainly, from our point of view as one of the small nations, one of the more desirable possibilities of the future would be to be attached to some sort of inner European monetary zone which would remain stable. Our own involvement over the past four or five years in the sterling area and the effects of inflation have cost us a considerable amount of money in terms of the loss of value and the ultimate repayment cost of hard currency loans. From our point of view, if economic and monetary union is a long way off—and there is no doubt in my mind that it is a long way off because an effective regional policy must precede it—then the short-term goal should, if possible, be some form of monetary zone that will enable the smaller countries of Europe to be cushioned or protected from the ravages of the inflationary effects caused by other currencies hopping up and down.

There has been a considerable degree of integration of our economy and we have undoubtedly gained considerably in industrial terms. Probably the most successful aspect of European Community policy has been that of the common agricultural policy and I have no doubt that from Ireland's point of view it has been and is a considerable benefit to us. Prior to our membership of the Community, Irish farming, as a result of the British cheap food policy, was in fact the Cinderella of Irish industry. The Irish taxpayer was paying out dole to small farmers and was also paying a subsidy on Irish agricultural exports to the British market. This was a very heavy burden for a small country and particularly for Irish taxpayers because the respective spread of taxes is so small. The developments of the last few years in that respect, in respect of Community policy, have fulfilled a promise. Irish agriculture is now, by and large, a viable industry. Farmers have a long-term future. They have a prospect of good prices if they work and produce.

Irish agriculture, even in the small farm area, need no longer be regarded as a rural slum. Where formerly Irish taxpayers were carrying many thousands of small farmers, they can now take some solace from the belief that these farmers with assured markets if they work can earn a good living and in coming years the taxpayers will have the satisfaction of knowing that Irish farmers should be becoming major income tax contributors. That is from our point of view in purely economic terms a major step forward from a time when the greater number of small farmers were drawing the dole. It is one area in which I believe we should compliment the Community.

As the Minister said, our approach to this question of the European Community should not be merely that we are looking for something. There are many areas in which we can contribute to the stability of Europe and to the development of an intelligent and sane Community programme.

Mention was made of the Belgrade Conference which was a very long drawn out conference which did not bring any results. It was in fact a step back from the Final Act of Helsinki and was a disappointment to many of the representatives of the western nations attending, including our own representatives. Unfortunately, some of our western countries are only beginning to realise that what is meant by human rights and what is meant by political interference in your own country is totally different in the eyes of the Soviets from what we would normally understand in most western countries.

There have been cases of imprisonment in Russia recently of people who were simply campaigning for human rights. This is something that would not be heard of in most western countries. We have to look a long way ahead to a time when the Governments of States like the Soviet Union will have been educated into at least an appreciation of what is meant by the dignity of the human being.

I would like to deal with the question of the regional fund itself. In some areas we are gaining somewhat from the regional fund—the latest figure would indicate around £42 million this year. Whilst we should not decry this, if the Community is to move towards economic and monetary union and towards a stronger and more viable community we should, as those of us who are in the Parliament have been doing, keep on pointing to the need to have effective capital transfer of resources in order to level up the less developed regions, most of Ireland being in the same position as the Southern Italian region.

The last point I would like to make is in relation to the fact that in the coming election there will be 15 members elected for the 26 counties and there will be also three for the six counties of Northern Ireland. Some mention has been made of this. I would not be inclined to go any further or draw any stronger conclusions from it than to say that, taking into consideration the difficulties that we have had and are having in reaching any kind of accommodation with our fellow countrymen in Northern Ireland, it is a credit that for the first time the people of the six counties of Northern Ireland will be having direct representations in the European Parliament. It is quite obvious, and one does not have to draw any conclusions on this, that in matters pertaining to our own interests here on the island of Ireland that we will be able to have common accord. That is one constructive aspect of the direct elections which I welcome.

Like other Senators I welcome this debate on the matters raised in the Eleventh and Twelfth Reports on Developments in the European Communities. It is very important that Members of this House get an opportunity to stand back from day to day decisions at the European Community level and examine overall trends and the larger policy issues. Undoubtedly, as was clear from the Minister's speech and from the contributions of other Senators, there are extremely important issues which are being raised at the moment at the European Community level and which could have a very substantial impact on the economic and social life of this country.

We have to get past the barrier of the difficulty of coping with European Community terminology and concepts and we have to try to relate these very significant policy issues to the life and lifestyle and prospects of the citizens—the people of this country. Clearly there is a lot of ground to cover and it will be necessary to be selective and to choose the major issues as, indeed, the Minister did.

I would like to begin with the question of the institutional structure and development of the European Communities. The Minister referred to the question of the institutions. He mentioned it a number of times in the course of his speech. At all times it seemed to me that the language he used was extremely vague and even woolly. There was a vague commitment to the importance of strengthening the institutional structure, but this went against what appeared to be an acceptance of the role and predominance of the European Council and a willingness to participate in that Council which shows a lack of commitment to reinforcing the basic institutional structure of the Communities. The Minister said:

Apart from direct elections other impending developments should lead to the re-examination of present methods of decision-making.

He mentioned the question of enlargement. He went on:

Our aim is to maintain the cohesion of the Community and we have stressed the importance of directing policy towards more effective institutional structures including a greater reliance on majority voting in Council, and expanded powers for the European Parliament and the Commission.

I wonder what immediate prospects he sees for expanding the powers of the European Parliament in view of the attitude of the French constitutional court and, indeed, the French political situation on this issue. I wonder what immediate prospects he sees of strengthening or even re-inforcing the existing role of the Commission in view of the fact that this body plays a very weak and rather indirect role at meetings of the European Council where the major policies are now being discussed, not in the kind of institutional structure which protects small countries like Ireland, but in an inter-Governmental structure where the big boys say their say and create by far the greatest impetus and have the greatest impact and can ultimately get their own way.

The Minister also made reference to a directly elected parliament. He said:

What with a directly elected Parliament, the accession of three new States and the prospect of a European Monetary System the time is now open to decide the shape of the new Europe.

And he concluded:

In our opinion the major problem is one of ensuring the smooth transition and efficient running of the Community. We believe that for these developments to be successful the institutions of the Community must be adapted to enable them to bear up under the strains which a greater discipline and cohesiveness will impose. In my opinion it is particularly important from the point of view of the smaller member states that the institutions of the Community must be able to function adequately.

It is not that I disagree with the Minister highlighting this point. My argument is that he highlights it despite appearing to accept the overall trend in the Community, which is away from taking decisions within the institutional structure of the Community with all that that structure means for a small peripheral country like Ireland. When Ireland joined the European Community one of the strong agruments made in favour of our entry to the EEC was that the institutional structure was particularly geared to protect the interests of small countries; that the Commission would be there in its role of initiator of Community policy; that it would be there in its role of ensuring observance of the obligations of the treaties; that it would be there to ensure that progress was made in a European Community framework on the various policy issues. What has happened in fact in an institutional sense is the gradual stripping down and diminution of the role and power and capacity for initiative or for ensuring progress within the European Community framework of the Commission. It has much less power, much less of a role to play.

The European Parliament, despite the fact that there are going to be direct elections next June, does not have real legislative powers. It has limited though quite significant budgetary powers. It cannot, at the moment, replace the imbalance created by the gradual diminution of power of the European Commission. Hopefully, when there are directly elected members of the European Parliament they will insist upon taking unto themselves more power. I believe that is the only way they will get more power and control over decision-making at European Community level, but it will be no easy task and will certainly not be something that will happen in the very near future.

In the meantime, and this is the first major question I would like to put to the Minister, or indeed to the Minister of State if he is the one who is going to reply to this debate ultimately, what is the attitude of the present Minister and Government to the increasing tendency for major decisions at European Community level to be taken in the forum of the European Council which is not a proper European Community institution and which lacks the checks and balances of such an institution and which cannot, therefore, protect and ensure the safeguarding of the priorities and needs of this country? That is an institutional question but it has very serious political and even economic implications, because if we are in some inter-governmental ball game with bigger countries like France and Germany determined to go in a particular direction then we have to be very careful indeed about our own potential vulnerability and about the lack of an appropriate institutional infrastructure and safeguards. So the first question that must arise—and the Minister raised it himself but I do not think he clarified it very much—is, is the present drift or trend in the institutional framework at the European Community level, the increasing and now apparently accepted predominance of the European Council when it comes to taking any initiative in the area of Community policy, the diminution in the role and protective intentions of the European Commission in this institutional balance and the tendency for thinking about institutional development to be itself now dropped into this inter-governmental arena? The proposal by President Giscard d'Estaing to establish a committee of wise men, I have heard three and possibly four wise men or possibly even a wise woman, one never knows, is reaching outside the present structure, looking for some sort of recommendations relating to the institutions from outside the basic framework which, as a small country, we should not under-estimate. It is a very different thing indeed for Ireland to be involved in an inter-governmental structure than in a European Community institutional framework, and I believe that we have not sufficiently safeguarded and articulated our interests there. I certainly would welcome a much more specific response from the Minister on this point in his reply.

The question of the institutional structure is intimately linked with the next major issue which I want to dwell on now, and that is the question of the European Monetary System. Again the initiatives for the establishment of the European Monetary System were taken at the various European Councils, in a more indirect way at the council in Brussels in December 1977 and certainly in Copenhagen in April and finally, in much more specific terms, in Bremen in July last. I would like to begin by referring to the statement made by the Taoiseach following the meeting of the European Council in Brussels on the 5 and 6 of December 1977. It is quoted in the Eleventh Report at page 129. It reads as follows:

In regard to the Economic and Monetary Union, I went to Brussels with no great expectation of results. This may, perhaps, account for my surprise at the degree of commitment indicated in the Council discussions to the idea of the European Union. The debate was full and positive. In supporting the concept, I stressed that the move towards union must involve a greater convergence of the economies of the different countries, and, in particular, positive moves to reduce regional imbalances.

In the early seventies, Ireland's per capita gross domestic product was almost 54% of the Community average. In 1975, the figure had fallen to 48%. In 1970, the average income in Hamburg was five times that in the west of Ireland. By 1975 the Hamburg figure had grown to six times that of the west of Ireland. If we were outside the Community this comparison would, I have no doubt, have been very much more to Ireland's disadvantage. But we are not outside the Community; and the figures as they are, without hypothesis and without conjecture, support the case for greater attention to one of the fundamental aims of the Community: I mean the aim expressed so vigorously at the Paris Summit in 1972 of ending disparities between regions.

Clearly when the matter was being seriously discussed at the Brussels European Council Meeting in December 1977 the Taoiseach, at that stage, was emphasising not that things had got better since Ireland became a member of the European Community but that the disparities had got worse. He did make the point that they might have got worse still had we not been members of the European Community. But far from a levelling upwards from the periphery of Ireland to the centre where France and Germany are, the disparities have got worse. I do not think that has been sufficiently clear from the confident approach which the Minister says that we are adopting in relation to discussions on the European Monetary System. Indeed, it seems—I say it seems because we do not have sufficient information as yet to do more than speculate—as though the aspect which I believe is more important, the aspect of the creation of a genuine regional economic development within the European Community concept has been pushed aside despite that rather strong statement by the Taoiseach in December 1977. That now seems to be swept aside for the moment and we are going headlong into a zone of monetary stability without the kind of institutional structures and safeguards which would seem to be essential if we are going to start pulling back on those disparities and catching up with the level of income and the standard of living of the more advanced countries in the European Community.

That is why I would like the Minister to be much clearer on the institutional framework which is intended for this European Monetary System. I am specifically keen to have some clarification of precisely what the institutional framework will be. He did mention that if the European Monetary System can come into being that it would achieve one of the objectives of the Treaty of Rome. Would the Minister be precise about how, through the present institutional structure, this European Monetary System is going to work? Is it going to work outside and alongside the present institutional structure in an inter-Governmental framework in a system where there will be provision for some low-interest loans? The figure of £650 million has been mentioned and it appears through the Minister's speech now to have some authority. Is that what the Minister means? I do not believe that has anything to do with a real and substantial progress on balanced regional development. That, I believe, can only come through a substantial enlargement of the budget of the European Community; the budget which is in preparation at the moment for 1979 shows no substantial increase. It only shows an increase relative to the cost of inflation and it does not show this qualitative increase which one would have thought would be one of the essential preconditions of accepting entry into the discipline and exacting demands of a zone of monetary stability such as the European Monetary System.

Again, I do not think that it is enough for the Minister to make a commitment to the institutional development and the reinforcing of the institutions of the European Community if he is prepared to accept a European Monetary System which is not within that institutional framework but rather outside it, very much more within the discretionary am-bit of what suits Germany in particular, and France in their desire for the particular advantages to them of the European Monetary System. If this does not sound very European minded, the reasons are that a lot of what I hear and see at the moment at the European Community level does not sound very European minded. I make no apology for arguing the very serious needs and interests of this country in that framework. We need to be very careful.

Apart from getting a much clearer sense of the precise institutional structure that is envisaged for this European Monetary System I think that it would be helpful to Members of the House to have a better appreciation of the kinds of commitments to funding at this stage, particularly by the Germans, and the possibility of ensuring the smooth transition over the next two years that was discussed. The Minister said in relation to this subject that should it fail or proceed with only some of the member states it could prove a regressive step, and there I would agree with him. There is a very real danger that if Germany and France in particular are able to persuade the other member states to move ahead very rapidly on a monetary zone and to try to exact both the discipline and the administrative difficulties which could arise, in particular if Britain does not become a member or does not become a member immediately of this European Monetary System, then this will face us with very substantial difficulties and problems which so far I have not heard talked about. For example reference was made to Northern Ireland, and the Minister in his speech refers to the possibility that if Britain does not join the European Monetary System in January and if Ireland does that this would raise a difference between Britain and Ireland and in particular between both parts of Ireland.

He seems to suggest in his speech that efforts would be made to minimise that difference from this end, as though all the advantage would be to the South in that particular situation. Perhaps I am wrong, but it seems to me that one very substantial potential implication would be a vast increase in cross-Border smuggling when cheaper imports from the North would very possibly flow into the South, when there could be an imbalance the other way that does not seem to be envisaged in what the Minister is saying.

This is one of the very serious implications of the possibility of Britain not joining, either immediately the other countries including Ireland join or joining at a much later stage.

We need to have much greater information and clarity on this, and I certainly hope that the promised White Paper will be much more specific on the implications. In particular there is a contrast between the way in which the whole subject of the European Monetary System is talked about and even written about here and the way in which I have heard it discussed over several days in several different kinds of meetings in Brussels. The tendency there first of all is to regard it as a very limited device. The clear advantages to Germany and France of this device are seen and it is believed to be a method by which the Governments of the weaker-countries—in which category the experts in Brussels would place Britain, Italy and ourselves—can try to get a level of wage restraint while distancing themselves from the unpopular measures involved. This is moving a bit closer to some of the motivation of the present Government. I believe that the Government is now facing up to a rather bleak situation in which there is growth in the Irish economy. There was growth in the Irish economy before Fianna Fáil came into Government and there is potential for even more growth in the Irish economy. To suggest that that growth was manufactured in some way by Fianna Fáil coming into power is not in conformity with the truth. It is a question of how do we maximise that growth and at the same time also try to achieve social justice and equity in our country. The way in which Fianna Fáil approached the problem, the pump approach of injecting a great deal of consumer spending money into the economy, has brought about more social tension and discord and, unfortunately, this may be evident in the next year, particularly in relation to wage claims. It will be seen particularly in relation to the critical problem of those at the moment living on fixed State incomes, those in receipt of welfare benefits. The polarisation and the fall in their real income is very dramatic. When we are trying to apparently achieve growth and progress it shows us to be capable of being a very selfish society.

I believe that the tensions are building up. It is virtually impossible for a great number of people who are supposed to live on social welfare to exist, to have basic foods, and the Supplementary Welfare Allowances Act is not working in the way that it was intended when it was passed through the Oireachtas. There is no genuine supplement in it. The Government—and I think this is in order in a speech on the reports on development in the Communities—has committed itself to lifting food subsidies, which would again directly hit this very disadvantaged and deprived group. There is another very seriously deprived group, and that is the low income group. They, again, have fallen behind. They are very substantially behind their counterparts in other European Community countries. There is a very real and very understandable social tension and demand for a greater fairness, for a greater social justice which is so lacking in the present policy. There will be claims for greater spending in the public sector in relation to social welfare benefits. They have not been increased since last April. They were in any case not maintaining their level with inflation and now they are at the sort of level that is an indictment of our society that we expect single parents to bring up their families on the level of social welfare benefits at the moment.

This is the situation facing the Government coming in to January 1979. There is a need for a very substantial increase in social welfare benefits and in the incomes of the lower paid. Meanwhile there are also a lot of claims in the pipeline at the moment. That is the background to some of the headlong enthusiasm. The Minister called it confidence. If we can back that confidence up that is fine. We should look with great caution at a country like Britain with what is left of its oil reserves, which are still very substantial, being very hesitant about moving into this European Monetary System. Are we so confident that we can swim in the particular way that Germany and France want us to swim in that particular sea or are there very substantially stronger preconditions before we should accept? I believe that there are, and here I get back to my initial remarks about the institutional structure of the Community. I believe that we should go back to the recommendations of the MacDougall Report on which the present Minister for Economic Planning and Development served as a member and that we should look for a very substantial increase in the size of the European Community budget before we make a commitment to accept the very limited purpose and very taxing discipline of the present proposals for a European Monetary System. We should be very, very careful about it indeed.

The third major policy area I should like to mention now is the question of future enlargement of the Community. This is a political prospect of immense significance, the possibility that the Community may over the next few years be enlarged again by admitting a further three members. The most advanced is the Greek application which is being actively processed but also there is the question of the Portuguese application by the Commission. There is also the fact that Spain has applied and this application is being examined. Like other Senators who mentioned the question of further enlargement, I have no doubt that the political arguments for further enlargement are overwhelming and that, with our own background, experience and stage of development we should undoubtedly reach out to and see very strong common cause with these other countries. Indeed, the lack of attraction of a Europe that closed itself to Greece, Portugal and Spain would truly earn the label of a tightly closed, exclusive club which did not have the capacity to develop as a genuine European community.

Business suspended at 6 p.m. and resumed at 7 p.m.

Before the break, I had been examining three of the important policy areas which are very much under discussion at European Community level. I had been linking all three. One is the question of the further institutional development of the European Community and, obviously, the question of a directly elected Parliament is relevant in that context but it is the only optimistic factor in that area. There are other very worrying developments and drifts at the European Community level. There is the apparent predominance of the European Council in decision making which is an inter-governmental body, not a true European Community institution. It is one which favours the strong countries and not smaller ones such as Ireland. It is one where the European Commission cannot play its proper institutional role and create a balance on behalf of the Community as a whole and, in particular, on behalf of smaller countries and less advantaged regions in the Community. I also linked to this the current proposals on the European Monetary System. I asked the Minister for a direct clarification about the institutional base of the European Monetary System. I would be grateful if the Minister in his reply would deal at some length on the proposals for the institutional development of the European Monetary System. Is it to be within the existing structures using the existing checks and balances, the European Community budget, and the present decision-making procedures? Is it to be outside that, in some way parallel to that, in a way which would be much more discretionary, much more in the control of larger countries, and much less in our interests?

The third very important policy area is the question of further enlargement of the Community. I made the point, supported by other Senators, that the political reasons for supporting further enlargement of the Commmunity are compelling; that our own historical development as a people, our close affiliations with Portugal, Greece and Spain should encourage us to welcome their applications for membership and this development of the European Community. However, there are serious and important questions involved. One of these relates to the kind of institutional development at European Community level. I was very critical of the proposal again to go outside the present structures and adopt the kind of proposal suggested by the President of France, Giscard d'Estaing, of establishing an ad hoc three-person committee. That smacks of the approach which wants to have a very strong voice in the potential future development and appears to be moving more in the direction of an inner directory and an outer Community of more peripheral and weaker states. I should like a view from the Minister about this potential problem of a development of a two-speed, two-tier Community and how we can ensure that this does not happen either consciously through a report of a committee of that sort or unconsciously through the drift towards giving a more substantial role and initiative to the European Councils. This is an extremely important aspect.

An aspect mentioned by Senator Staunton was the question of ensuring that further enlargement of the Community does not worsen further the regional balances and disparities. It is necessary to remind ourselves that a year ago the Taoiseach raised at the European Council in Brussels the fact that the disparities have worsened between Ireland and Germany since we joined the Common Market. Despite the fact that people may point to the advantages of membership, the overall position is that the disparities have worsened and have been aggravated. This is relevant to any suggestion of further enlargement to bring into the Community people from countries which are experiencing the problems of new democracies, economic problems and problems of growth. They have much to offer the European Community. It is by no means a one-way train, but they also have substantial need for economic and social support and need for the kind of policies which the Community have not developed for a Community of nine. The question is: is the Community more likely to develop and commit itself to those policies in a Community of 12 than it was in a Community of nine? If not, what are the very serious institutional, economic, social and political implications for the future of the European Community?

These three issues which were raised by the Minister in his opening speech are directly and pertinently relevant at the moment. The first issue is the question of the institutional development or the drift of the European Community, with the predominance now of the European Council in all initiatives that are taken, and the predominance within that Council of Germany and France. Secondly, there has in my view been a headlong rush to a European Monetary System in the absence of a commitment to enlarge the budget of the European Community and create a genuine transfer of resources. A transfer of resources has to be in a structured and developed way where we bring investment to create jobs in and bring up to an equal standard the regions of the Community. It is not a question of Germany lending us a low interest loan of £625 million. It has to be much more structured and a more genuine commitment through the budget of the Community. As far as I can see there is no sign of that at present. There is a complete disparity between what happens at the European Council when talking about the European Monetary System and what happens at the Council of Ministers for Finance or Foreign Affairs, when talking about the budget of the Community. At these there is a German and French reluctance to see the kind of enlargement of the basic budget which would create the structure for this kind of transfer of resources and genuine balanced development within a European Community context.

The issues are extremely important. This is a very critical time in the life of the European Community and there are grave implications for us. Although the Minister mentioned many times over the word "confidence" I would prefer the word "caution" at this stage. We have good reason to be cautious about how we maximise the growth that certainly is there in the Irish economy, how we do it in the best interests of all our people and how we eliminate the kind of polarisation and absence of social justice which figure largely at the moment in the approach in Government policy.

I should like to turn now to some specific subject matters and I will begin with the social policy. Before the summer recess the House debated a report on youth employment or, perhaps, more specifically youth unemployment and the measures being contemplated at the European Community level. We debated the Report which had been prepared by the EEC Joint Committee and every Senator who contributed to the debate was faced with the stark realisation that we have a higher number of young unemployed and that because of our higher birth rate, the sustained nature of that birth rate, we have a unique demographic structure. Our problem, which is as much a challenge and a richness as it is a real problem, is that our population will continue to grow to the end of the century. It will not taper off in the way the population of the other countries of the European Communities is predicted to do in the mid-1980's, and we will have this enormous challenge and this great demand.

I should like to ask the Minister to tell us the present stage of these proposals for youth employment. I am aware that they did not get the support from France that had been hoped and it now appears that they have gone, to some extent, undergound. I could not glean from the reports on developments what the situation is, so I would welcome some clarification on that specific issue.

A second issue I would welcome clarification on—it has been sitting around now for quite some time—is the draft directive on equality in social security. It is fair to say that for Ireland membership of the European Community has been helpful in getting on our Statute Book legislation at least achieving the standard of equality, whether or not we have achieved the reality in a significant way among men and women workers. The standards have been achieved. We were not able to postpone the legislation on the implication of equal pay and we made faster progress in the area of equal opportunity. We established a significant statutory agency, the employment equality agency, within a European time scale rather than in what might have been an Irish time scale. A third draft directive has been sitting there for a considerable time, the draft directive on equality in social security. This directive was considered by the Joint Committee, welcomed, reported on, noted that it would involve a very substantial restructuring in our own social welfare code, which is very male orientated, and endorsed very strongly the principle and commitment to equality. I should like to know whether this has been followed up by our relevant Ministers at the meeting of the Ministers of social policy or whether it has been considered at the meetings of the Ministers of Foreign Affairs or what is happening in that area.

In his opening speech the Minister referred to the question of regional policy. Clearly there can only be substantial disappointment at the size of the new regional development fund over a period of three years. It is some improvement on the original fund, but £75 million to Ireland over a period of three years is not going to substantially correct the existing disparities. That all stems from the basic problem, that the size of the overall budget of the European Community is not being enlarged significantly and, therefore, obviously, matters such as the regional development fund are not going to show any marked increase.

The Minister referred to the creation of a section of the fund outside of national quotas. I would welcome some specific information about the ways in which Ireland can immediately hope to benefit from or seeks to benefit from that part of the fund which is not on a national allocation. I should like to know what kind of arguments we are putting forward in order to try to begin to bring ourselves back first of all to an equal rate of disparity that we were at in 1973 when we joined the Community between the Irish standard of living and the German standard of living. We should then try to bridge the gap quickly and come to an overall level of regional balance, which is definitely a commitment under the Treaty of Rome.

I should like to turn to another specific item, the Convention on terrorism. The Minister referred to this in his opening speech and I was not clear from his reference what the position was. He referred to it in the script that was circulated to us and he added a few comments about the examination of the constitutional problems. Do I understand him to have expressed the view that there are, in his opinion, no constitutional barriers here to Ireland ratifying this convention on terrorism? That is something on which I would welcome his comments and clarification.

In the area of company law, which may be to some extent a dry and technical area but one in which there has been fairly substantial progress in directives at European Community level with the passage of the Second and Fourth Directives, I would welcome an indication from the Minister of whether it is intended to incorporate these by a new Company Act here. If so I should like to know whether that Company Act will confine itself to implementing the requirements of the Second and Fourth Directives, and, perhaps, the revision of the implementation of the First Directive or whether it will go further and provide the opportunity for a basic review of our company law. If that is the case I should like to know whether the Government will accept the recommendation in one of the reports of our Joint Committee that a select Committee of both Houses should be established to examine the question of reform of company law. That was a specific proposal in one of our reports.

I should like to turn to the establishment of our Joint Committee which is referred to in the Eleventh Report. At the time it was clear, certainly in so far as the Labour Party was concerned, that there was an undue and unnecessary delay between May 1977 and December 1977 when the Committee was established by a motion in both Houses. We were pleased that the Government accepted the broadening of the terms of reference of that Committee. I believe it is necessary to go a step further. This is partly the role and function of the Committee and its members but it is also one which calls for a Government response. I believe there should be more direct dialogue between Ministers and members of the Joint Committee. This happened initially when the Committee was established when the Committee called for a dialogue occasionally. This was the first Committee during the Coalition Government and we called for a dialogue on the question of fixing farm prices. This has not happened to the effective level that it should. To some extent this has prevented the Committee from having the political impact it should have and from drawing the attention of the members of the Committee and the general public to the importance of a number of the proposals which are being examined in the draft by that Committee for the economic and social life of our people, or for their environment, or for their safety at work, or for their rights in cases of redundancies, or important issues. I would welcome the views of the Minister on whether there would be a willingness by Ministers to come to meetings of the Joint Committee to discuss draft proposals at the European Community level which have a particular significance for Ireland.

There is a need for this more developed parliamentary involvement and accountability by Ministers in Parliament for what is being discussed at the European Community level because of the very developed scope of the policies which are under consideration. That covers the specific point that arose out of the reports. The July Report is inevitably at the moment slightly dated, but I certainly take the Minister's point that this is a better opportunity to discuss both reports than has been the average of these reports of developments in the Community. I welcome the opportunity and welcome the fact that he went beyond the reports by discussing the proposals for a European Monetary System.

In concluding I will seek yet further clarification on the basic question, why, given the lack of what I would call a favourable institutional development, given the increasing disparities between the standard of living here and the standard of living in a country like Germany, given the higher inflation rate here and taking into account—it is important to take this into account; I am not at all defeatist about Ireland's future within the European Community if we adopt a particular way of harnessing our development and managing our economy which is not the present way of doing so—the Minister is leading so confidently as he put it himself. I should like to know why he appears to be so dramatically more confident at the pospect of the imminent approach of the European Monetary System than, for example, either our Italian or British counterparts faced with the same prospect of a decision. Is it because, having been confident in launching the pump priming injection into the economy, Fianna Fáil now need confidently to be rescued from the difficulties that this policy has led to, difficulties in our balance of trade, difficulties in our external borrowing and difficulties in the social inequalities which have arisen? The Government are now faced with very unpopular decisions in the area of seeking wage restraint and in the area of seeking to increase fairly dramatically taxation without having got in the measure that might have been anticipated a redress and correction of our unemployment problem. There has been some improvement. It is inevitable and right that there would be some improvement with that kind of approach, but it has not been—as much for social and economic reasons—as great as the Government had hoped and anticipated. Now there is that genuine question mark, a political question mark, what are the Government seeking from the European Monetary System as of January 1978 to help them through another year with the kind of problems that are looming on the horizon for the Irish economy? That basic question is relevant to the Report on developments in the European Communities although it is, obviously, dealing more with the Irish economy than with what is happening at European Community level.

The Minister in his very helpful review of developments in the European Communities brought us up to date on the proposed European Monetary System so I am taking it that it is in order to make some comments on that proposal. These can be all the more general and all the less technical if, as I assume, a specific opportunity will be provided for this House to debate the issue when the Government produces the White Paper and final conclusions are about to be taken.

My standpoint about the EMS is not an academic one. In reality I see us as not having an entirely open choice. We are in the EEC and the presumption must be that we would wish to participate actively in any general Community initiative, particularly if the conditions were such as to promote not only monetary stability but a more balanced development within the Community enabling the weaker countries to catch up in time with at least some of the rest. I would expect that to be our disposition and, indeed the Minister confirmed it when he said we must be positive in our approach to EMS. I would expect that the weight of international policy considerations would be strongly in favour of our joining the EMS to the point of being compelling if all EEC members joined. The position is less clear-cut if some countries neither stay out definitely nor go in immediately and with a full commitment to the scheme. That might well be the position of two countries, Britain and Italy, who might adopt an intermediate or provisional position of close association rather than immediate and full membership. However people like myself can only speculate about this, and that is why it is very important that we should have a more searching examination closer to the point of decision, when the situation may be clarified.

I should like to intervene to state that I hope subject to the order of the business of the House, that that opportunity will be available to the Seanad at that time.

Thank you. The Minister in his address this afternoon expressed the hope that the present negotiations on the EMS will result in Ireland being able to enter the system under conditions which will allow us to remain within it. We would all share that hope. The context indicated that the Minister was speaking entirely of external conditions rather than the post-entry domestic conditions which I would consider to be a much more important factor in determining whether we can stay within the system. The conditions which will enable us to make a success of the EMS are not just the financial facilities offered by the Community, whether these be short-term or long-term or on commercial terms or non-commercial terms. The domestic conditions are far more important, and I mean by these—I will be coming back to them in a moment—I mean by the domestic conditions the change of attitude, the change of approach which will enable us to bring down our costs with the help of the cheaper imports to which a stronger currency will provide access, bring down our costs and ensure that for the future they will stay much closer in line with the cost trends in Germany and the less inflationary countries of Europe than they have been hitherto.

Just a brief comment on the financial facilities offered by the Community. It is important to distinguish between the two kinds of facility. There is a facility being offered as part of the European Monetary System itself whereby if, for a while, a country participating in the system gets into trouble on its balance of payments front because of capital movements or because of an upsurge in inflation at home and finds that it has to support its own currency, in effect has to borrow currencies from the system, the system itself will provide short-term loan facilities in these currencies, denominated in the ECU numéraire. In effect, we would in those circumstances be borrowing harder European currencies in order to shore up our balance of payments temporarily and prevent the Central Bank losing reserves too fast in trying to support the exchange value of our currency.

I do not want to become too technical, but it is clear that this would be just a short-term easement of the drain on Central Bank reserves which would otherwise take place. I want to distinguish that purely short-term aid to meet what is hoped to be passing difficulties, which we would be expected to correct by domestic deflationary policies, from the other form of facility we are seeking, the transfer of the longer-term capital resources which would be needed to increase productive investment here and accelerate the rate of economic growth. We have indented for resources of that kind. Preferably we will receive them in the form of grants or at least in the form of loans for long periods at low interest rates. Preferably—and I share Senator Robinson's view on this—we will get them from the Community budget on a planned and ordered basis rather than through specific bilateral negotiations with individual member countries.

These are the two quite distinct financial facilities in which we are interested. The first comes with EMS itself. The second is a separate thing which we have been trying to negotiate, I do not know with what success as yet, but which is vital to a proper balance between the monetary stability aspect of membership of EMS and the remedying in time of the big imbalances in economic attainment within the Community.

I would like now to return to the domestic conditions of successful and sustained membership of EMS. It is not only the Government but many sections of the community who would strongly desire the greater price stability and other advantages capable of being derived from greater stability of exchange rates but it is not a matter of what we desire, it is a matter of what we can achieve and what we can sustain. The practical question is whether the relationship which EMS would involve with a strong group of currencies would be sustained by a basic and continuing improvement in the factors affecting domestic production costs. In that context, I must say quite bluntly that if the trade unions in the new circumstances were still to pursue relatively high income increases, nominal and real, the new exchange relationship would be rendered untenable by rising costs and unemployment. It is not an exaggeration to say that the answer to the question, whether the Irish £ could hold its position without embarrassing and unreasonably frequent resort to devaluation proposals, depends essentially on the co-operation of the trade unions, as indeed does the prospect of our ever attaining full employment here.

I am not going to discuss the question of what would be the position if Britain also enters and we can maintain all the advantages of the present one for one parity relationship and enjoy full participation in EMS at the same time. A much more serious question is what happens if the position is otherwise—if Britain does not join and we have to incur not only the inconvenience and costs involved in exchange margins with a currency in which we still conduct a very large share of our total transactions but also the undesirable breach of parity with Northern Ireland in currency matters and the other economic consequences of having all our exports made more costly, perhaps, in terms of sterling, the dollar and other non-European currencies. I would emphasise that, whatever be the situation, if we are to make the grade and stay in this system without embarrassment, it must be on the basis of tougher anti-inflationary policies at home and greater restraint on the incomes front in particular.

It is no harm to remind ourselves that we are not starting from a very promising base. It is right to have the ambition to get the highest rate of exchange we can for our currency, because that means the best value in terms of command over imports for everything we produce here, but it is an ambition that is realisable only if we in Ireland can establish and maintain a favourable relativity of cost trends. We are not starting from a promising base given the extravagant expectations of annual income increases prevalent for years past, the weakness of internal trade union discipline, our comparatively poor industrial relations, the level of unemployment, the already excessive public borrowing requirement and the large external payment gap. It is true that our exports have been growing but this is because the effective depreciation of our currency, in line with sterling, has more than offset the comparatively high rise in our domestic production costs. I do not know whether anybody has made the calculation but perhaps I should put it on record that between 1971 and 1977 the Irish £ lost over half its value, 52 per cent, in relation to the Deutschemark and there has been a further depreciation this year of over 9 per cent. So we are 60 per cent below 1971 in the value of the Irish £ in relation to the Deutschemark. Even in relation to the United States dollar, which has been going through such unhappy vicissitudes recently, the depreciation of the Irish £ since 1971 has been of the order of 20 per cent.

This effective devaluation, which has offset the comparatively high rise in our domestic costs, would in future be denied to us except by mutual consent of all our partners in a European Monetary System. It is well to remind ourselves where we start from, and the tigher conditions to be observed, if we are to achieve the very desirable ambition of joining the EMS. I hope we can achieve it and that the domestic conditions necessary to achieve it will be fully set out and accepted if we decide to join, as I think for international policy reasons we are virtually bound to do.

I should like to conclude with a few words about monetary integration, because I have never been enamoured of this particular approach to European monetary and economic union. I have always thought that there was a lopsided concentration on the monetary side and far too little attention to the economic co-ordination which must accompany and sustain any approach on the monetary side. The monetary approaches can be spectacular. They can be visualised as "snakes" or "grids" or "baskets" but they are in essence surface phenomena. It is deeper down at the level of economic integration that the foundations of EMU—economic and monetary union—must be laid. Real coordination of economic plans and budgetary policies and the transfer of resources, not just through a small Regional Fund but through all the policies and institutions of the Community, these are the important matters. The essential foundation even for approximation to monetary union is approximation of price and cost trends. This can be produced over time only by a set of co-ordinated economic policies. "Co-ordinated" does not mean "similar" because, if the objective of the Treaty of Rome about reducing imbalances means anything, it means that it will be necessary to pursue policies both in the member states themselves, and at Community level in regard to the member states, which are quite different. The countries which lag behind will have to be helped to catch up in living standards with those which are relatively more advanced. A measure of what was needed in our case was given by an estimate some years ago that only a sustained growth rate of about 9 per cent per annum would enable us to catch up with the standards of the other smaller EEC members by 1986. In short, what the implementation of co-ordinated economic policies should mean is an attempt to achieve a tolerable degree of similarity, not necessarily equality, of economic experience and attainment in the member states. This means substantial resource transfers, primarily of capital on easy terms but also of enterprise and skill, to the less advanced areas. Otherwise, as I see it, attempts at phased progress towards monetary union will fail because the diversity of economic conditions, particularly of inflation rates, will prise exchange rates apart or else put unbearable pressure on the free trade front or disrupt the working of the Common Agricultural Policy.

I, therefore, have always assigned a subsidiary role in the achievement of EMU to monetary policy as such and a much more significant role to closer coordination of economic performance, backed up by adequate resource transfers to the less developed member states.

I welcome the opportunity to discuss the Eleventh and Twelfth Reports and the Minister's comments on them. Senator Brugha described the Minister's statement as broad. It is also rather bland and sanguine but, I suppose, in the nature of things, we must expect Ministerial pronouncements to be like that.

As Senators may have gathered from my previous statements on matters connected with the EEC, I am not notably an enthusiastic European. I make no apologies for stating that whatever vision I have is an Irish one and not a vague nebulous European one. So, no apologies for being a little Irelander.

On this occasion I want to make some comments on specific issues arising out of the reports. I was glad to note that there is a section on disarmament and the implication there is—though it has nothing directly to do with the Community—that the Community thinks disarmament is a good thing. That is the way in which the world is moving, and any aspirations towards disarmament are incompatible with any talk of a new defence union for western Europe, still less our own involvement in any such hypothetical union. I was glad to hear Deputy John Kelly's idiosyncratic views being disowned by his party in recent weeks. The Minister, of course, will tell me that this is old hat and that again and again he has assured us in this House and elsewhere that there is no question of Ireland being involved in a defence union. I am always glad to hear such repeated disclaimers.

On direct elections which form such an important and immediate part of the Community's programme, I note that the Minister sees these in a very optimistic light and says these direct elections confer a great degree of democratic legitimacy and heightened prestige to the European Parliament. They will give the people a direct voice in Europe. There is also the contrary view that the direct elections are an exercise in window dressing and that their main purpose is to lend an illusion of democratic control to the affairs of the Community.

I would like to make one or two specific points here. First of all, there is and there will be popular apathy. The fact that the election campaign here was launched some weeks ago by the Leaders of the three main parties is quite remarkable and, I should imagine, unique among our Community partners. One of the reasons why the three main parties lent themselves to this exercise is that they tacitly recognised that there is widespread popular apathy. Senator Brugha touched on this and suggested that there should be a massive educational campaign in the months ahead to tell the people what the EEC really is. Since we joined the European Community we have been subjected almost to saturation point with information about what the Community is. Is it possible that apathy is not based on ignorance but on a suspect idea that the direct elections are not, after all, anything to enthuse about?

We are not unique in this. If one talks to people in other EEC countries one gets the same reaction. There is a considerable degree of apathy on the direct elections. If we mount a massive campaign, as Senator Brugha suggests, it is important that we do not exaggerate the significance of the European assembly and the elections. In the first place, we might get used to calling the so-called Parliament by its real name, which is an assembly rather than a parliament. In the first paragraphs of his address the Minister was accurate in this respect but then he began to move back to the more colloquial term Parliament. It is not a Parliament nor is it intended that it should be in the near future. It lacks the two main attributes of a Parliament—a body from which a Government is elected and to which it is responsible, and the powers of legislation.

Other Europeans have reservations about the direct elections. In France, for example, there is a strong body of opinion which is opposed to any meaningful extension of the powers of the European Assembly. Perhaps the electorate will be impudent enough to ask the Fianna Fáil spokesmen how they square their enthusiasm on Europe with the less than enthusiastic attitudes of their Gaullist confréres. I would plead with the political parties that it is not too late to select the best possible people for nomination to the election. If the EEC is a fact and the direct elections are looming in front of us, we owe it to our country to have the best possible representatives, people of the best possible calibre. The evidence to date is that not all of the candidates who have thrown their hats in the ring can possibly be described as being of the best calibre. If they are not of sufficiently good calibre it will only induce or further compound the cynicism in the electorate about the direct elections and about the benefits of the Community in general.

I suggest that aspirants to the EEC should have some degree of linguistic competence. Any of us who have experienced simultaneous or instantaneous translations at a conference will know how inadequate it is for a participant to depend on these translations. Even at their very best they fail to convey the meaningful nuance which is immediately recognised by those who speak the language being translated. It is well known, that for insular reasons as much as everything else, our record in this is very poor.

I was present last week at a seminar in Gummersbach, West Germany, on this very question. It was a small seminar with representatives from the Nine and from the three applicants. We listened to very eloquent representatives from Greece, Portugal and Spain putting forward the case for enlargement of the Community and protesting enthusiastically that their motives were true-souled and political and not at all tainted by any idea of economic prosperity. At that seminar as well, it was interesting offstage, so to speak, to get the reactions of the existing Nine and, more particularly, the Germans, Dutch and the French. Against that enthusiasm of the applicant countries there was posed a certain scepticism about the ability of the Community machinery to function under the enlargement. Indeed, a number of the old Six seemed to regret that it was ever extended to Nine. The whole machinery and organisation that was designed for six was barely standing up to the demands of the Nine, still less the prospect of an additional three. The Germans in private, said: "If more regional and social funds are necessary it is ultimately we, the Germans, who have to pay for them". The French said: "We are not too happy about the prospect of Spanish produce and their effect on the French markets".

I conveyed what I took to be Government policy on this; that while we favoured enlargement we had a certain concern about the capability of the existing institutions to deal with the enlargement. We were worried about the effects on the common agricultural policy and on the regional and social fund. Then I went on to give my own opinions about the reaction of Irish opinion to the Community experience. I pointed out that there was prosperity in certain non-taxed quarters but there was also a considerable degree of disenchantment, not any longer confined to the 17 per cent who voted against entry. The Greeks, Spanish and Portuguese might well, in a few years, come to regret the fact that their sovereignty would be eroded. This is not true of the larger and central members of the Community. They might regret, as I regret, that their native Parliaments would be downgraded in status as this Parliament has been. There is a great degree of complacency about this in this Parliament. I pointed out that in a little matter like the buy-national campaign or in fishing they might find that they were no longer masters in their own house. In that connection might I draw the attention of the House to the reported dissatisfaction of the Commission in Brussels with the "Buy National" campaign?

Debate adjourned.

When will this debate be resumed?

Before calling on Senator West on the Adjournment Debate could the Chair have an indication of when it is proposed to sit again?

Next Wednesday.

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