I move:
That Seanad Éireann takes note of the Reports: Developments in the European Communities — 32nd, 33rd, 34th, 35th, 36th (Irish Presidency of the European Communities, January-June 1990), 37th and 38th Reports.
Developments in the EC—32nd-38th Reports: Motion.
I welcome the Minister to the House.
The seven half-yearly reports which we are considering this afternoon cover the period from January 1988 to December 1991. On behalf of the Minister for Foreign Affairs I welcome this opportunity to reflect on the evolution of the European Community over that period and on the significance of present events.
Since January 1988 the EC has undergone a series of remarkable and historic events. Briefly, these included: first, the peaceful and orderly achievement of German unification in a European framework and the integration of the former East Germany into the Community. One of the high points of the Irish Presidency in 1990 was the positive welcome awarded to this development by the European Council which met in Dublin on 28 April 1990. Second, against the backdrop of momentous events in Eastern Europe, the Community took a further important step in the process of European integration. Important preparatory work on the negotiations leading to the Maastricht Treaty took place during the Irish Presidency. Agreement was reached during that period on the date of convening of the Intergovernmental Conferences on political union, and economic and monetary union.
The two Intergovernmental Conferences ran for a 12 month period and the result — the Maastricht Treaty — represented a balanced compromise between the member states. The ratification process has not been easy in a number of member states and much of the argument has related to the openness of decision-making and the principle of subsidiarity. The principle of subsidiarity is a recognition of the need to ensure that the Community does not take action where that action would be better carried out at national level. The concern that decisions should be taken as close as possible to those affected is, of course, one we share in Ireland. The Government are also aware that Community institutions could be perceived as distant and bureaucratic. The subsidiary debate is, therefore, a timely one.
However, we must also ensure that the idea of subsidiarity does not undermine the capacity of the Community or its institutions to function. The Community has become deeper over the last 40 years. The Maastricht Treaty continues this process but the principle of subsidiarity is spelled out to ensure that there can be no fears that decisions that are best taken at national level will be taken away to some distant central point.
Just as there can be no renegotiation of the Treaty there can be no rolling back of the Community and its accomplishments. There can be no diminution of the competences of the institutions, particularly the Commission, which is the guarantor of the Treaty and has always shown a particular sensitivity to the interests of the smaller member states. In particular, the role of the Commission as the initiator of draft legislation must be preserved. This is a position which Ireland will argue at the Birmingham European Council on 16 October.
As Senators are aware, the Treaty was approved by the Irish people in the refuerendum on 18 June. Before Ireland can ratify the Treaty, a number of other conditions must be met. An amendment of the European Communities Act, 1972, is required to give effect in national law to the Treaty on European Union. The Bill will be presented to the Houses of the Oireachtas for debate and approval in the coming weeks. We will then have the opportunity to discuss all the developments that have occurred in Europe during the past few months in considerably more detail than the time allowed today.
The passage of the Bill will allow the State to ratify the Treaty on European Union. At the Lisbon European Council in June, the Heads of State or Government confirmed their decision to ratify according to the agreed timetable which was by the end of December. The General Affairs Council meeting in New York on 21 September indicated the high priority they attached to the speedy and successful conclusion of the process of ratification of the Treaty as signed at Maastricht. It is the Government's intention to ensure that Ireland's ratification procedures will be completed by that time.
One area of Community development has been particularly in the news in recent weeks, that is Economic and Monetary Union. The turbulence in the exchange rate system in the seventies, following the oil shocks, showed the importance of stability in exchange rates for the proper functioning of the Common Market. Ireland has been a member of the Exchange Rate Mechanism — the ERM — since it was set up in 1979. Our policies have enabled us to maintain our currency in a strong position in that mechanism.
Preparations for stage 1 of European Monetary Union were completed under the Irish Presidency in the first half of 1990 and that stage began on 1 July 1990. The Maastricht Treaty sets out the further two stages. The final stage will start in 1997, or at the latest in 1999, for those member states which qualify. Others will, of course, be able to join later as and when they qualify. Qualification depends on meeting certain criteria such as low budget deficits, low inflation as well as low or decreasing accumulated debt.
The meeting of Finance Ministers of the Twelve on 11 June 1990 identified inflation and budget deficit as the two main impediments to convergence. The Irish Government have pursued for some years now policies which have brought our budget deficit under control, steadily reduced our accumulated debt and given us an inflation rate that is one of the lowest in Europe.
These policies are necessary in themselves to form a basis for a healthy economy — the burden of financing our accumulated debt simply had to be brought down. However, these policies also mean we are able to maintain our strong position in the present European Monetary System and that in fact we are one of the very few member States which would qualify to enter the third stage of monetary union if it were to begin today.
Our main economic priority remains, of course, the task of tackling unemployment. Sound economic policies remain a basis for this. The Maastricht Treaty revises Article 2 of the existing Treaty to make it clear that the Community must have among its main tasks that of promoting within the Community a high level of employment and social protection.
The third and final stage of monetary union, which will come into effect, as I said, in 1997 or 1999, will involve a total and irreversible linking of the participating currencies leading in effect to a single currency, the ECU. Ireland is committed to this objective.
Recent events on the currency markets confirm that we must move forward to a single currency. In the third stage there will also be a single European Central Bank — one in which we, like other participants, will have our say so that the monetary policies that count in Europe will be taken in the interests of all.
Closer integration of the European economies must be paralleled by increasing the extent and effectiveness of the Community's cohesion policies to ensure that the economic and social disparities between the richer and poorer member states can be reduced. Since the Treaty of Rome, the Community has developed mechanisms — primarily the Structural Funds — to boost the prosperity of the less-developed regions. Following the Single European Act, the Structural Funds were doubled in amount with a particular emphasis on the areas of greatest need, including Ireland — the so-called Objective 1 regions. Between 1989 and 1993 Ireland will have received over £3 billion, or 10 per cent of the funds.
The Maastricht Treaty further strengthens the commitment of the Community to economic and social cohesion by the creation of an additional Cohesion Fund. This will be set up in 1993, specifically to help the four poorest member states meet the costs of additional infrastructural or environmental projects. The Community can thus be expected to pursue, through to the end of this decade and beyond, its policies to facilitate increasing convergence between the economies of the member states.
Where is the £6 billion?
The Community is at present in the course of negotiating the financial perspective for the coming years, in the package we call the Delors Two package. In this the Commission proposes substantial increases in the Community's structural actions, particularly for the less developed regions — the Objective 1 regions, which include the whole of Ireland. We are pursuing these negotiations with vigour, and we are aiming to achieve the kind of increase proposed by the Commission. This provided for a doubling for Objective 1 regions in the four less developed Community countries, taking the increase in the structural Funds and the new Cohesion Fund into account. The presidency is to launch the final negotiation phase shortly so that we can have decisions by December.
The end of December, 1992, will see the completion of the single market of the European Community. The Single Market will provide for the freedom of movement of goods, persons, capital and labour within the Community. To date, over 90 per cent of the 282 measures needed to complete the Single Market have been agreed at Council level. Though great progress has been made, the Commission has identified certain areas where more work is required. These include the creation of a European Company Statute, the establishment of a Community trade mark, frontier controls, cultural goods and double taxation. In the meantime each member state of the Community is engaged in the task of transposing measures agreed at Council into national law.
European integration is not, of course, an end in itself. It is a means of achieving the wider objective of promoting the well-being of all Community citizens. This implies policies which ensure that the benefits of economic progress are reflected in improved living and working conditions throughout the Community.
The increased emphasis placed on the social policy aspects of the Community's agenda in recent years is, therefore, most welcome. Ireland is participating fully in the effort to give practical expression to this social dimension. This mirrors the Government's commitment to social consensus, an essential condition, in our view, for sustainable economic development at both national and Community levels.
The Community's Social Charter, adopted in December 1989, sets out the fundamental principles and objectives of Community social policy. Ireland is a signatory of the Social Charter and is committed to working for its effective implementation. In the same spirit, we also subscribed to the Maastricht agreement on social policy.
The increasing problem of drug smuggling and addiction, which is a worldwide one, is a matter of concern to all member states. The European Council meeting at Strasbourg in December 1989 set up a high level committee composed of the personal representatives of the Heads of State or Government, to co-ordinate and give direction to all aspects of the fight against drugs. During the Irish Presidency in the first half of 1990 this committee — called CELAD — drew up a plan for co-ordinated action against drug smuggling and addiction at national, Community and the wider international level. This committee has continued to develop its activity to tackle the increasingly international activities of the drugs barons.
I turn now to agriculture a very important sector. The recent agreement on reform of the Common Agricultural Policy represents the culmination of months of difficult negotiation on the future direction of agriculture policy. The need to adapt the Common Agricultural Policy to meet the demands of changing circumstances had become increasingly evident following a series of adverse market developments in recent years.
The central objectives of the reform are to tackle the problem of surplus production while safeguarding the income position of farmers. Reduced market support and the lowering of prices should lead to a better balance between production and consumption and increased consumer demand. The consequential income loss to farmers will be compensated by direct income payments. These adjustments will help to secure the long term viability of the Common Agricultural Policy in the changing context in which it now has to operate. This is of crucial importance to Ireland in view of the considerable benefits which the policy confers on this country.
The reform also ends the uncertainty that had existed in the agricultural sector and enables producers to plan with confidence on the basis of assured support arrangements. This should ensure that the agriculture and food sector can continue to contribute substantially to the overall development of our economy.
The final compromise agreement, moreover, represents a very substantial improvement from the Irish perspective compared with the proposals originally presented. This is particularly the case in the beef sector.
I would like to avail of this opportunity to pay a special tribute to retiring Commissioner MacSharry for the high level of commitment, dedication and work he put into the very difficult renegotiation and realignment of the Common Agricultural Policy. I wish him every success in the future.
The Community is a major player on the international stage and in the world economy. It is the world's largest exporter — responsible for about 15 per cent of world exports — and is the biggest market in the industrialised world. The policies it pursues externally are thus of considerable importance. Ireland, which is itself so dependent on trading for its economic progress, continued in the period under review to make a sustained input to EC formulation of policy on relations with third countries. Within Europe these relations are particularly close and they have assumed added importance in light of the changes which have utterly transformed the continent's political landscape in recent years.
The ties which the Community has been developing with the members of EFTA, with the Central and Eastern European countries and with the Mediterranean States should be seen against that background. The Community has pioneered the process of closer integration as a contribution to stability and has followed a similar approach in relations with its nearest European neighbours.
In May this year the lengthy negotiations to establish a new and more structured framework for EC relations with EFTA were brought formally to completion with the signature of the Agreement on the European Economic Area. This will essentially extend the Single Market to a 19 State area with conditions of equal competition throughout.
Four of the member states of EFTA have separately applied for membership of the Community and another application is expected shortly. Internal work, preparatory to an enlargement, is being done under the UK Presidency. Formal accession negotiations, as agreed at the Lisbon European Council, would start only when the Delors II package is completed and the Maastricht Treaty ratified.
The Community's relations with the countries of Central and Eastern Europe have been the focus of increasing attention since the historic changes there beginning in 1989. Support for the difficult transformation under way, both at political and economic level, has been a consistent element in the Community's approach. Humanitarian aid has been despatched to the particularly needy cases of Albania and the Baltic States. Wide ranging technical assistance in connection with the development of market economies has been provided under the Community's PHARE programme.
Most importantly, new agreements on the political and economic aspects of relations between the Community and these countries are being negotiated. In the cases of Hungary, Poland and the Czech and Slovak Federated Republic, the association agreements have been signed and the goal is to complete the ratification process by the end of this year in respect of Poland and Hungary. The evolving situation in Czechoslovakia has to be taken into account in the case of that ratification. Negotiations with Bulgaria and Rumania are still in progress.
The situation in the former Soviet Union has also called for increased activity on the part of the Community. Humanitarian aid had been provided to a total value of around one billion ECU and further such aid is planned. Ireland has played a role in this Community action. Substantial quantities of meat and dairy products were sourced from stocks here. In addition, members of the Army served with the EC Task Force established to monitor the distribution of the aid in Russia.
The Community formerly had a co-operation agreement with the Soviet Union but with the break up of that country it has become urgent to establish a framework for EC relations with the individual republics. The mandate for the Commission to negotiate partnership and co-operation agreements with the republics was approved by the General Affairs Council on 5 October. Negotiations should open shortly on agreements which would cover commerce as well as economic co-operation and assistance and political dialogue.
The Community's major role in world trade had meant a major effort in the period under review in connection with the Uruguay Round negotiations of GATT. The negotiations are aimed at further strengthening and liberalising the world trading system while also bringing new areas, such as services and intellectual property, within its scope. The negotiations on agriculture have been difficult though this is by no means the only area where significant further effort is required.
Ireland, together with Community partners, remains committed to the goal of an early conclusion of the round on the basis of a substantial, global and balanced agreement. In regard to agriculture it is important that the Community be afforded full credit for the major reform of the Common Agricultural Policy which has been agreed. The compensatory payments under this reform must be classed as permissible under a new GATT agreement.
The period under review witnessed important progress in the Community's development co-operation policy. The Fourth ACP/EC or Lomé Convention came into effect in September last year. Formal negotiations on the new Convention began in 1988 and continued over a series of negotiating conferences at ministerial level. While the Commission formally conducted the negotiations on the Community side, Ireland, with the other member states, was actively involved in the formulation of the negotiating mandate and advised the Commission throughout. The negotiations were conducted at all times in a constructive spirit of partnership.
Like its predecessor, the new Convention is a wide ranging agreement and includes provisions for trade co-operation, the stabilisation of export earnings from commodities, industrial and mining co-operation, financial and technical assistance and protection of the environment. The arrangements for the financing and management of Community aid are set out in the Internal Financing Agreement negotiated under the Irish Presidency in the first half of 1990.
The Community had devoted a lot of energy in recent years to improving co-operation with non-ACP developing countries. In particular, in 1990 the Community agreed on new guidelines to govern its relations with Asian and Latin American countries and formulated a new policy for Mediterranean countries. Under these new arrangements, the overall level of Community aid to both areas has been substantially increased. The period covered by these reports has also seen growing recognition of the role of women in development and of the importance of environmental protection in our co-operation with developing countries.
The EC has provided food aid and other emergency aid to many countries over the years and was among the first of the international donors to react to the tragic situation in Somalia. The EC's programme of emergency assistance has so far provided 253,000 tonnes of food aid for Somalia.
The process of European political co-operation has enabled the Community and its member states to look outwards, to other parts of the world, on the basis of co-ordinated positions. In the period covered by these reports, the Twelve have worked closely together on Eastern Europe, the Middle East, South Africa, Central America and other regions. They have developed common approaches to nuclear non-proliferation, human rights and other issues of broad international concern. Within the United Nations and the Conference on Security and Co-operation in Europe and in other organisations, they have often been able, by speaking with one voice, to work more effectively than individual member states acting alone.
Recent years have witnessed a transformation of Central and Eastern Europe, the consequences of which have major implications for the Community today. It fell to the Irish Presidency in 1990 to co-ordinate the Community's immediate response to these events — to facilitate German unification and to pave the way for new relationships between the Community and the new democracies of Central and Eastern Europe.
Major progress has now been made in establishing democratic systems and in securing respect for human rights throughout the eastern part of our continent, but the era of change has also brought with it its own uncertainties, dangers and tragedies.
In the former Yugoslavia in particular, the dissolution of a state held together by the force imposed by a Communist regime has been accompanied by tragic consequences for all concerned. The European Community and its member states have, from the outset of the crisis, made every effort to resolve the conflict and bring about a settlement. These efforts, closely co-ordinated with those of the United Nations and the Conference on Security and Co-operation in Europe, have been pursued through the Conference on Yugoslavia, originally chaired by Lord Carrington and now enlarged under the co-chairmanship of Mr. Vance and Lord Owen; through the efforts on the ground of the EC monitor mission, in which Ireland has been an active participant, and through the exercise of the collective weight of the Community to seek to persuade the parties, especially Serbia, to co-operate in bringing about a peaceful settlement. The Community and its member states are also playing a major part in humanitarian relief efforts.
In the former Soviet Union, the transformation, welcome in itself, has also been accompanied by severe tensions in many areas. These reflect the enormous adjustments — political, economic and social — necessitated by the collapse of Communism. While there are clear limitations on the extent to which the Community can ensure that the crisis now being faced in many parts of the former USSR will be overcome through peaceful and democratic means, the Community has been making, and will continue to make, a major contribution to this end.
The Conference on Security and Co-operation in Europe (CSCE) has now 52 participants instead of 35. More than ever before the participating States are united as to values and objectives.
The Vienna Concluding Document of January 1989 agreed a mechanism which gives countries the right to investigate suspected human rights abuses in other States.
The Charter of Paris, adopted at the CSCE Summit in 1990 provides for new structures and institutions including regular meetings of Heads of State or Government and of Ministers for Foreign Affairs. A Summit in Helsinki in July, attended by the Taoiseach, further broadened the work of the CSCE, for example, by strengthening its ability to mediate in situations of potential conflict and intensifying, through further negotiations now beginning in Vienna, cooperative approaches to European security.
The end of the Gulf crisis saw the US Secretary of State, James Baker, painstakingly preparing the launch of peace talks between Israelis and Arabs. I am glad to say that this initiative was to bear fruit before the end of 1991 and that Ireland and our partners in the European Community are working actively to contribute to the success of those negotiations.
The decision by President de Klerk in September 1989 to abandon the policy of apartheid was followed by the release of Nelson Mandela. Consistent pressure by the Twelve played its part in bringing about this change of direction.
While the abolition of the so-called statutory "pillars of apartheid" is an important step, the legacy of nearly 50 years of apartheid will not be removed so easily. Ireland with its partners in the Community has been encouraging the parties to implement fully the National Peace Accord of September 1991 and to advance the negotiating process aimed at achieving a united, democratic, nonracial South Africa.
The period in question witnessed positive developments in the peace process in Central America, most particularly in Nicaragua and El Salvador. Meetings held under the San José arrangements, including a meeting in Dublin in 1990, have for many years been an importance source of support for dialogue within and between Central American States.
The European Community worked hard, in collaboration with Australia, Japan, the Association of South-East Asian Nations, and others, in support of efforts to bring an all-party agreement in Cambodia. This has led to one of the most ambitious — and essential — peacekeeping operations in the history of the UN. I am concerned that the Khmer Rouge have yet to demonstrate in practice their full acceptance of the UN plan.
In the field of nuclear non-proliferation, the Community has been gradually developing a common policy. During the Irish Presidency in 1990, the European Council adopted a declaration on Nuclear Non-Proliferation for the first time. Last year, the European Council adopted a second Declaration which covered chemical and biological weapons and called for restraint and transparency in transfers of conventional weapons, in particular towards areas of tension.
The experience of European Political Co-operation to date, and the expectations of the Community's partners in other parts of the world, suggested the necessity, in the context of the Maastricht negotiations, to develop stronger procedures in the foreign policy area.
The House has already had a detailed and extensive discussion on the outcome of Maastricht. I believe, however, that this House will agree with me the Treaty strikes the right balance between the need for a coherent European Community role in world affairs and the desirability of maintaining checks and safeguards in such areas as decision-making and the future relationship between the European Union and the Western European Union.
The ground has been laid for Ireland to continue to contribute to the Community's international policies on the basis of the values which have always informed our approach to these issues — which come down to placing the rights and welfare of individual men and women at the centre of our preoccupations.
I welcome the Minister of State to the House and welcome his wide ranging contribution to this debate. I accept that we will probably not be able to do justice to this enormously important and all-embracing topic on this occasion. We will have another opportunity to do so when this House amends the European Communities Act, 1972, between now and the end of December.
This debate, limited as it may be, is nonetheless extremely timely given the difficulties of the last few weeks and the post-Maastricht referendum perspective we are now developing because of various difficulties. It behoves all of us, particularly those of us in political life, to try to help the electorate to understand what the Maastricht Treaty is all about. Even at this late stage the one criticism we must all accept is not that there was so much wrong with Maastricht, but that the Treaty represented a step too far, and too fast. Consequently, people were genumely afraid of what was involved because they could not make sense of it and voted no. The people of Ireland overwhelmingly endorsed the Maastricht Treaty, as no other in Europe has. Other countries have, through their Parliaments, endorsed it and agreed to its ratification but we are the only country where the people have actually said yes with any great clarity.
The people deserve to have their fears allayed. They deserve to have the language of the debate pitched at a level everyone can understand. Those of us, in these Houses, who have become familiar with the topics and "Euro-speak" are inclined to slip into the jargon. Even when we are trying to explain the issues we are not really communicating, because of the language we use. As a result, many people who otherwise would be very supportive of what we are doing, have been left behind because they cannot make sense of it. As I said, it was going too far too fast.
As the introduction to the reports we are debating today states, section 5 of the European Communities Act provides for the Government to make a report twice a year to each House of the Oireachtas on developments in the EC. This is, ostensibly, what this exercise today is all about.
The reports now being debated — from June 1988 to June 1991 — cover a period of very rapid development in the European Community which followed a period of 15 years of very slow progress. Between 1973 and the mid-eighties there were no dramatic achievements. For us there were very important steps taken, such as our entry into the Exchange Rate Mechanism, but, generally, up to the period of the mid-eighties, there was no exhileration in the pace of change in Europe. Since then, however, there has been a lot of action and things have been changing very quickly.
To look back on the historic evolution of the Community we must remind ourselves that in 1957 the Treaty of Rome gave us the EEC — the European Economic Community; in 1987 the Single European Act gave us the European Communities, or EC; and in 1992 the Maastricht Treaty will give us European Union. I hope we are still of the same mind that we were in June and July when we debated this issue. Today, we are looking at the present difficulties in Europe as we rapidly approach 1 January 1993, the deadline we have spoken about for so long for the full implementation of the Single Market.
Within the European Community in the last few years, apart from the very rapid progress in terms of its institutions, we have seen German unification; outside the EC we have seen the collapse of the Soviet Union and the Warsaw Pact, Eastern and Central Europe have been looking more and more to the European Community for stability. As the Minister said, the two 1991 intergovernmental conferences led to the signing of the Maastricht Treaty in December last year. The intention of the Maastricht Treaty will be to give the Community European Union. I wonder will it.
I am afraid the Euro-sceptics have grown in number and recent developments have added fuel to their case unfortunately. The direction the Minister has pointed out is the only direction for Ireland. Whether we are talking about the overall Maastricht Treaty and ultimate European Political Union, prefaced by the completion of the European Monetary Union, it is the only way for Ireland, as a small, open, exporting country. We are very much European in our perspective. I would hope that those of us who are in a position to do so will be able to allay the fears of the Euro sceptics and the Euro cynics whose numbers grow daily. We have an enormous job to do but it behoves us to get out there and do it.
The Maastricht Treaty proposes the establishment of a European Central Bank for a European single currency. Doubts over this plan for full monetary union greatly increase the pressure on the Exchange Rate Mechanism and have caused chaos in the currency markets in recent weeks. So, too, did the Bundesbank. The problem goes back to German unification. Their demand surged following unification fuelling inflation and their budget deficit expanded much to the Bundesbank's alarm. There was an increase in interest rates to control the situation.
The Deutsche Mark is effectively the anchor currency in the Exchange Rate Mechanism and it is not expected to be devalued. Many economic commentators now say that German unification called for substantial appreciation of the Deutsche Mark against most of the other ERM currencies. A dearer Deutsche Mark would have allowed the Bundesbank to cut interest rates sooner and this, above all else, needs to happen. Germany must cut its interest rates if the Exchange Rate Mechanism is to return to any degree of stability. The Exchange Rate Mechanism deserves to be preserved. It was a mistake to regard the prevailing parities as fixed in the ERM and requiring protection at all costs. The ERM system was designed to cater for regular realignments. The Deutsche Mark needed to be revalued, post-unification against other Exchange Rate Mechanism currencies, but the Bundesbank could not get agreement from France and others even though it offered to lower its interest rates in the interim.
Recent history deserves to be recalled. Britain rejected a German proposal on 13 September for a controlled realignment within the ERM but Germany went ahead and invested heavily in propping up sterling in the ensuring difficulties. On 16 September sterling was withdrawn from the ERM after extraordinary selling overcame the system. Italy suspended the lira and Spain devalued the peseta at 5 per cent. Chaos ensured. Since then, pressure has come on the so-called stronger currencies. The French franc, in spite of, or perhaps because of, France's weak endorsement of the Maastricht Treaty has suffered accordingly. However, the Bundesbank has rallied to the franc's defence and invested heavily to resist devaluation of the French franc. The question has been posed whether the pound sterling, when it joined the ERM in 1990, was correctly valued at 2.95 DM. The British economists say it was correctly valued based on its purchasing power; the German economists say it was too highly valued.
Where does this chaos leave us, the people of Ireland? Where does it leave our economy which is an open exporting economy? We are still in the ERM, thankfully, with a huge appreciation of the punt against sterling, a 3 per cent increase in our interest rates and little hope of short term respite for mortgage holders and traders, particularly exporters, to the UK. The UK takes more than 30 per cent of our exports. Most exporters depending on that market now have their workforce, or a proportion of their workforce, on notice, as their margins are decimated overnight and they are working at an immediate loss.
We look towards a United Kingdom that is hostile to Europe. We look to Europe as committed Europeans and we are caught in the middle of the currency chaos as no other country in the EC is. We deserve the support of the Community as never before at this critical period. We are the only country whose people have convincingly endorsed the Maastricht Treaty. Europe's investment in our country since 1973 has been well rewarded particularly in recent months. As far as I am concerned, Europe still owes us. We have proved to be worth every ECU spent. We were not found wanting when the Community needed us most, when it came to the final step of the Maastricht Treaty.
If all the talk on cohesion and convergence means anything, it means that the Community and the institutions of the Community rally to help weaker states, particularly in times of crisis. This Government have every right to look to Europe to step in and help the Irish economy or a lot of the good that has been done in recent years will be undone overnight and we will add dramatically to the 300,000 on our dole queues.
The Minister referred to the Commission. He said: "The Commission... which is the guarantor of the Treaty has always shown a particular sensitivity to the interests of the smaller states". We can call on the Commission immediately to show that sensitivity and to show that it can react rapidly to a country when it is needed. We are caught between our dependence on the UK market for over 30 per cent of our exports, with sterling outside the ERM now, and with the Irish punt inside the ERM. Unlike any other country, Ireland is suffering and is being squeezed between competing philosophies at this point.
What is the Senator suggesting?
I am not in a position to have the answers. Apparently the economists cannot agree. They all have different answers. We have to look for the answers to those who know much more than I do on how to run an economy. I am suggesting we will have to find many of the answers at home and that now, as never before, the Community must rally to Ireland's aid because when they needed Ireland they got an overwhelming endorsement from us. If cohesion and convergence and looking after weaker and peripheral economies means anything at all and if all the Euro-speak is to be translated into reality, now is the test of the willingness of the institutions of Europe to rally to the aid of a weaker country.
I hope the Minister for Finance is already in negotiation with Europe on the implications for Ireland of this currency chaos, particularly sterling's withdrawal from the ERM. I am not suggesting we tie ourselves to sterling at the cost of our commitment to the Exchange Rate Mechanism and to the other currencies of Europe. That would be a retrograde step but I recognise acutely the position in which our mortgage holders, our traders, our exporters to the UK find themselves. Those already on the dole queues are likely to be joined by thousands more unless we have a resolution of the problem. There will be no panacea for this but I would like greater evidence from Europe that they recognise the critical position we are in now and that they will respond. Only they have the institutions and the paraphernalia that can respond.
There is one other point in regard to the Minister's speech I would like to make. He defined the principle of subsidiarity. This definition I have not had in writing or seen in print before from the Government and I question it. It is a very honest definition and it is how we always felt it worked but it is not what I understood subsidiarity to mean. The Minister says:
The principle of subsidiarity is a recognition of the need to ensure that the Community does not take action where that action would be better carried out at national level.
With one stroke of the pen this Fianna Fáil-led Government have obliterated decisions taken at local and regional level in our country. What about local government? Is it any wonder we have not heard a word about local government reform? This was to be one of the pillars of this Government. It was certainly one of the planks the Progressive Democrats insisted on when they joined with Fianna Fáil. Where is local government reform now? Perhaps local government is obsolete. What about the principle of taking decisions at the lowest possible level that is effective or can we not pass the national level in this country at all?
I take exception to the Minister's definition of subsidiarity. It is honest perhaps but it is one we need to look at and see if that is what we all understand the principle of subsidiarity to be. It is not my understanding of it and I am very committed to true local government, not the present system of rubber-stamping central Government. We all await with bated breath the reforms that have so long been promised but so little heard of from this Government. Perhaps now we know why reforms in this area are not needed and why local government may be obsolete. Decisions will be taken at national level and no further down the line. Interesting, disturbing.
It does not actually say that.
It says: "At national level", I am subject to correction. I am only reading what is before me and it disturbs me.
I would like to refer to a very important aspect of the European Community as it impacts on our economy, namely, the Common Agricultural Policy and its reform. None of us would argue with the need for reform of the Common Agricultural Policy. That was overdue and the present system was unsustainable by any criteria but we have to be more honest with our farmers, young and old, in relation to the impact of the reforms.
There are very uncertain times ahead for our farmers in the context of these reforms. Young farmers who will not inherit a well-stocked farm or a farm with good production rights established on it will be limited to an enterprise in dry stock, cattle. There was a possibility if the cereal issue was to be resolved on a regional or national basis that that area would have been open to young entrants also but now, at the request of the farm organisations, we are moving in the direction of individual quotes for tillage. That probably rules tillage out so any farmer inheriting land that is not well stocked — land an old uncle might leave to a favourite niece or nephew — has one option under the Common Agricultural Policy reform and that is dry stock, cattle but if you have not a very understanding bank manager that option is effectively ruled out as well.
There is a possibility, I suppose, of an increase in sheep production from the national reserve. In theory that is there as well but if this works as effectively and as efficiently as the national milk reserve I would not lose any sleep waiting for it if I was a young farmer. Given the chaos in the sheep markets, which is another knock-on effect of the currency chaos in recent times, nobody would be looking towards an increase in sheep production but in theory that option might be there as well.
Where does that leave our young, well-educated farming population today? They all cannot inherit well stocked farms. Let us be honest with them. We are mouthing about the need to educate them and the importance of doing that but is anybody standing up and saying that under this reform of the Common Agricultural Policy there is effectively no future for them. After this generation have spent their active lifetime on the land there is virtually no future for those coming after them. It will be essential that a new pre-retirement scheme as agreed in the Common Agricultural Policy is sold effectively and made to work in this country to allow land mobility by transfer, sale or rent to our young and well-educated farmers.
I am very sceptical to the point of being cynical about the so-called guarantees on the compensation payments promised in return for the price reductions and the production controls in the reform of the Common Agricultural Policy. It is dishonest of this Government to pretend they can guarantee compensation payments beyond one, or at most two, years. The reforms are being phased in over three years and, while the price reductions and production controls will be permanent, how can any Commissioner guarantee indefinitely adequate compensation levels, given the annual budget fixing in Europe and the likely change of Commissioners? We know there will be a change now but the likely ongoing change of Commissioners, the Council of Ministers and the Parliament are part and parcel of the democratic system in Europe. The Commission cannot commit its successor to a certain line of spending but it can commit to it production controls and price reductions; it cannot commit the incoming Commission to guaranteed compensation payments. Who knows what pressures will be on the Common Agricultural Policy spending in a few years time? What do this Government mean by guaranteed compensation? I think they have been sold a pup in an effort to get approval for the reform of the Common Agricultural Policy. I hope our farm organisations and our farmers realise where they are on this issue. As a country we will need every pound or ECU of compensation we can get from Europe.
Between now and 1995 the gross agricultural output in this country will decrease by over 14 per cent, that is, £447 million. Direct payments, that is, the existing premia, the Common Agricultural Policy compensation measures and all the disadvantaged areas headage payments, will double to £617 million in the same period. In other words, direct payments will account for half the net farm income by 1995, an increase from one-fifth in 1991, and farmers will be dependent on Europe for half their income by 1995. At the moment they are only getting one-fifth of their income from Europe.
The Common Agricultural Policy reform will impact least on the milk sector provided the farmer has a viable quota. However, the reforms will be major for all the other sectors — that is, beef, sheep meat and cereals. For the single suckler system direct payments, already an important part of income, will represent over 100 per cent of net income by 1995, in other words, there will be more in payments from the market and fewer expenses. For other beef systems the income before subsidies is likely to strongly negative in 1995, with subsidies being equal to two or three times the net income. For lamb we cannot predict the 1995 live premium level but it is likely that it will be well over 100 per cent of the market price, less expenses — that is, net income.
The 1995 compensation for cereals will be equal to or greater than the net income. In other words, the Common Agricultural Policy reform means that, with the exception of milk, agricultural prices are being cut to a level equal to or lower than production costs in this country. Our farmers' incomes will be the Euro subsidy, the cheque in the post. Maintaining the level of compensation into the future is the key issue for farm organisations and politicians and I do not like what I see.
In County Wexford, which is not any different from many other counties, farmers were late into milk. Wexford is mainly a dry stock and tillage county, a county of farmers who invested heavily when advised to do so on joining the European Economic Community in the early seventies to bring their land and their buildings up to standard and to maximise production. They invested heavily on the promise of a return from their various enterprises. Immediately they were into production controls of one kind or another, perhaps the best understood at this point would be the milk quota but production controls have extended far beyond milk at this stage. Their ability to make their bank repayments and to expand their enterprises to fund investment was cut immediately.
What answer have this Government for the farmers of Wexford and every other county who are on their knees at this time. We had better hear it fairly quickly because their patience is running out. At this stage they are exasperated and are beginning to understand that the reform of the Common Agricultural Policy, which was wrapped up in a lovely package, a good PR job, is not what they thought. The reality is dawning and the Ministers for Finance and Agriculture and Food should realise that they can no longer treat the farmers of Ireland as fools because, effectively, that is what they have been trying to do.
With 300,000 people already out of work and the dramatic appreciation of the punt against sterling, with over 30 per cent of our exports going to the UK and the fact that we have yet to take account of the impact of the Common Agricultural Policy reforms on the economic life of this country, there are very difficult times ahead. Many generations of Irish people gained their dignity from being self-employed on their own land. The cheque in the post is the Commission's response to over-production but this cheque in the post takes no account of our family farming tradition. Let us remember that there is nothing common about an agricultural policy where certain member states can afford to pay national aid to their farmers, which is five or six times greater than other member states can afford. We need a level playing field before the Community's agricultural policy deserves to be called a common policy. This point has been missed in the so-called reform of the Common Agricultural Policy.
I have made this point at least on three or four occasions in this House and I cannot get an adequate response from this Government as to how they will ensure that the Community's agricultural policy will be a common policy. I would also like farm organisations to put greater emphasis on this point because whatever their achievements and successes may make for their members, unless the playing field is level, unless the policy is common, our farmers will be handicapped compared with the Germans, French and others. Our Government and our people cannot afford to subvent farmers to the same extent as the Germans, French and Dutch. Let us get this right or we are at nothing. It is adding to what I think is a dishonest picture that is being painted for our agricultural community at the moment.
Children in this country, reared to believe that they, too, would work the land, have a very uncertain future. Another segment of our population is left without hope. Let nobody tell me that we cannot create a significant economic linkage between our capacity to overproduce quality food and the hunger problems facing Somalia and other countries on the Horn of Africa and the new democracies of Eastern Europe and Russia. Surely in marrying our surplus to their great need there lies one of the greatest challenges yet for our democratic institutions.
I would like to say how proud I am of our President's success and great work in Somalia and in the UN during the last few days. I compliment her sincerely, as I compliment the Minister for Foreign Affairs, Deputy David Andrews, on their commitment in this area. They have allowed the world to see how the Irish people, as well as the Irish Government, view with alarm the lack of support in terms of the great needs of Somalia and many other people around the world. We are a generous nation; we have always been generous in a voluntary capacity but I am afraid our ODA record is an embarrassment to the people of Ireland. The Minister referred to an increased commitment to ODA but that has to be translated into action and we must see the money on the table. However, it is very easy to be carried away on a wave of euphoria and to say that we will increase our contribution. We need a commitment to attain the UN levels within a clearly defined deadline.
The Single Market is around the corner — 1 January 1993. Recently a package was announced by the Government to support jobs in companies exporting to the UK that are in serious trouble because of the appreciation of the punt against sterling. I hope this will be immediately translated into action and that there will not be a bureaucratic tangle between those who need help and the Government. This would slow down the effectiveness of the package but I am prepared to give it an opportunity to operate before we comment on it. It is welcome as a step in the right direction.
The quest to create jobs in this country is well recognised. The tragedy of those without work, the hopelessness and lack of dignity must also be recognised. I am concerned about a group of 1,000 people in this country who are going to lose their jobs as a result of the Single Market on 1 January 1993. This Government have paid no attention to this group. If we were to create 1,000 jobs in the morning there would be flag waving and luncheons and IDA press receptions and PR launches of one kind or another and there would be great whooping it up around the counties where the jobs were being created. This is understandable and let us not decry good news because there is a lot of bad news around but when the Government are in a position to protect 1,000 jobs and they refuse to call down finances that is available in Europe to do so I must question what they are about. I refer to the 1,000 customs clearance and freight forwarders who will find themselves redundant from 1 January onwards. Madame Scrivener in Europe has provided 30 million ECUs to help this category of people who find themselves without work through no fault of their own but because of a European decision on restructuring the organisation of the economies of Europe.
This money is there to be drawn down. The case has been made by the Minister for Finance. The national body, the local bodies, Rosslare Harbour Customs Clearance and Freight Forwarders have presented their case. They have come to the Joint Committee on Secondary Legislation of the EC. They have spoken to the MEPs. They have come backwards and forwards and have got nothing from this Government. There must be a will to help save 1,000 jobs, to redeploy, to retain, to redirect the skills that are available in this workforce. I cannot understand how the Government are sitting on their hands and ignoring 1,000 jobs that with the stroke of a pen on the 1st January will be gone. They are not even being phased out over a few weeks. Their work will be gone on 1 January.
I appeal to the Minister present to ensure that the Minister for Finance draws down the money available in Europe to help this sector. If the European Community is to have the benefits that we are all so quick to tell the public about, we must be honest about the downside and we must do everything possible to help those who will be adversely affected by decisions that are in our greater interest. Please let me see some activity from this Government in relation to Customs Clearance and Freight Forwarders from Cork, Rosslare Harbour, Dublin and Dundalk. The issue is there. Nobody appears to be listening. It is possible to draw down compensatory moneys to help them. Please let us have some result because January is around the corner.
There is a certain irony in the fact that the current President of the European Community is one John Major. He presides over a party that has been described as á la carte Europeans. That is a kind description. Where does the President of the European Community stand on the future of the Exchange Rate Mechanism, on the future of the Maastricht Treaty, on the European Community itself? He and his party have no policy on Europe. They blame the Germans for the present currency chaos and they want the Maastricht Treaty rewritten. They are negative and hostile to the European vision and yet until the end of this year the hands that drive the Community are in Britain. That is a very disturbing scenario and the rest of the Community should make clear in no uncertain terms to Prime Minister Major, and indeed to his colleagues who will preside over all the other ministerial Councils, exactly where we want Europe to go, where we want the Exchange Rate Mechanism to lead us.
The British people, and indeed the Bundesbank, need to be told that the vision of Europe is to have a Central Bank of Europe culminating in a single currency and no selfish interest, however well motivated, whatever hidden agenda there may be in relation to the Bundesbank's future or indeed the double agenda of the British people and John Major must prevent that. Mr. Major says one thing to the British people and something else when he is in Europe. Whatever hidden agendas may exist there must be a single message as far as Ireland is concerned: that is, that we know where we want to go, we must remain part of the ERM and, if at all possible, avoid devaluation. Not all economic commentators, who are much wiser than I, feel that is an option indefinitely. I hope it is a realistic option for us. Our message must be that we accept the objectives of the Maastricht Treaty and we insist that Europe recognises that we are caught between our difficulties with sterling outside the ERM, on the one hand, and the punt within the Exchange Rate Mechanism.
I would like to again thank the Minister and I look forward to some response and an in-depth ongoing debate.
An Leas-Chathaoirleach
I would like to remind Senator Lanigan who is about to speak that, in accordance with the Order of the House today, this debate will be adjourned at 2 o'clock.
When I saw the number of documents we were supposed to debate in two hours I thought it could not be done. I am glad the House has agreed that this will be a continuing debate to allow for as many Members as possible to talk about the developments in the European Communities since 1989. Since then we have gone through many phases in the evolution of the concept of a united Europe. When we read the aspirations of the earlier developments and when we read what is in these reports we may say that very little has been done but I hope we will see changes.
In the short time that I have today, I will deal with the problems of people who are dying, all over the world and what Europe can do. I think that might be better than dealing with the problems the currency crisis is causing for certain people, the major unemployment crisis we have, the prospects for farming and the various other developments that have to take place in Europe.
Much has been said here today about the visit of President Robinson to Somalia and we hope her visit will have an impact on the world over and above the impact that it has made on the media up to now. In essence, there has been no worldwide impact so far. The press got the opportunity yesterday in New York to speak to her and I hope they will take on board the deep impressions that she was able to give to them as a result of her visit to Somalia. Again, we must not forget that the visit was one in which the Minister for Foreign Affairs took a major part. Indeed, it has to be said that the Minister visited Somalia initially and what he saw and what he said when he came back made a strong impact on people here and in the European Community.
While we all saw on television or read in newspapers about the appalling situation in Somalia, I do not think the full impact of the poverty of the desolation of that and similar places will ever be felt unless people experience it themselves. Unless people can smell poverty they do not know what poverty and death are about. Poverty and death are widespread in today's world. When television can convey the experience of smell then people will be enabled to know what death and deprivation are about. The deaths taking place in Somalia do not arise totally from a natural disaster, from the desertfication of the Horn of Africa or from drought. They are the result mainly of an horrific civil war.
Debate adjourned.