Seanad Éireann debate -
Thursday, 25 Nov 2004

Vol. 178 No. 18

Council of Europe Development Bank Bill 2004: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of Foreign Affairs (Mr. Treacy)

Is cúis áthais dom bheith ar ais i Seanad Éireann le freastal ar an Bhille tábhachtach seo, an Bille um Banc Forbartha Comhairle na hEorpa 2004. Tá mé ag súil leis an díospóireacht agus an pháirt a ghlacfaidh na Seanadóirí uilig. This Bill provides for Ireland's membership of the Council of Europe Development Bank. The CEB is the oldest international financial institution in Europe and the only one with an exclusively social vocation. Its activities are targeted to emergency projects and to strengthening social cohesion in Europe. The CEB is the financial instrument of the policy of solidarity, developed by the Council of Europe over the years. The Government views the Council of Europe Development Bank as a valuable expression of that solidarity and of social cohesion in a wider Europe. Although Europe is one of the most developed regions of the world, there are still large pockets of poverty. This is where the Council of Europe Development Bank assists in development. It acts first and foremost in favour of the most vulnerable and fosters balanced social development in the fields of health, education, social housing and employment. The bank is valued in EU member states, in particular by the countries of central and eastern Europe, as an important source of lending for social projects. Ireland's accession to the bank will be viewed positively by these states as a reflection of our commitment to wider European solidarity.

The bank is a multilateral development institution, placed under the supreme authority of the Council of Europe. It nevertheless has its own full legal status and financial autonomy. By granting loans, the bank participates in the financing of social projects, responds to emergency situations and thus contributes to improving living conditions and social cohesion in the less advantaged regions of Europe. It is an appropriate time for this Bill to come before this House as it gives a further signal that Ireland welcomes the accession of the new member states into the EU and displays our willingness to play our part fully in the new Europe.

The current subscribed capital of the bank is just over €3 billion, but only 11% is paid in. The balance is designated as callable capital, but it is most unlikely that this will ever be called on. Ireland would provide subscribed capital of €30.515 million. The paid-in capital contribution for Ireland would be €3.369 million. When joining, Ireland must also pay a contribution to the bank's accumulated reserves of €9.764 million. Its full contribution paid in capital and contribution to the reserves, amounting to €13.1 million, will be paid in four annual equal instalments of €3.283 million each. Provision for these costs is being made in the Bill.

Set up in 1956 and originally named the Council of Europe Resettlement Fund for National Refugees and Over-Population in Europe, the fund started out with just eight members. A number of EU member states joined over the subsequent 25 years. However, with the change in the political landscape in Europe in the early 1990s, the influx of new members over the following ten years reflected the growing interest in the bank. The new member states of the EU and former members of the Soviet Union brought the membership up to 37 different countries. In 1999, the name was changed to the Council of Europe Development Bank.

The primary purpose of the bank is to help in solving the social problems with which European countries are or may be faced as a result of the presence of refugees, displaced persons or migrants consequent upon forced movements of populations as a result of natural or ecological disasters. However, in recent years the bank has expanded its operations to support projects relating to social housing, health, education, rural modernisation, support for SMEs and the improvement of the quality of life in disadvantaged urban areas and the protection and rehabilitation of historic heritage. It is the only European development bank with a social purpose. Its activities are targeted primarily to emergency projects and to programmes directed at strengthening social cohesion throughout Europe. The bank provides loans and guarantees, not subsidies, to its member states, to local authorities and to financial institutions. Its loans are intended for the implementation of social projects which thus enjoy the benefit of favourable financial conditions. Since the bank receives no annual contributions from its members, its financial activity is based on its paid up capital and reserves and the resources it raises on the financial markets. Since its inception in 1956, the bank's capital has been increased regularly to sustain the development of its activity while, at the same time, preserving its financial soundness. The bank does not receive any other aid, subsidy or budgetary contributions from member states to finance activities. The necessary resources are, therefore, raised on the international capital markets in the form of borrowings.

For its borrowing activity the bank has been rated by Moody's since 1988, Standard and Poor's since 1989 and Fitch Ratings since 1996. It enjoys the maximum AAA rating with all three agencies on its principal long-term debt. To ensure that it maintains access to the funds needed to pursue its activities the bank continues to have recourse both to large-scale borrowings in major currencies aimed at a broad range of institutional investors and to issues in given currencies or with specific structures.

To obtain financing from the Council of Europe Development Bank the projects presented must meet the following general criteria: compliance with Council of Europe conventions; respect for the environment on the basis of international conventions and compliance with standards of quality; participation in the financing of projects may not exceed 50% of the total eligible cost, the balance of which may be co-financed by other international institutions; and compliance with bidding procedures in accordance with national and international directives.

Since 1994, the bank's circle of member states has widened to include a large number of new states, including European Union member states and former republics of the Soviet Union. Some 14 states have joined since 1994. The policy developed by the bank is aimed at strengthening its activities in the new member states by contributing to their economic and social development and reducing inequality. It has introduced innovative instruments to meet the specific needs of each country. Some €1.804 billion, spread over 66 projects in 14 countries, has been lent to the new member countries since 1995. Loans are issued on favourable terms, with a deferred repayment period being carried on, for example, in the form of long-term loans.

The sectoral breakdown of approved projects illustrates the bank's capacity for action, not only in its statutory priority sectors but also in health and education infrastructure, employment, vocational training and employment in small and medium enterprises and the Roma community. The bank has adjusted the eligibility criteria as a consequence of the strategy for supporting the social housing sector, which has particular characteristics in the new member countries. The total of disbursements made in favour of the new member countries in 2000 was higher than the total made during the previous five years.

The bank has signalled its intention to become the reference financial institution for the Balkans on the question of refugees and migrants. It has become heavily involved in the work of the stability pact for south-eastern Europe. One of the pact's priorities concerns refugees and specific attention is being paid to the Roma community. For example, the bank approved a €30 million project in 2000 for the construction of housing in Croatia aimed at facilitating the return and integration of refugees.

Strengthening social cohesion means contributing to solving the unemployment problem in the first instance and the Council of Europe Development Bank has adopted two lines of action to that end. It promotes the creation and preservation of jobs and supports investment in SMEs, which are the principal source of new jobs and vocational training.

Action in favour of employment is one of the bank's new priorities. It has financed several projects aimed at the preservation and creation of jobs in small and medium-sized firms in many countries. The governing board sets out the general orientation of the bank's activity, lays down conditions for membership and decides on capital increases. It approves the bank's annual report, accounts and general balance sheet. The board consists of a chairman and one representative from each of the bank's member countries.

The administrative council exercises the powers delegated to it by the governing body, establishes and supervises operational policies and approves investment projects submitted by governments. It votes on the bank's operating budget. The governing board elects the chairman. The governor, who is the bank's legal representative, heads up its operational services. He is responsible for the bank's staff, under the general supervision of the administrative council, and conducts the bank's financial policy in line with the administrative council's guidelines. He represents the bank in its transactions and examines the technical and financial aspects of requests for financing to the bank. The auditing board consists of three members who are appointed by the governing board. It checks the accuracy of the annual accounts which will also be examined by an external auditor.

I reiterate the Government's view that the Council of Europe Development Bank is an important part of the operations of the Council of Europe. I pay special tribute to Senators who, with their colleagues in Dáil Éireann, have given and will continue to give distinguished service on the Council of Europe and support all its activities, including the continuing enhancement of the role of the Council of Europe Development Bank.

The Council of Europe Development Bank plays a vital role in the new and expanded Europe. Ireland's membership of the bank at this time is a valuable expression of our solidarity with the new and expanded Europe at an exciting and historic period for the growing European Union. I commend the Bill to the House and look forward to the ensuing debate.

Mr. J. Phelan

This is my first opportunity to welcome the Minister of State, Deputy Treacy, in his new capacity as Minister of State with responsibility for European affairs. I will echo many of his remarks on the Bill which the Fine Gael Party fully supports. The Council of Europe Development Bank is not widely known and I was unaware of many of its activities until recently.

As the Minister of State outlined, the Bill will allow Ireland to join the Council of Europe Development Bank and make a contribution towards it. It seeks the approval of the Oireachtas to accept the terms and conditions of membership. Under the terms of membership, agreed by the governing board of the bank, Ireland's subscription to the bank's capital will be €30,515,890, of which €3,368,950 will be "paid-up capital", with the remainder available to the bank in the form of callable capital. Ireland will also be required to make a contribution of slightly less than €9.8 million to the bank's reserves. Ireland's total cash contribution, therefore, will amount to slightly more than €13,132,680, which will be paid in equal instalments of €3.2 million over a four-year period. Payment of the first instalment, which falls due within 30 days of the bank's receipt of Ireland's declaration of accession, has been provided for in the Book of Estimates discussed in the House yesterday.

Membership of the Council of Europe Development Bank is part of the Government's strategy to join a number of development banks, as recommended in the 2002 report of the Ireland Aid review committee.

According to information provided by the bank, it was established in 1956 making it the oldest international financial institution in Europe and the only such institution with an exclusively social vocation. The bank is the financial instrument of the policy of solidarity developed by the Council of Europe. A multilateral development bank placed under the supreme authority of the Council of Europe, the bank nevertheless has full legal status and financial autonomy. By granting loans it participates in the financing of social projects and responds to emergencies, thus contributing to improving living conditions and social cohesion in the less advantaged regions of Europe. Loans are granted in Council of Europe member states.

The bank's fields of action, as defined in its articles of agreement and resolution 1480 (2004) of the administrative council, are structured under three main headings, to which the Minister of State briefly referred. Under the heading of strengthening social integration, the bank plays a role in providing aid to refugees — the Minister of State referred to a project under way in Croatia in this regard. It is also prominent in the areas of social housing and job creation, for example, it recently made a large investment in Germany. Disadvantaged urban areas and rural modernisation are other areas of special interest.

Under the heading of managing the environment, the bank has played a significant role in funding reconstruction work after natural or ecological disasters in various parts of Europe, as well as in the protecting the environment and preserving historic and cultural heritage. The bank's main areas of concern under the heading of developing human capital are education and health.

The bank has assets of approximately €4.5 billion and has awarded more than €20 billion since its inception. Examples of projects funded by the bank include €11 million approved for improvements in health care in Bulgaria; since 1995, the Council of Europe Development Bank has contributed to financing a project for therestructure of the health sector in Bulgaria. This major programme aims to improve the health of the population and increase the efficiency of the health care system. Some might argue that we could take those ideas on board here. The programme addresses four different aspects of the problem, three of which are co-financed by the Council of Europe Development Bank and World Bank. The four areas involve strengthening the capacity for analysis and management in matters of health care policies, rehabilitating almost 1,000 neighbourhood health care centres, rehabilitating blood transfusion centres and improving emergency services throughout Bulgaria.

In Germany, €100 million was approved to provide vocational training which plays an integral part in the fight against youth unemployment. Germany has a widely acknowledged and long-standing tradition of apprenticeships and the Council of Europe Development Bank has financed an innovative project in Bavaria. The programme consists of granting finance to local small and medium-sized enterprises that agree to make additional apprenticeships available for training young people. According to an evaluation carried out by the Landesanstalt fur Aufbaufinanzierung, a Bavarian bank that received financing from the Council of Europe Development Bank, this programme involved over 7,000 small and medium-sized enterprises and led to the creation of over 10,000 apprenticeships, which is very significant by anyone's standards. Studies carried out on the project show that the whole programme played a decisive role in reducing regional unemployment among young people in Bavaria.

The bank provided a considerable sum to help reconstruction following the floods in Hungary in 1998 and 2000. It gave €9.7 million in aid for refugees and migrants in Lithuania to construct and renovate housing for former deportees returning there from the former USSR. It provided €97 million in Poland for reconstruction and flood prevention measures following the horrific flooding in 1997 and 1998. After the earthquake in Slovenia in April 1998, it provided €4.6 million for reconstruction of buildings and infrastructure, and for social housing for dependent elderly persons whose houses were destroyed.

In Spain it provided €6.2 million for the construction and renovation of schools. Between 1996 and 1999, it financed the construction of 109 schools and the renovation of 374 others in Andalucia. Given the potential for strengthening social cohesion in the villages concerned, the construction or renovation of certain schools was undertaken at the request of, and in close collaboration with, parents' or teachers' associations. The social impact has been very clearly felt as the project has benefited 63,000 students, including almost 2,500 children from gypsy or migrant families, and has generated jobs in the construction industry, estimated at 2,000 per year, and in 540 teaching posts. The bank provided vital aid to Turkey following the earthquake there in 1999. The council acts as another bridge towards the full integration of Turkey into a modern democratic European framework.

Fine Gael is proud to support this legislation. We have a record of being pro-Europe in this House and others. At a time when euroscepticism is a growing aspect of politics in this country and throughout the European Union it is apt that we deal with this Bill now. This institution focuses on European integration and social cohesion and I fully support this Bill.

Dr. Mansergh

I welcome the Minister of State to the House and I welcome the Bill. The Council of Europe is probably the oldest post-Second World War European institution, along with the Organisation for European Economic Co-operation. Ireland has been a member of the council since the beginning, unlike the European Union, which we joined somewhat later. Although the European Union has expanded and enlarged it by no means covers the whole of Europe. Apart from countries such as Bulgaria and Romania which should join in two or three years time, there are also the Balkans and many former states from central and eastern Europe and the former Soviet Union, some of which are in the news today.

I wonder why we are joining the bank at this late stage and I have some reservations about dealing with the legislation only at the moment when the time limit expires. We should give higher priority to our international obligations and deal with them in a timely manner. In this case there is no real matter of controversy that needs to be debated at length but it is regrettable that we are discussing this only 48 hours before the deadline expires. There are several reasons we might not have joined earlier, one of which is possibly the previous name of the bank which was the Council of Europe Resettlement Fund for National Refugees and Overpopulation in Europe. We might have had problems signing up to a concept of overpopulation in Europe but the name was changed in 1999.

The name was unfortunate but the real reason was that it required a significant financial contribution and we will be contributing €13 million. In the past we have been somewhat reluctant to subscribe to some of these organisations. We should have joined this bank long ago rather than so belatedly. The argument would be that we did not have enough money or it did not have sufficient priority. At an earlier stage of our membership of the European Union we benefited from loans from the European Investment Bank for different capital products. That does not have the same degree of importance for us now that we can fund most of our capital spending ourselves. It is important for these countries to be able to get money for essential social infrastructure and emergency relief at reasonable and competitive interest rates which might not otherwise be available to them.

Previous speakers have covered the ground well on projects recently supported by the bank. Approximately €2 billion was approved in loans last year. The bank serves a useful purpose. It will be a matter of considerable importance that we do not have a kind of Iron Curtain or fortress Europe in a political or economic sense. We will have to pay attention to the problems of countries that are outside and that will perhaps remain outside the European Union. We must not put them at an unacceptable disadvantage and this Bill is a contribution to that aim.

Europe has no interest in having political or economic instability nor untoward movements of population just beyond its borders. As Europe enlarges, its area of responsibility will also expand. I do not just mean the area within the European Union, but also its neighbouring countries. Ireland is at the western periphery of Europe, while most of the countries that are beneficiaries of this are in the south-eastern end of Europe. Some of these countries will become members, such as Bulgaria, Romania and perhaps even Turkey. I hope that it will happen in the future, when conditions are right. I do not accept the alternative version of fortress Europe that is based on the idea that as we are a Christian civilisation and Turkey is mainly a Muslim country, it does not fit in. We must have a truly pluralist view of the European Union without in any way underplaying its mainly Christian roots.

In theory at any rate, Ireland is eligible for loans under this Bill. In practice, we do not have difficulties obtaining finance for worthwhile infrastructural and social projects, nor for things like flood relief. We are therefore unlikely to avail of funds from the bank. As a display of solidarity with the rest of Europe, I warmly support this Bill. My only criticism is that it is long overdue.

Mr. McDowell

I welcome the Minister of State to the House to debate this Bill, which my party also supports. I had the pleasure of serving on the parliamentary assembly of the Council of Europe in 1994. It was a very interesting time in the development of the council. It was shortly after the collapse of the Soviet empire and after the fall of the Berlin Wall. We were casting about for a way in which the countries of central and eastern Europe could be integrated into the European mainstream. It was obvious at that stage that these countries would not be ready for EU membership for quite a long time. As we now know, it took another ten years. It was necessary to provide a middle way that would facilitate them in accommodating themselves to European norms in order to become members of the European Union. The Council of Europe performed a remarkably good job in that regard. It was not easy and there were times when I felt that the council was turning a blind eye to inadequacies in the structure in some of the eastern European states. At one stage, it appeared to ignore the treatment of minorities in Slovakia, or the separation of the executive and judicial powers in some of the former communist states in eastern Europe. It was a difficult time, but there is no question that the Council of Europe performed an extremely useful function, as it was one of the very few institutions into which those countries could accede.

This was done through the use of the carrot and stick approach. Membership of the club was enough for the people of these countries to feel part of the European norm. However, it also brought home to them the way in which their practices had become totally undemocratic. It was quite normal, in countries that we regard as quite developed such as the Czech Republic, for ordinary citizens to accept and expect that the judiciary would effectively implement the will of the executive. It was accepted that the courts were incapable of vindicating individual citizens' rights if the government did not want that to happen. In making it clear that this was not an acceptable norm, the Council of Europe performed an extremely useful role.

The Council of Europe Development Bank is somewhat different in so far as it has a mainly financial role. It provides funds for what we in this country would call social inclusion. In that regard, it was quite distinct from other development banks in Europe and elsewhere. For many years, we have had the European Bank for Reconstruction and Development and the European Investment Bank, of which we are members. These banks also performed a useful role in funding large-scale projects in eastern Europe. For example, they funded the transfer from nuclear power to more conventional forms of power generation in eastern Europe. It is also useful for the bank to have this vocational, socially inclusive role and I welcome the fact that we have decided to join it at this stage.

I examined the Schedule to the Bill and the purposes to which it has been put. It is fair to say that we could borrow some of these purposes in Ireland, although I appreciate that we do not intend to do so. The treatment of minorities is something in which we have not excelled. It is true that there are still people in this country who have difficulty in accommodating themselves to the fact that the children and grandchildren of settlers who arrived here in the 17th century are Irish and are entitled to be treated as people who have rights.

More recently, we have not been good in the way we have treated our own recently arrived immigrants. When we look at countries like Romania and countries in the Balkans that have very clear minority problems, we should examine our own consciences. That should not stop us from telling countries like Romania, Bulgaria, the countries of the former Yugoslavia and Slovakia, that we do expect them to meet certain norms in recognising the ethnic rights of their minorities and in allowing them due expression, be it legal, political or linguistic.

We recently had a visit from the Croatian Minister for European integration who made a presentation to the European affairs committee. I asked her a number of questions on the issue of refugees, which is pertinent to the work carried out by the bank. While Croatia has made serious progress in the past couple of years, much of it driven by the desire to be part of the European Union, there is still a great deal to be done there. The Minister repeatedly made the point that while her Government has no problem with the notion of displaced people in Bosnia, the rest of Croatia and Serbia returning to their former homes in Croatia, these people have to recognise that resettling them is very difficult. It is all very well for the Croatian Government to state on the one hand that it would like the refugees to come back and that they have a right to do so, but on the other hand they are told they will not have houses and jobs.

In that context, the expressed will of the bank to become involved in those issues and to assist directly in the provision of housing for displaced refugees is very welcome. The message needs to go out that countries such as Croatia should not be allowed to reap the benefits of ethnic cleansing and that people who lived previously in Croatia, Serbia and different parts of Bosnia do have a right to return to their property and a right to be resettled should they choose to exercise that right. It is appropriate that the EU, or in this case the Council of Europe, should have that extra arm available to it to provide direct financial assistance to those who are looking to assist in the resettling of those refugees.

The decision of the Government to join the bank arose out of the 2002 review of our development aid. I guess it is part of a distinct shift in Ireland's development aid activities. There was a time when we provided "black baby" assistance through voluntary organisations. We then pursued a bilateral aid programme, which was correctly and properly targeted at providing assistance to individual projects on a bilateral basis. The increase in our contribution to multilateral organisations, including the Council of Europe Development Bank, in recent years can be partly attributed to the increase in our overall expenditure. We have increased the amount of money we give to other banks, such as the Bretton Woods institutions, the World Bank and the IMF. We have provided direct bilateral debt relief assistance in recent years.

Perhaps the shift to which I have referred has not been discussed to the extent it might have been. The non-governmental organisations which deal with such issues are largely supportive of it. While I do not criticise the broadening of our development co-operation base, I wonder if we sometimes fail to examine carefully the effect of the various forms of assistance we provide. Ireland is providing direct budgetary assistance to Mozambique, for example. The assistance is debt relief, in effect. The money is being allocated to assist Mozambique's budgetary position. Therefore, it seems to me that we have to take a greater interest in what is being done with that money by the Mozambican Government, which I do not intend to criticise as it has made enormous strides in recent years. We need to co-operate with the Mozambican authorities.

Referring to development co-operation rather than development assistance may be the real key in this regard. We need a mechanism that enables us to co-operate with such governments to provide the additionality. In other words, if we provide debt relief, we need to ensure that the money that becomes available as a consequence is used in a way we can support. We need to adopt a hands-on approach to our bilateral assistance to countries like Mozambique.

NGOs and other organisations which are directly involved in development co-operation are concerned about the role played in recent years by the Bretton Woods institutions, particularly the IMF. The World Bank, by contrast, has done much in recent years under the leadership of Mr. Wolfensohn to take a more caring approach. It seems that a "good cop, bad cop" approach is being adopted. The IMF is clearly the bad cop and the World Bank is sometimes the good cop. I have previously expressed concern about the use of ESAF funds, the operation of the ESAF programme and the conditions imposed on developing countries in the Third World which seek assistance from the World Bank and the IMF.

The imposition of the neo-liberal economic model, which is typically favoured by the economists who work for international banking institutions, can sometimes be inappropriate. It has frequently undermined civil society in developing countries. It has undermined the governments of such countries by making it more difficult for them to invest in education and health as they try to structure their economies in a fashion that fits into the IMF model. As a small but growing contributor of international aid, for example to the financial institutions in question, Ireland should make it clear that it is not comfortable with such an economic model. Given that the World Bank has slowly shifted its priorities in recent times, I am hopeful that one can make an impact on such institutions. They may not be totally impervious to political persuasion or the views of the governments which, in effect, fund them. At the meetings of such institutions, which are typically held each year, the Government should state clearly where it wants money to be spent and how it wants it to be linked.

Although the Minister of State has provided some information today, I do not know much about the workings of the Council of Europe Development Bank. Can he tell the House what is the bank's total loan portfolio? I assume that it operates from similar commercial ratios as most normal banks. I noted the Minister of State's comment that the bank gave loans of approximately €2 billion some years ago. I assume that its total capacity must be five or six times that sum. I would be interested to know the bank's total loan portfolio.

It is interesting that the Council of Europe Development Bank has been given the AAA standard by the international rating agencies. I am fascinated by how the bank has managed to maintain that standard, while seeking to provide soft loans with deferred repayment in the vocational and social sectors. It seems that one has to take a few risks when one is trying to get involved in the work of those sectors. If the bank has been taking such risks, it must have been extremely successful with their outcomes. It is a pretty clever trick to maintain the AAA standard in such circumstances.

I assume the Minister of State does not envisage that local authorities will apply for loans from the bank. I would like him to confirm that it is seen simply as a form of aid. If he has any further information about the geographical spread of loans in recent years, I would be interested to hear it. I assume that we are talking primarily about countries in eastern Europe, some of which are now EU member states. I would appreciate more information in that regard.

I cannot conclude without referring to the current debate on Ireland's overseas development aid allocation. I will not repeat what I said yesterday about the diminution of our ambition to meet the UN target, other than to reiterate that it is a pity and a shame and that people are extremely unhappy about it. I accept that the Government has reduced its target to 0.5% of GNP, but I ask the Minister of State to clarify whether the reduced target will be achieved. In the last 24 hours, non-governmental organisations, led by Dóchas, have expressed concern about whether the Government's new commitment to increases of €65 million this year and €60 million in each of the years 2005 and 2006 will enable it to achieve the 0.5% target. Having used my calculator this morning to examine the matter, I cannot envisage how the 0.5% target will be achieved. The monetary increases which have been announced will not amount to 0.5%, unless the Government foresees that there will be an economic recession in the next two or three years.

I read the comments of officials from the Department of Finance, who said they do not really know what the GNP figures are. That is nonsense. The Department produced an estimate of GNP just a couple of months ago as part of its mid-term review, just as it does every year. I am sure it is well aware of the figure on which it will base the national pensions reserve fund contribution, for example, which is due to be approved by the Dáil next week. The Central Bank produced its quarterly estimate of GNP just a couple of weeks ago. The notion that we do not have a decent estimate of GNP and we cannot, therefore, make a reasonable estimate of what the relevant figures will be in two or three years' time is nonsense. Officials in the Department of Finance are aware that three-year predictions are produced as part of the budgetary documentation.

We know, as best we can, that the money being committed as overseas development aid will not comprise 0.5% of GNP. The numbers are bogus. I have calculated that we will allocate 0.45% or 0.46% of GNP at best. It is shameful that we have decided to abandon the 0.7% target solemnly made by the Taoiseach at the UN four years ago in favour of a 0.5% target. It is absurd and dishonest to suggest that the new target can be met by the monetary commitment the Government announced a couple of days ago. I ask the Minister of State to explain the reasoning behind the decision at the conclusion of this debate or in the next couple of days. Can he confirm whether it is intended to allocate additional moneys to meet the 0.5% target? Will the Government meet a commitment on which the ink has hardly dried? The Government should realistically outline how the new 0.5% commitment will be met. The numbers which have been provided so far do not add up.

The Labour Party supports the Council of Europe Development Bank Bill 2004 and Ireland's proposed membership of the bank. I thank the Minister of State for coming to the House for this debate. I am fascinated by the Bill, which seems to deal almost exclusively with the issue of immunity. I assume that there is an obligation to provide immunity to the workers in the bank. Will the Minister of State clarify the matter?

Ms Ormonde

I welcome the Minister of State, Deputy Treacy, and wish him well in his new brief. I am delighted to contribute to this debate. I will not talk about the overseas development aid scheme.

Mr. McDowell

Go on.

Ms Ormonde

The scheme seems to be part of this whole contribution. It is not related to this particular subject. Ireland is becoming a member state of the Council of Europe Development Bank, an old established institution that is under the authority of the Council of Europe. As a new member of the Council of Europe I am still trying to familiarise myself with its workings. I am still looking at the wider membership, including several countries associated with the council, and how it drives its social and human rights agenda. Most of those countries associated with the council are new and developing democracies who therefore have a great many problems, including on human rights. The current interests in the bank reflect that.

Having visited Turkey some weeks ago and examined its problems in the areas of human and minority rights, I believe it is a great opportunity that we should become a member of the bank to show our solidarity with the Council of Europe and the very important projects taking place in the changing Europe of today. It has been asked why we are becoming members only now. Of course, it is a signal that we have arrived and are now a major player in the EU. Although we are still a small country, we want to be involved and show responsibility and a willingness to play our part in a wider, changing Europe. This is a golden opportunity for us to show our solidarity now.

The Minister outlined the role of the Council of Europe Development Bank, which will have a social vocation, including social housing, health, education, rural modernisation and small enterprise. In addition, there is a regional remit to deal with refugees, displaced persons and migrants. It is good to share the burden to ensure that social cohesion is realised across Europe.

The Minister referred to the eligibility criteria and how projects will be monitored. Will the conditions be met fully? Will the bank work within Council of Europe conventions? I am not convinced that the Minister highlighted how countries will measure up to those criteria, such as how to respect the environment on the basis of international conventions and compliance with equality standards. There is a danger that support will be provided for economic projects that have a long-term impact on the environment. It is therefore important to apply the criteria. Will there be a mechanism in place to carry out the evaluation? What mechanism is in place to monitor the investment?

I am also concerned about what structures will be put in place to report progress. Many committees are subcommittees of the Council of Europe. Will there be interaction between those relevant to the area and the bank?

On the question of migration, we now know that people from developing countries, including the ten new EU member states, which are still developing their democracies, are moving to more prosperous countries with higher standards of living. There must be proper structures in place to address that. Ireland will have a responsibility in this regard and the fact that we are now becoming a contributor to the bank means that we will want questions to be answered on how money is spent. Social projects can be vague, especially with regard to the way in which programmes are implemented. It is very important that the bank measure countries against the eligibility criteria and requirements and that a monitoring structure be put in place to report on how money is spent. We often hear reports that money has been lost or wasted because too many people were working on a project.

It is very important that Ireland plays a part. We should be delighted that our money is going in the right direction, but we need transparency and accountability. It is worthwhile, and we are delighted that Ireland has become a member of the bank now. It is an expression of our solidarity. We have come a long way and are playing a major role. Having said that, we like to think that there is transparency regarding how money is spent on such projects, particularly in states emerging from being less democratic than westernised countries. I have seen examples where projects failed because they were not properly monitored or supervised.

Mr. Daly

I welcome the Minister of State at the Department of Foreign Affairs, Deputy Treacy, congratulate him on his new office and wish him well in his task. I have known him for a long time and am aware of his commitment, expertise and political skills, all of which I am sure he will bring to bear in dealing with the various issues that affect his current areas of responsibility.

Opposition Members have been vocal on the issue of overseas development aid in recent days in the context of the publication of the Book of Estimates. However, it is disappointing that when a modest measure dealing with a minimal contribution towards such aid is presented, Fine Gael Party members in particular are in sparse attendance and have given the proposal very little attention.

Mr. J. Phelan

I would not say that.

Mr. Daly

Perhaps the Senator has an explanation as to why so few of his party members are present.

Mr. J. Phelan

Fianna Fáil Party members are also sparse. There are 30 of them, and they are not in a position to throw stones. It is a poor showing to have only four out of 30 party members present.

Mr. Daly

There was no one on the Fine Gael benches.

Mr. J. Phelan

That is rubbish.

An Leas-Chathaoirleach

The Senator without interruption.

Mr. Daly

This is very important legislation. We were one of the founder members of the Council of Europe. My criticism is that it has taken us 50 years to get involved in this bank, which is designed specifically to help the poorest of the poor in developing countries. This modest contribution as part of Ireland's overseas development aid is extremely welcome, and we should expand it.

Perhaps the introduction of this Bill might direct the public's attention to the work of the Council of Europe, which is not widely known. The media are more interested in determining what expenses Irish delegations draw down for attending meetings than in the work of the council and its various committees on political affairs, social affairs, health and education. They seem to direct their attention on the one hand to whether one attends meetings and, on the other hand, to what travelling expenses one claims. I wish the media would pay some attention to the work of the council, much of which is relevant to us in Ireland.

Those of us who are members of the all-party delegation, including Labour, Fine Gael and Independents as well as Fianna Fáil, have contributed to the evolution of Council of Europe policies. The Irish delegation, in the general assembly and the various committees, has made an outstanding contribution. This is welcomed by the member states, especially the emerging, fragile democracies that need economic and social stability. If they do not have such stability, they will experience political instability which, following the collapse of communism, is not desirable in these states. I refer to the Ukraine, which has a population of 50 million. A civil war is feared and the problem stems from underdevelopment and a lack of education and opportunity. There are also drugs and alcohol problems but such emerging democracies have a humanitarian deficit which, unless it is remedied, will lead to conflicts similar to those in the past. The civil unrest in Ukraine following the election reflects an underlying desire among certain people for a return to the communist regime. This could spread north and south of the Ukraine and result in a difficult scenario in eastern Europe.

The Bill is welcome because it is long overdue and it will make a contribution to the Irish response to the necessity for spending on overseas aid. Ireland should accelerate its investment in this area to help the poorest of the poor and to help establish stability in emerging democracies by investing in education, employment and social schemes.

I was Minister of State with responsibility for overseas aid for a number of years. I had the opportunity to bring all the aid organisations together in Iveagh House. It was the first time non-governmental organisations came together with the Department and I was struck by how little they knew about each other's activities. It was an education for both the NGOs and the Department, as each organisation outlined its activities to ensure improved co-operation, less duplication of effort and more support for those who needed it most.

It is important that the aid organisations should be made fully aware of the legislation so they might direct their attention to countries in central and eastern Europe to address refugee and migration issues quickly. The situation in the Ukraine could easily get out of hand and we have witnessed many horrific instances over the past number of years of anarchy following the breakdown of law and order. These incidents mainly stem from the underlying poverty and deprivation experienced by people. Senator Ormonde referred to Turkey and she will have seen the conditions in which some people live in Istanbul. Ireland's efforts in the campaign to improve living standards among the populations of emerging democracies are welcome and worthwhile and they will create an awareness in the public mind about how important these areas are and how welcome our contribution is in such countries.

The cutback in overseas development aid has been widely discussed in recent weeks. Unfortunately, I had the experience of losing my seat in the 1992 general election and this puts this issue in perspective. Does the public care about overseas aid? If the public did, I would have received the highest vote ever for the work I did in this area. I would have received between 10,000 and 12,000 first preference votes, instead of half that number. The work done in the area of overseas aid was not appreciated. I do not wish to sound a note of warning for the Minister of State.

Mr. Treacy

The alarm bells are ringing.

Mr. Daly

Could the public and the media, in particular, pay attention to the work of the parliamentary committees of the Council of Europe and show respect to the members of all domestic parties who make a contribution, which is widely sought and welcomed by the Council's institutions, rather than engaging in negative debates about the costs of flights and hotels? Mr. Duffy, who apart from being a public service broadcaster, is also a newspaper columnist, is more interested in expenses than the work done by MEPs and the contribution Ireland makes to the development of European institutions and, especially, the Council of Europe, which is often confused with the European Parliament.

Members have received many documents from the various committees of the Council of Europe. They provide good examples of how the council's work can be implemented domestically and throughout member states. I thank the Minister of State for introducing the legislation because it might lead to improved awareness of the work of the Council of Europe, the activities of its political, legal and social affairs committees and the contribution it has made to the evolving stability in Europe.

The council was established so that there would be no more wars in Europe. We are on the brink of another outbreak of hostilities in the emerging democracies and we have a responsibility to use our political skills and the financial resources available to institutions such as the development bank to make a meaningful and positive contribution at the Council of Europe. I wish the Minister of State well in the task before him. He should not suffer the same fate as I did for my work in 1992.

Labhrás Ó Murchú

Fáiltím freisin roimh an Aire Stáit. Most people have limited knowledge of European institutions in terms of the manner in which they impact on us and the role MEPs play in them, which is often positive and progressive. This lack of awareness is most manifest during debates on referenda and, undoubtedly, it will manifest itself during the debate on the European constitution.

I imagine that few people have any knowledge of the Council of Europe Development Bank. In the context of a materialistic world, this bank is in many ways a good news story. Whenever we discuss banks we do not often use the terms "social conscience" or "social focus". Recently many people were heartened by the findings of The Economist survey which put Ireland at the top of the league in terms of quality of life under various headings. This was a salutary and timely reminder to us of how lucky we are as a people.

This position was brought about by our vision as a people, our tenacity, the leadership of Government and the assistance we have received from Europe. We have been able to enjoy the fruits of life as a result of our position in Europe. Unfortunately, in some areas this has also brought a sense of greed. We seem to always think in terms of the begging bowl and what we can get from Europe.

The time has come when we must consider how we can contribute, pay back and help those less fortunate than ourselves. This is expected of us as a result of our history. For example, one need only look at the contribution we made when we were not affluent. Our people travelled throughout the world, whether as missionaries or to help develop legislative systems in underdeveloped countries. People expect Ireland to be central to any mission that sets out to help people, whether in an emergency or as a result of an historical position.

It is important that we are seen to be part of banks like the Council of Europe Development Bank, which is focused not just on emergency areas but on areas such as education, social housing and health, all the areas of immediate concern, and that we are seen to support them. It is easy to forget. In fairness, the media, the broadcast media in particular, have made us aware of the parts of Europe and the world which still suffer from extreme poverty. We are all aware of it but it is important that it is highlighted.

I remember speaking to a person who returned from a visit to North Korea shocked by how dismal a country it was and that the women there still worked in the fields. I thought that was ironic because we could still remember Ireland at that particular stage of non-development. We have come a long way in a short period, yet it is easy to close our minds. We should realise that other countries could succeed in the same way we did if they had luck and support on their side.

Recently I entertained a group comprising two mayors and two others from Slovakia. They came to Ireland through contact with some nuns from the Presentation Convent in Cashel who were working in Slovakia. The group came to study our development as a tourist destination. From talking to them I realised they did not have the bare essentials; they did not have roads, let alone the other necessary infrastructure we take for granted. When we brought the group around the country to show them certain developments, these educated, highly intelligent people were mesmerised.

We should not confuse lack of opportunity with lack of education or intelligence. These people may have suffered under the system operated in their country and some of their initiative might have been dulled, but they were still inspired by what they saw and wanted to be able to achieve similar results. They accepted this would not happen overnight. It is interesting that it is to Ireland these groups come. In some way they identify and feel a particular affinity with us. This may be for religious or other reasons apart from historical ones. It is not sufficient that we just entertain these people and empathise with their difficulties. We must be practical.

I admit that like many others I knew little about the development bank before this debate. The bank probably did not register with us to any great degree until now. Having learned about it, I was inspired by it. Often when discussing development we see these as being peripheral and see the economic charter as the central driving force, even though we have social and cultural charters. This is not to say that we do not do well in the other areas. I am particularly pleased that through this development bank we have, in a way, the antidote to materialism and to selfishness or self interest. One might say the same with regard to charity.

I do not believe one must wait until one gets to the next world to be rewarded one hundred fold. We are rewarded through morale. The morale of a nation is lifted and rewarded by doing something not specifically for itself but for others. While it would not be our motivation, our generosity is paid back to us through friendship and co-operation that may be required at a given time. How often have we said about Ireland that because we never colonised another country, the Irish find friendship wherever they go? This is largely because people saw us as givers not takers. This is our image and it benefits us when we need support on other issues. It is interesting that other countries, because of that fraternity of nations, can identify with us because of having helped them at a given time.

The same goes in the case of the development bank. I do not suggest this should be our motivation in helping; I am sure it is not. By making a contribution and being part of the development bank, we are doing what is right and what is expected of us, which is why I strongly support the Bill. Taking part positions us as a proactive country that wants full development within Europe, not just for the big powers and those lucky enough to be in the right position at a given time, but so that all nations large and small will benefit.

I support the Bill and am glad to see there is a degree of unanimity thereon. There should be no division on it, but solidarity. I am glad this step is being taken. I echo Senator Mansergh's comment that it should have happened sooner. However, it is happening now. It underpins our confidence as a nation that we are prepared to be part of a social project and development of this kind.

Mr. Mooney

I echo the welcoming comments to the Minister of State, Deputy Treacy. I am particularly pleased that he is here as Minister of State with responsibility for European affairs. He has graced this House with his presence on many occasions through the years in various portfolios and I have every confidence he will continue to bring the same efficiency and professionalism to his new job as he has done in the past. I wish him well in that regard.

I also echo the comments of Senator Mansergh who has taken the lead in this debate and of my friend and colleague, Senator Ó Murchú. Why has it taken so long for Ireland to sign up to this bank and why are we being asked to pass this legislation at the 11th hour when it could have been done much earlier? Be that as it may, I am glad it is going through both Houses.

I highlight this, perhaps for a different reason to my two colleagues, and in a sense to pick up the thread of what Senator Daly said about attitudes in Ireland and the Irish political establishment towards European institutions. I have noticed in my membership of this House that there is a perception, not fuelled by successive Administrations I hasten to add, but certainly fuelled by the media, that Irish political participation in European institutions is about junkets, travelling abroad, the glamour of aeroplanes and airports. Inevitably it comes down to how much it costs to stay in a hotel or whether one travels business class or economy.

I do not wish to overemphasise this point and I agree with everything Senator Daly said. He and I are members of the Council of Europe, as is Senator Ormonde, and we have first-hand knowledge of the impact this attitude has on those of us who believe we are doing something positive in the council, in our case, and in the other European institutions which have distinguished Irish members.

Following the recent publication of expenses for both Houses of the Oireachtas I was asked by Matt Cooper on "The Last Word" radio programme if I stayed in a three star or five star hotel and if I travelled economy or business class. That was his question to me on national radio as a member of the Irish delegation to the Council of Europe, despite the fact that in the two years I have been there I presented three separate reports. I could also list the contribution of other Irish members. Not one of those debates has ever been discussed or even reported, not even as much as one line has appeared in the national newspapers about what is done there. Is it at all surprising, as appears to be emerging in the debate, that there is confusion in the minds of the Irish electorate about the Council of Europe, the European Union, the European Parliament, and the Parliamentary Assembly of the Council of Europe? If this Bill does nothing else it takes a small step in the right direction in terms of promoting the Council of Europe.

I see there are young people in the Gallery who are here as part of civics classes where they are learning about State institutions. Perhaps they will go away from their experience in this House and say in reply to being asked what was being debated in the Seanad that we were discussing a Council of Europe institution. It might lead to someone asking a question as to what the council is about, who its members are and if it is the same as the European Parliament? They both meet in Strasbourg although in separate buildings. The European Parliament also meets in Brussels.

The Council of Europe is the oldest of the European institutions. It was set up in 1949 in the immediate aftermath of the ending of fascism and the Nazi scourge in Europe by 14 like-minded countries. I am proud to say Ireland was one of the founding members. It was set up primarily to protect human rights across the European continent to ensure that never again would any girl or boy, man or woman, be subjected to state terror and authoritarianism and that their human rights and dignity would never be violated in future. The European Convention on Human Rights was agreed at that time and still remains as a monument to the far-thinking people and environment of that era.

It is salutary that we should remember the circumstances in which the Council of Europe was set up because the lines have become considerably blurred in recent years and there appears to be an increasing violation of human rights, especially in eastern European countries, many of which emerged out of the dark decades of communism. Belarus is a basket case. It has a dictator, an authoritarian communist, Mr. Lukashenko, who is running his own private fiefdom where the freedom of the media and any attempt to introduce the norms of democracy are constantly flouted. My colleague across the floor, Senator McCarthy, raised the issue of Chernobyl children on the Order of Business. This dictator refuses to allow them to leave the country. This is at the heart of the type of work the Council of Europe does.

Debate adjourned.