Dáil Éireann díospóireacht -
Thursday, 7 Dec 1978

Vol. 310 No. 6

European Council Meeting: Statement by Taoiseach.

The Taoiseach

With the permission of the Ceann Comhairle, I will make a statement to the House on the outcome of the meeting of the European Council in Brussels. The meeting has not as yet led, as it normally does, to comprehensive conclusions set out by the President of the Council but I have laid before both Houses the two documents which have been made public, the resolution on the European Monetary System and the terms of reference for the "Committee of Wise Men". The discussions on the EMS and on the action necessary to strengthen the economies of the less prosperous countries took up almost the full two days of discussion in the formal meeting and very little time remained to consider other matters with which we were to deal. However, before dealing with the EMS, I will refer briefly to the discussions that did take place on other topics.

We discussed the proposal made by the French President that "Three Wise Men" should be commissioned to report on certain problems. We agreed to call upon a number of eminent persons with special knowledge of European affairs to give thought to such affairs. The committee thus formed is comprised of Mr. Barend Biesheuvel, formerly Prime Minister of the Netherlands, whose period of office included the occasion of the Paris Summit of 1972; Mr. Edmund Dell who, up to the time of his recent resignation was trade secretary in the British Government, and M. Robert Marjolin, a former Vice-President of the European Commission, who earlier in his career was Secretary-General of the OEEC, the forerunner of the present OECD, and who has already headed a group which produced a valuable report on a possible path towards economic and monetary union.

The mandate of the committee is:

To consider the adjustments to the machinery and procedures of the Institutions which are required for the proper operation of the Communities on the basis of and in compliance with the Treaties, including their institutional arrangements, and for progress towards European Union. It emphasises the interest it attaches to having available specific proposals in this connection which may be implemented swiftly and which take into account experience to date and the prospective enlargement to twelve. The European council requests the Committee to report back on its conclusions in October 1979.

Since our accession, this country has consistently advocated the improvement of decision-making in the Community and has more recently stressed the need to bring about improvements in advance of the further enlargement of the Community. We have also, of course, been concerned to maintain the balance of the Treaties, to support the institutions established under them and to maintain the equality of status of all member states of the Community. We could not accept a Community with two tiers in its institutional structure. I believe that the mandate which has been agreed contains satisfactory safeguards in these respects.

We also considered the remuneration of members of the directly elected European Parliament and concluded that members elected next June should be paid the same salaries as those of members of the Parliament of the country they represent; that their salaries should be subject to national taxation in their own country; and that they should receive satisfactory allowances for such expenses as travelling, subsistence and support staff. It will be for each member state, in relation to members holding the dual mandate, to decide whether they may retain both salaries.

There was some discussion of the common agricultural policy of the Community, arising largely from discussion on transfers of resources, in the EMS context, although there was a separate paper from the Commission arising from an unofficial or informal mandate for reflection given to it by the Bremen meeting of the European Council. The paper reiterated that the CAP was a cornerstone of the Community, reconfirmed the principles on which it is based and outlined its achievements over the years. It saw the CAP facing three main areas of difficulty at present—surpluses in some markets, regional income disparities within agriculture and monetary upheavals, and noted that a major part of agriculture expenditure results from the disposal of surpluses and the application of monetary compensatory amounts.

It put forward certain guidelines for future action which it asked the European Council to endorse. In fact, for lack of time, the meeting did not specifically discuss these guidelines and they were not endorsed: Indeed, no conclusions were reached on the Common Agriculture Policy. I understand that the President of the Commission subsequently expressed the view that on the basis of the discussion that had occurred, he felt the Commission was free to put forward proposals based on the suggested guidelines in its proposals for the annual agricultural price-fixing package. If the Commission in fact follows this course, the proposals will have to be considered by the Agricultural Council where the Minister for Agriculture can be relied upon to point out the deficiencies in the Commission's analysis and to ensure that this country's interests are served by whatever decisions are eventually taken. The Commission paper will be fully considered at the next meeting of the European Council.

There was also a cursory discussion, at the very end of a protracted meeting, of fisheries policy in the light of attitudes at, and the outcome of, the last Fisheries Council. However, time did not permit of any progress and the subject goes back to the Fisheries Council for further attempts to resolve the differences that prevent agreed solutions. However, the European Council expressed the wish that there should be an early resolution of the matter.

The most important proposal discussed at the meeting was that for the creation in the Community of a zone of monetary stability by means of a European Monetary System. I have described the main outlines of this proposal in this House before. It may, however, be as well to outline again, now, the main features of the scheme.

The proposals envisage a system modelled closely on the present "Snake" arrangement but with an additional role for the European Currency Unit which is now referred to as ECU. The ECU will be a basket consisting, like the present European unit of account, of a specified amount of each of the Community currencies and the weights of the currencies in the basket will be subject to review. Each currency will have a central or starting point expressed in terms of the ECU. This central currency rate will be used to get an exchange rate against each other currency in the system.

Participating central banks will intervene in the foreign exchange markets in order to maintain the currencies within an agreed margin of fluctuation. The normal margin will be 2¼ per cent as in the present "Snake". However, during a transitional period, there will be an option of a wider margin of up to 6 per cent for currencies not in the "Snake".

When two currencies reach the fluctuation limit against each other, an obligation to intervene will apply to the two central banks concerned. Intervention will give rise to debit and credit balances which will have to be settled in due course by transfers of reserve assets between the central banks.

The system will be under-pinned by expanded credit facilities. The proposed new European Monetary Fund will not be set up for two years but, in the meantime, the expanded credit will be channelled through the existing Community short-term and medium-term schemes. It has been agreed that a total amount of 25 billion ECU, or £17 billion, should be available from the start of the new system.

Each central bank will deposit 20 per cent of its gold and 20 per cent of its dollar reserves. In return it will receive a supply of ECUs which may be used in settlements between central banks arising out of intervention operations. The deposits will be managed initially by the existing European Monetary Co-operation Fund. Other European countries with particularly close economic and financial ties with the Community may participate in the EMS intervention arrangements, but these would not have access to the Community credit facilities.

The aim of the system is to create within Europe a zone of monetary stability of the sort that exists in few countries in the world today. We saw great advantages in the proposal and have taken an active part in formulating the mechanisms and procedures through which it would work. Our attitude has been determined largely by the view that the scheme would advance the interests of the European Community and aid in its integration and cohesiveness. These consequences would flow, in a smoothly working system, from the practice among the Nine of working more closely together on monetary matters and from the benefits to trade and transnational investment which would follow from the elimination of the disruptions caused by frequent and illogical changes in currency parities brought about largely by speculation. There would be the further advantage, for us, that adherence to the system, and its disciplines, could reduce our rates of inflation to a level more closely approximating to that of the most successful economies in Europe.

However, we estimated that immediate and unconditional adherence to the system could cause problems for a number of reasons. The first is that within the system it would not be unlikely that, over time, the value of the Irish currency would be higher than it would have been outside the system. This would happen because the value would be fixed in relation to currencies whose values are likely to rise. With a sensible incomes policy and increases in productivity of which I know this nation is capable, we could offset this obstacle, given time.

The second problem arises from the comparatively under-developed state of the Irish economy and certain difficulties peculiar to it. We have the lowest gross domestic product per head in the European Community. The proportion of the population engaged in agriculture is over twice the Community average. With more than 50 per cent of the population under 25 years of age, we have one of the youngest populations in Europe. This has advantages and disadvantages.

Basically, in the present case, it means that the inflow of young persons to the labour force is approximately three times the average in the European Community, as a whole. This problem is aggravated by the fact that the level of unemployment here is among the highest in the Community. The inflow of young people can, therefore, accentuate the already serious difficulties in the labour market.

The third problem is that a fully developed monetary union—towards which the new system is tending—would increase the gravitational pull on investment and labour of the central areas of the Community, and thus make more serious the difficulties which distance from the centre creates for trade and industry here. This particular difficulty is increased greatly by the comparatively underdeveloped state of our social and productive infrastructure.

These difficulties would not be a decisive obstacle to our adherence to the system. We have the capacity as a nation to increase our competitiveness and productivity. We have a favourable attitude to investment and its benefits. Indeed, we have one of the highest investment ratios in the Community. By exercising foresight and restraint, we can provide jobs for our young people who are our greatest asset. And we can improve the efficiency of our roads, communications and other infrastructural facilities.

During my visits last month to the French President, the British Prime Minister and the German Chancellor I explained both our positive attitude to the monetary proposals and the difficulties which we anticipated in the transitional period should we decide to join the system. I said that in our view the Irish people were politically and psychologically willing to join with their partners in Europe in the creation of a zone of monetary stability but that the difficulties I have mentioned would preclude their joining unless there was a significant transfer of resources. The size of this transfer may, obviously, be the subject of debate and many different views can be taken.

I notice, for example, that the Leader of the main Opposition party in his contribution to the debate on this subject on 19 October 1978, put his price—for full monetary union—at five times the level the Government had been seeking. The Labour Party Leader said in this House on 30 November that we should accept what we were asking only if our European partners were to give it to us without conditions as to how it was to be spent, as between capital or current, or in any other way. We were simply to be given the money—and that was that.

I should like the House to consider the implications of these attitudes. We are asking the countries of the Community, who, powerful as they are, have, themselves, substantial problems of unemployment and economic restructuring, to forego the use of resources which they raise from taxation in their own countries, and to pay over these resources to us. In common sense, our case for this transfer must be well founded and responsible—as I believe it is. It should not be embroidered with fantasies or made look ridiculous by the addition of impossible conditions.

During my discussions with the French, British and German leaders I received a great deal of understanding and support. During the meeting in Brussels, each of the three leaders was at great pains again to emphasise his support and understanding of the Irish case. However, in the mechanisms and procedures of the Community that case became inseparably linked with other arguments and views, the net effect of which we are now discussing.

The debate in Brussels continued over the greater part of the two days and nights. It was concerned essentially with (1), the technical and monetary aspects of the new system; and (2), the measures necessary to aid the less prosperous countries. Almost the entire first day was occupied by the former, and the measures in respect of the less prosperous states were not touched on until late on the second day.

On both of these, a major issue was the extent to which the United Kingdom wished to participate in the new system. Essentially, they wished to be part of the management but not to take part in the exchange rate mechanism. The conclusions as they emerged will enable the United Kingdom to join the system if they wish.

On the monetary aspects, the first difficulty concerned the degree of obligation on a country to intervene in the money markets when the exchange rate of its currency is moving out of line with its central rate. The British wished for compulsory intervention. The Germans took the view that this could not be. In the event, the decision was that when a currency crossed its threshold of divergence there would be a presumption that the authorities concerned would correct this situation. If measures are not taken, on account of special circumstances, the reasons shall be given to the other authorities.

A second difficulty concerned the division of the reserve fund of 25 billion ECUs as between medium and short term credit for currency support. This was resolved by the division of the fund into 14 billion ECUs for short-term monetary support and 11 billion ECUs for medium-term support.

There are many other highly technical aspects of the system before the meeting. Important as these are —indeed, they are vital to the proper functioning of the system—I will not detain the House with a description of them here. The conclusions which emerged are adequately described in the document headed "Resolution of the European Council of 5th December, 1978, on the establishment of the European Monetary System (EMS) and Related Matters", which I have included among the papers I am laying before the House.

The major issue in so far as we were concerned was the question of resource transfers which is dealt with in Part B of that document. Our position, for the reasons I have outlined, was that to participate successfully in the scheme and to counteract its adverse effect in a transitional period, we would require a resource transfer of approximately £130 million a year over five years on the assumption that the United Kingdom was within the system.

This is a realistic figure. It results from as objective an appraisal as we could make of the effects of the system. I think that it is fair to say that during my discussions with the other leaders our case was, in the main, accepted, with some reservations as to the size and form of the resource transfers involved. This acceptance was confirmed and, indeed, reiterated many times during the Brussels meeting. However, because of the relationship with what would happen if the Irish case were met and something similar done for other countries, the total consequences of support to the degree that we were seeking went beyond what members of the Council felt they could recommend. In the event, the Council agreed that the European Investment Bank might make available for a period of five years loans of approximately £670 million a year to the less prosperous member states participating in the new system. These loans would be subsidised to the extent of 3 per cent a year, subject to a limitation of £670 million approximately on the total amount involved over the five-year period.

Any less prosperous member country participating in the mechanisms would have the right of access to these facilities. Member states not participating effectively and fully will not contribute to the financing of the scheme. The United Kingdom will obviously be in that position. Of the totals I have mentioned, Italy would be entitled to a maximum of two-thirds and Ireland, a maximum of one-third.

The details of the scheme are not included in the resolution. However, they would provide for a 15-year loan term, with a moratorium on principal repayments of three or five years. The present value of a 3 per cent interest subsidy, with a three-year moratorium on capital repayments is equivalent to approximately 20 per cent of the value of the loan—discounting at 9 per cent.

Under the scheme, therefore, Ireland could draw on loans of up to £225 million a year, approximately, from the European Investment Bank. If we did draw on these loans, they would be subsidised to the extent of approximately £45 million and this subsidy could be paid as a lump sum grant in the first year of the loan term. Thus, if Ireland availed of the offer to the full and borrowed up to the limit I have mentioned, it would benefit from a resource transfer of approximately £45 million a year—which is the grant equivalent of a loan of £225 million. This figure of £45 million a year for a period of five years corresponds to the estimate of £130 million a year which I mentioned as representing our estimate of the size of the resource transfer necessary to offset our entry into the scheme in the transitional years.

Because of the disparity, I told the council that I could not at that stage indicate to them that I would recommend joining the scheme but that I would consider the matter further in consultation with my Government, particularly to see whether there could be any further basis on which I could contemplate a positive response.

I said I would convey our decision in a short time. This process of consultation is continuing.

Dr. FitzGerald

Before coming to the main issue dealt with by the Taoiseach, there are two earlier points on which I wish to comment briefly. The first is a reference to the appointment of the "Three Wise Men" and their terms of reference. I must admit to some concern in this regard, concern which I found shared widely in Europe on occasions on which I have had contact with prominent political leaders in the EEC.

First, we had the Tindemans Report several years ago, attempting to do very much the same job. This report of the Belgian Prime Minister was discussed by Foreign Ministers and more vaguely by Heads of Government, but it ran into the sands. It is not clear what is the particular value of re-opening this matter now, but what is particularly a matter of concern is that the "Three Wise Men" have been appointed by the Heads of Government and not by the institutions of the Community. This would appear to constitute a further danger to these institutions in repeatedly intervening from outside the system because the Heads of Government are outside the system. This appointment was decided by way of an inter-governmental meeting. It was not a decision of the Community. For it to have been a decision of the Community there would have had to be a proposal from the Commission on which the Heads of Government could have acted, but that was not the case. It was a question of the imposition on the Community by the Heads of Government, acting inter-governmentally, of a procedure of review of its institutions, without consulting the institutions regarding their views, and without giving them the opportunity of suggesting how and by whom a review should be carried out.

The correct procedure that I would have expected our Government to follow would have been to propose that, if it were thought that a further review could be useful at this stage, the institutions should be asked to nominate someone, not necessarily one of their members, but somebody from outside such as from the Commission, the Court of Justice or the Parliament. That suggestion was made in some political circles with which I had contact and I regret that the European Council, instead of taking account of it, acted unilaterally and in a manner further to undermine the stature of the institutions of the Community to which this country has always attached importance, and rightly so in view of our relatively small size in the institutional structure.

The other matter which the Taoiseach raised in the earlier part of his speech was the question of salaries of members of the European Parliament. I have always thought that there would be disadvantages if the salaries paid in Ireland were to be at the level necessary to attract a German member of Parliament to joint the European Parliament. Such salaries which would have been of the order of £25,000 per year would have been so disproportionate to salaries here in the public sector, and indeed even in most parts of the private sctor, that they might have given a wrong impression and might have had an adverse effect on the degree of participation in the elections and in the confidence of people in the value and the seriousness of the elections.

At the same time, the task being undertaken by these Deputies is one of immense difficulty. It involves travelling, sometimes twice a week, for about 35 weeks in the year to places that are relatively inaccessible from here in terms of transport. This throws an enormous burden on the people concerned. It is an exhausting activity and to remunerate it at the rate proposed now seems to be going to the opposite extreme. I would have hoped—and this had been suggested in the papers—that an intermediate figure of a kind more appropriate to this country would have emerged, a figure which would have been close to if not at the level of the salary of a Minister here. This would seem to be appropriate given the status of the people concerned and the kind of work they must carry out.

One of the dangers of what is being done now is that not only is it likely that no one will stand in the election with any prospect of success who is not already a member of this or, perhaps, of the other House—perhaps that was likely anyway—but that at the time of the next general election Deputies of this House, who will have carried the burden for several years of the dual mandate, will not consider themselves able financially and in terms of family responsibilities to lay down the burden of that dual mandate and to remain members of the European Parliament only but will consider it necessary to stand again for election to this House and to carry on a relationship which in its present form is unsatisfactory because Members cannot serve both Parliaments adequately. If they are away for those very 35 weeks that the Dáil is meeting they cannot play an effective part in the life of the Dáil. All of us can accept that in the transition period—the first three years—this would happen. Indeed, it has happened up to this point. But the fixing of the salaries at the level proposed would appear to ensure that this situation would continue permanently and that there would be great difficulty instead of there being a move over towards a system in which members of the European Parliament would remain members of, but would not stand for, the Dáil in most or all cases.

Therefore, it is regrettable that there has been a move to the opposite extreme than was proposed originally. The Government should give some consideration to the question of making some arrangements nationally to modify the situation and, in order to prevent this salary arrangement being a blockage either to the entry into the European Parliament of anybody from outside or to anybody in this House leaving this House and remaining in the European Parliament to do a fulltime job. I will leave that thought with the Taoiseach. It is unfortunate that he was distracted by the much more immediate issue of the EMS thereby preventing adequate consideration at the European Council meeting of this salary question.

I turn now to the question of the European Monetary System. The Taoiseach's statement has gone only a small way to clarifying the appalling confusion created by the Government in relation to the EMS debate. Indeed, it has added further to the confusion because, apart from the Taoiseach contradicting himself between Brussels and Dublin and two of his Ministers contradicting him yesterday, he has now, at least in respect of one matter, contradicted them. I do not know at what point this situation will come to an end and the Government will agree on what it is they were offered. I had expected that by today they would have sorted themselves out and would have had one story to tell, but apparently we must wait further. This creates an impossible position for the House and for the country and it is of grave danger in a situation already fraught with uncertainty. It is adding unnecessarily to the confusion. The Government have a responsibility not to do that. Yesterday there was not one person—member of the Government, civil servant, banker, economist, doctor, businessman or man in the street—who was not totally confused as to what it was that the Government had turned down.

The source of confusion was initially the Taoiseach himself. All four morning papers had very experienced political correspondents accompanying the Taoiseach to Brussels and they reported what he had said, aided in the case of one paper by a local correspondent to whose expertise I can testify. All reported that the total package secured was £225 million in soft loans. The Irish Independent stated “the top offer was £225 million in low interest loans.”The Irish Press said that “the amount was reduced.... Ireland might end up with only £200 million in soft loans.”The Irish Times said that “The Taoiseach, Jack Lynch, is left with no option but to reject the £225 million package of aid.”The Cork Examiner stated that “the resource transfer offer amounted to only £225 million over five years in loans at subsidised interest rates.” It could not be clearer, and all four papers reported the same thing.

The Taoiseach would seem to have spelled out the annual sum involved in this package, which he clearly indicated to them was a package for the five-year period. He is quoted in the Irish Independent as saying “£45 million a year in loans too small.”The Irish Times reports him as saying, “The total of the transfer available represented around £45 million a year.”The Irish Press said that “the amount offered to Ireland was a mere £45 million a year in loans over the next five years.” It could not be clearer. All the papers got the message. It was a total package of loans of £225 million over five years which—and you can arrive at this by dividing by five—is £45 million in loans each year. That is what the Taoiseach told the Press on Monday night in Brussels. It is not credible that all these experienced correspondents got everything that was said wrong. They could not have done that if they had been told what happened with minimal clarity. That was the first story that came through and it was confirmed by officials in Dublin. The Financial Times yesterday reported from Dublin, “Irish officials were bitter tonight”—that was the night before last—“The £225 million resources transfer offer was derisory.” Whatever the Taoiseach said in Brussels he had conveyed to Dublin, and officials in Dublin gave the same story.

Incidentally, the accusation has been levelled by the Minister for Economic Planning and Development that the media have got it wrong throughout the whole period of negotiations and have got it wrong again now. This accusation is wearing increasingly thin. He had already produced this allegation against the journalist who, unknown to him, reported a meeting in Clontarf and was accused of reporting the Minister wrongly. Unfortunately for the Minister, on the day the Minister was trying to put it right the journalist gave a full account, based on his notes of what happened, and republished it in The Irish Press. I think nobody was in doubt about the authenticity of what he said and the credibility of the journalist.

Then we had the arrival of M. Chirac in Cork when the events of last Tuesday night were anticipated. After evident pressure from Fianna Fáil—embarrassed because their awkward ally said in Cork what he never tires of saying in France, namely that he is against the existence of the European Parliament and has accepted it reluctantly only because the Heads of Government have given it the green light and because he has no alternative, M. Chirac was then persuaded to accuse our corps of diplomatic correspondents of all getting it wrong.

That does not work. You cannot fool all the people all the time and you cannot get away with misleading the diplomatic correspondents and the political correspondents, all the time pretending it is all their fault. At some stage the credibility disappears. This Government have outrun their credibility in these matters. All of us can be mis-reported on occasion by a journalist. That is a hazard of politics and it is irritating when it happens. It is a quite different matter when a Prime Minister addresses a group of correspondents who are specialists in their field who unanimously take note of what he says, report it and are then told that they have got it wrong and that they have misled themselves and the public. In a democratic system that is unacceptable. The responsible press have a function to perform. Of course they make mistakes, but they do their job well and the specialist correspondents do it extremely well. Nobody is going to believe that in these circumstances they have all got it wrong on both occasions and only M. Chirac and the Taoiseach right.

When the Taoiseach arrived back in Dublin he was interviewed on radio. The interview was not broadcast until 6.30 p.m. last night. In that interview he reiterated that there were only soft loans, no grants. He said it several times. He went on to say that the amount available to us was 200 million units of account a year. That is £125 million approximately at the present value of the unit of account. That was what he said when he arrived in Dublin. It was growing. It started at £45 million a year in Brussels and in the course of this tiring two-and-a-half-hour flight it had grown to £125 million a year by the time the Taoiseach arrived in Dublin. It doubled overnight when the Minister for Economic Planning and Development got his hands on it. Lo and behold, at a lunchtime interview we were told that the amount per annum in the way of loans was now £225 million. The Minister went on then to explain what we had been offered. Perhaps I should quote the Minister, because we come now to a different story from that of the Taoiseach. The Minister said, "We were offered basically a package of soft loans. On the amounts put forward this would mean that Ireland could borrow about £225 million a year for each of five years." I shall come back to that "could" later. "There would be a strong subsidy element in the loan and that subsidy would be converted into a cash grant and paid to us each year. The amount of the cash grant that would be paid would be £45 million each year. Thirdly, we were offered "a five-year moratorium or time lag, if you like, before we would have to make any repayment of the amount which we would borrow, and of course that five-year holiday is also worth something. We have not put a precise value on it yet." Those are the three essential elements.

Let us note several points from this. First of all, we are told that this moratorium has a value which is going to be put on it. We have not yet been told how you put a value on a moratorium. I have consulted numerous experts on the matter who are unanimous that a moratorium of that kind does not have value and is not something on which you can put a value. If the Government think otherwise perhaps they would show the calculations by which they have arrived at a value which experts say you cannot put upon a moratorium. The Minister says it is worth something but he does not say how much. Note that he has first of all said that we could borrow £225 million a year, that we would be paid £45 million a year, and on top of that there was a moratorium which has not been quantified yet and which is therefore not included in the £45 million and is a five-year moratorium.

What is the Taoiseach's story this morning? It is different again. There is no possibility of him sticking to the same story in any to speeches. "The details of the scheme are not included in the resolutions: however, they would provide for a 15-year loan term with a moratorium on principal repayment of three or five years." Now we are going down. We moved up between Brussels and Dublin from £45 million a year to £125 million a year; next morning in Dublin it was £225 million a year in loans. At that same time we were at peak. We peaked at 1.30 p.m. yesterday. It was, not surprisingly, the Minister for Economic Planning and Development who did it; he did a bit of peaking at election time also and we were at a disadvantage subsequently. Yesterday at the peak when things were at their best it was £225 million with a five-year moratorium. Now it is evaporating before our eyes. It has gone down now to three or five years in the Taoiseach's speech. Who is telling the truth? What is the moratorium? What are the terms? Can anybody is this House in the opposite benches know which it is? Whom do you believe, the Taoiseach or the Minister?

Minister for Foreign Affairs (Mr. O'Kennedy)

: There is no conflict between them.

Dr. FitzGerald

Is there no conflict between saying firmly that we were offered a five-year moratorium, a five year holiday, and saying three or five years?

The Tánaiste

The Deputy has just said it has no value.

Dr. FitzGerald

I am coming to that. There is no need to remind me. Which is it? It has not got a financial value, I have been told. I am not saying that; that is the advice I have. I would like to be told how it has a value. The calculation is complex, but before we start trying to put a value on it, before we start examining how the Government have valued it, could we be told which it is? Is it five years or three to five years? How are we to know? What is the point of having a debate if they get up and contradict each other until at the end of it we are no wiser than before?

Mr. O'Kennedy

We are not having a debate, we are having a statement.

Dr. FitzGerald

What is the point of having a statement from the Taoiseach if at the end of it we are no wiser and do not know whether to believe him or the Minister? It did seem yesterday that the Minister knew better than the Taoiseach. The Minister and the Minister for Finance convinced a lot of people yesterday that the Taoiseach was quite wrong the night before and that they knew better, that they had the facts and that the Taoiseach really did not know much about what the whole thing was about. That certainly was the impression in Dublin yesterday as far as everybody in the streets and the fields of Ireland was concerned. This morning perhaps the Taoiseach did not like that or perhaps he thought it was time for him to establish that he knew more than them. So this morning he comes in and contradicts the Minister.

First of all he makes it clear that the moratorium value as alleged to exist, which has not been explained to us, is included in the £45 million. but the Minister said it was extra. He said it had not been quantified yet; it was on top of the £45 million. The Taoiseach says it is inclusive. The Minister says it is for five years. The Taoiseach says it is for three to five years. Where are we left with this? What is the point of having a statement of this kind if we are not to be given an authoritative and clear statement of what the position is?

The Taoiseach went on to make the following statement, which I am sure is not totally clear to everybody in this House: that the present value of a 3 per cent interest subsidy with a three year moratorium on capital repayments included, as we note from the calculations, is equivalent to approximately 20 per cent of the value of the loan discounting at 9 per cent. Now, hands up, those who understand it. Hands up. Does anybody understand it? I think one hand may go up and that is the hand of the man who probably drafted it, the Minister for Economic Planning and Development.

An Leas-Cheann Comhairle

The Deputy should continue his statement and he should not invite Deputies to participate in it. We are making statements here and it should be a statement and nothing else.

Dr. FitzGerald

I am sorry, a Leas-Cheann Comhairle. There is a difficulty. When we are faced with these flat contradictions I think I am entitled to inquire as to who is telling us the truth about it and what are the facts. I would like the House to be given the details of how the £45 million is calculated, because that phrase I have just read out is not comprehensible to anybody, including myself. It may be a defect on my part. Perhaps my education did not extend to this type of figuring. I do not understand it. I do not understand how the value put on the moratorium is calculated. I am willing to be convinced. I am always willing to learn. If it can be shown it can be done, let it be done. I asked five experts yesterday and they said that there was not any value. I told them I thought they may be wrong. The Government would hardly say it has a value if it has not. I am not saying there is no value but I am saying that I have not found anybody yet who says it has a value. Tell us what the value is and explain how a 3 per cent interest subsidy on £225 million a year accumulating over five years is turned into £45 million. Because, indeed, if it is just taken straight—but obviously it is much more complex than that—in the first year 3 per cent on the first £225 million is £6.75 million. In the second year it is £13.5 million because we have two £225 millions and so on upwards, the figure in the last year being £34 million.

How one adds together five figures from £6.75 million up to £34 million, divide it by five and arrives at £45 million is a mystery. It is a mystery to which there is probably an answer. I am not saying there is not an answer. I am saying that, on the face of it, the man in the street is a bit puzzled and is scratching his head as to where the rest of the money comes from. To him it works out at £22 million. We are told it is £45 million. Just show us the calculations, because I do think it is serious when we have issues like the stock markets involved attempting to assess what this might mean in case the Government might decide finally, as the Minister for Finance and the Minister for Economic Planning and Development said yesterday, to go in, although the Taoiseach last night told the press to the contrary, and worried that they have said more than they should have said with all the confusion during yesterday.

People might believe the Ministers for Finance and for Economic Planning and Development at this stage. They might believe them when they say that it is not so bad that we might not go in on these terms. People want to know what are the terms. We are entitled in this House, the public are entitled and the various financial experts are entitled to be told how the £45 million is arrived at. Would the Taoiseach put in the Library of the House at once the calculations by which that is arrived at in terms comprehensible to those of us who can manage simple arithmetic but without algebra so that we can examine it this afternoon and see how the figures are arrived at? We are entitled to that. I am not contesting that it is correct. It seems to me so incredible that the Government would get that wrong as well as everything else that I am taking it on faith, but it is not clear to me how it is arrived at.

Moreover, it is not clear to me from the statement that was made in Brussels on this subject that the interpretation we get for the £45 million each year given by the Minister for Economic Planning and Development is correct. The statement is in the Council's official resolution and the relevant part is as follows: "The European Council requests the Commission to submit a proposal to provide interest rate subsidies of 3 per cent for these loans. The total cost of this measure divided into annual tranches of £134 million each over a period of five years shall not exceed £670 million." It goes on to say that we get one-third of that, so that for us the total cost for Irish purposes of this measure, divided into annual tranches of £45 million each over a period of five years, shall not exceed £223 million. That does not say that there will be a payment each year of that amount because, in fact, the basis of the statement is that loans of "up to" £1,000 million European units of account per year will be given. The Taoiseach in his speech says the European Investment Bank might make available for a period of five years loans of "up to" approximately £670 million a year. First of all, there is no guarantee that

First of all, there is no guarantee that the full amount will be provided and, secondly, while there is a reference to the annual tranches, the reference would appear to be to a maximum that it cannot exceed in any year—in our case £45 million—and the total in our case cannot exceed £223 million.

If that is the case how are we sure that in the first year we will get £45 million and not £6.75 million, which is the interest subsidy due on the first tranche of the loan? Certainly it is not clear from the statement issued by the Council; and as already the Taoiseach has contradicted most of what the Minister for Economic Planning and Development said, we cannot take as gospel from him that in fact we do get £45 million each year. Perhaps he has got that wrong too, as everything else has been got wrong by one or other Member of the Government.

Could I ask how the wording of the Council resolution is interpreted? To me, in a year when we have borrowed £225 million and with the interest subsidy at 3 per cent it is £6.75 million. How do we get £45 million back in that year? An alternative interpretation that seems to me to make more sense is that these are maxima—everything is "up to" a certain figure—and that we will get each year the possibility of borrowing £225 million, which we could borrow anyway from the European Community in some form, and that there will be an interest subsidy of 3 per cent which in no year shall exceed £45 million and which in total shall not exceed £223 million.

That seems to be what the words means. If there is a private guarantee that they mean more than that, and that in a year when the interest subsidy is £6.75 million we are, nevertheless, given £45 million with which to pay it, would the Taoiseach put in the Library of the House the document that says that, because the Council's resolution does not say it? If it is a private understanding that the meaning of the Council's statement is that each year we get £45 million even when there is only a £6.75 million interest subsidy, will the Taoiseach put in the Library of the House immediately the document in which they have got that private guarantee or offer which he then turned down? It is not clear from what is here. Unfortunately, we cannot take this as gospel from the Minister for Economic Planning and Development because he has already been contradicted by the Taoiseach both on the inclusion of the value of the so-called moratorium in the £45 million and on there being a five year moratorium guaranteed at all. So if two of the three points in the Minister's statement have already been contradicted by the Taoiseach, I think we need verification of the third. That verification is not even given by the Taoiseach himself. His speech does not seem to me to make this statement. What he says is that if we did draw these loans they would be subsidised to the extent of approximately £45 million and this subsidy could be paid as a lump sum grant in the first year of the loan term. It is not clear that that means that the £45 million is paid from the start. I will not dwell any further on it but I would like the document, in which this guarantee is set out, placed in the Library of the House.

Minister for Economic Planning and Development (Professor O'Donoghue)

If it was only an annual subsidy of 3 per cent why would the Council want to write in such a large tranche of interest?

Dr. FitzGerald

That is exactly what I want to know and I want the document that sets out that we get £45 million each year. I am not clear that that is what people think in Brussels. We want to be clear that at this point the European Commission, the Council secretariat and the Government, when they finally reach agreement among themselves, are talking about the same thing. Perhaps they are, but nobody can know anything at this stage in view of the confusion they have created.

It is difficult to see how a situation could arise in which four quite different sets of information have been given, by the Taoiseach on three occasions and in between times by two of his Ministers. There was either a deliberate and dishonest attempt to play down the amount secured in the hope that the grossly inadequate terms actually offered would seem more attractive when they emerged the following day, an attempt which misfired because they played down the terms so much that they produced headlines such as: "Aid sell out", "We were conned", "Giscard halts Irish gallop"—a deliberate ploy to create a situation in which people would after lunchtime yesterday here the Minister for Economic Planning and Development on radio say, "Good Heavens, it was better than we thought". If it was not an attempt to achieve a psychological effect, which misfired, the only other explanation seems to be that the Taoiseach so misunderstood the terms he was offered that he misled himself and the press who were with him. The result in any event was humiliating for Ireland. We are the laughing stock of other countries. The Government do not seem to know what was offered before turning it down. We could hardly be in a worse bargaining position in which to recover credibility and to seek to secure better terms even at this late stage, as I believe was not inconceivable until this mess was made of it, in view of the German and French anxiety for our participation in the system.

We ought to look further at the terms as they are now told to us, whether or not they stand up to inspection and checking in Brussels. There are a number of facts we have to get clear. The fact of our getting the loan as such has no importance. It just means that of our total borrowing during the next five years, which even if reduced to 8 per cent of GNP by 1980 as the Government have promised, would still be well in excess of £600 million in 1980 money terms. Of this borrowing, which will not fall below £600 million in that period, £225 million will be available from the Community rather than from some other source. We are talking of a straight substitution of one kind of borrowing for another. It is not even a substitution because we have already had a Community loan. It is no different from any Community loan in the ordinary way or a loan from anywhere else. It does not help us to get the loan. Our problem is that our borrowing is too high and, as the Government have agreed, has to be reduced to 10½ per cent next year and 8 per cent the following year, that is, the total borrowing, including whatever borrowing we get here. It is irrelevant whether it is borrowed from Europe or elsewhere. It is simply choosing to borrow from Europe because they are willing to give us some advantage in connection with the loan but it adds nothing to what is available to us to be able to borrow this money.

Secondly, the moratorium or delay in payment has no value. I am not arguing as to whether or not one can put a financial value on it. I am told one cannot; the Government say one can, but there will be a document in the Dáil Library explaning it all to us after this debate. I am saying that the delay in repayment has no value in connection with the loan for a different reason. We get moratoria on virtually all our loans. If we examine Table 8 in the Central Bank Autumn Bulletin we will discover that the following loans have moratoria of up to ten years in some cases. The table does not go beyond nine years so I cannot establish from it exactly how long some of the moratoria are. Let me mention them. There was the Ireland 7½ per cent stock, Ireland 9¾ per cent stock, 7 per cent sterling DM bonds, Ireland 6½ per cent Notes, 9 per cent Algemene Bank Nederland, Ireland 9½ per cent, Belgian Franc loan, 9 per cent Kuwaiti Dinar Notes, UAE Dirham Bonds, 10¼ per cent Dutch Guilder, 9¼ per cent DM Private Placement, Ireland 9½ per cent Dollar Notes, Ireland 8¼ per cent DM Bonds, EEC loan, 8½ per cent DM Bonds, 7½ per cent Swiss Francs, 6? per cent Swiss Francs and Ireland Japanese Yen. Those are loans in recent times with moratoria. The moratoria average 6½ years. They range in two cases to over nine years. I do not know how much over nine years because the table does not go beyond that. None of them are less than three years. The typical figure is 7 years and the average figure is 6½ years.

The question is not whether the Government were very clever to get a moratorium but why it is only three or five years, when on the ordinary loans they are borrowing the moratorium is in fact up to twice that. I want to know why the moratorium is so short. As far as I can see all loans have moratoria at the present time. I do not want to over-state anything. I may have missed one but certainly I have given a sufficiently long list of loans, all of which are current and have moratoria of an average of 6½ years. Why did the Government accept a moratorium much shorter than the moratoria they get on their other loans? Were they forced to accept a shorter moratorium because they were getting an interest subsidy? I am glad to have trapped the Minister for Finance into this. If the Government are claiming that there is a financial value on the moratorium I take it that it is less for three years or five years than for seven years. We have lost something in accepting this moratorium. By not getting the 6½ to 7 year typical figure the financial benefit which the Minister for Finance has just claimed exists was reduced. How much have we lost by that to off-set against the £45 million? I would like an answer to that question.

Mr. Colley

There is no limit to the extent the Deputy will misquote me.

Dr. FitzGerald

I would like the document put in the Dáil Library to indicate how much of the value of the so-called £45 million consists of the moratorium, how it is calculated and what would have been the value if we had got a 6½ to 7 year moratorium, as the Government normally get on their loans, so that we will know how much the Government have lost by accepting a three to five year moratorium. That information should be given to the House and to the country as well.

The only relevant figure for us now is this alleged £45 million cash grant. What is the basis for this? How is it arrived at? Is it the case, as The Irish Press have reported this morning, that the European Commission have yet to produce a scheme, so that there is no proposal because obviously there cannot be a proposal for transfer of funds and there cannot be a transfer of funds until and unless the European Commission produce a proposal? Then the Governments can decide what they like but when it comes to an actual decision to transfer their money it has to be done through a procedure proposed by the Commission, Parliament consulted and a decision by the Council of Ministers.

Is there a Commission proposal or are we talking in the air about something that has not even been written down yet? The Irish Press suggests that there is no Commission proposal. The Taoiseach did not tell us that. The House is entitled to know that. I was warned both before the European Council meeting and since that this was very likely to turn out to be the case. I was sceptical about it but I was warned about it. Is it the case that to benefit from this we would need to submit proposals to the European Investment Bank for infrastructural projects? Is that how the money is to come or is it through another mechanism such as the Ortoli Facility? The Irish Press story today is that what is involved is that we can now borrow up to £225 million a year from the European Investment Bank. The European Investment Bank, first of all, provide money only for infrastructural projects. They will not provide money for industrial projects that might affect competition.

The aid we need is for industry. In order to survive the early strains of membership we need help for our vulnerable industries. I need not dwell on that because I raised it in the House last week. Is it the case that the money must come from the European Investment Bank, must be for infrastructural projects and cannot be used to help industry? Why did not the Taoiseach tell us about that? Is that part of the terms? If that is the case, how do we propose to submit projects which overnight will be over four times greater than the maximum we have ever been able to submit with success to the European Investment Bank? The maximum we have ever received from that bank is £52.1 million. The bank do not lend money for any old thing, they lend it if a project is submitted. We in Government and this Government have been submitting projects to the European Investment Bank in an effort to get money from them.

The money available to them is adequate because I remember discussing when I was a member of the Government whether there would be a need to expand the resources of the bank in order to cope with additional demands from outside the Community as well as inside it. We were told that the situation was all right, that they could accept certain additional obligations in respect of certain outside countries without the bank's resources having to be increased. The money was there. As far as I am aware there has never been any constraint on the total amount available, yet we have never succeeded in submitting projects for more than £52.1 million in one year. How do we expect next year to find projects and submit them which overnight will attract £225 million? Is it a necessary pre-condition of gaining this loan what we must have these projects accepted? Is this story in The Irish Press correct? Why did the Taoiseach not tell us the method by which this money was to come? He told us virtually nothing about this, except to contradict his Minister on a couple of points.

Is it clear that this sum would remain guaranteed with enlargement? With other demands in the future on the European Investment Bank because of enlargement, is it guaranteed that this sum would take priority or would it be squeezed in those circumstances?

The Council's official resolution as published in The Irish Times today states that the sum available to Italy and ourselves is up to £700 million a year and we would get one-third. It is a maximum, not a guaranteed figure as suggested by the Minister for Economic Planning and Development. What we have had here is totally unsatisfactory in what was said. As I said last week, there is no provision for replies. The whole problem at present is that we need answers to questions.

I had expected the Taoiseach this morning, even in his own interest, to clarify all these outstanding matters in explicit terms so that the House, the country, the financial sector, the industrial sector, farmers, trade unionists and others would be in a position to know what it is we were offered, where we stand and what it is the Government are now seeking to have topped up by a further offer. We do not know that. The Taoiseach did not really do credit to himself and certainly did not do credit to the House by not explaining these facts. We are not now talking of the negotiating position. I am not asking him to say what measures he proposes to take in order to try to negotiate a better deal. I suggest that that is what he should be doing. At this stage we want to know what he was offered. That is a matter of historical record.

The fact that four contradictory accounts have been given—three by the Taoiseach and one by two of his Ministers—has left everybody in a state of complete confusion. I believed that confusion would be cleared up this morning. I thought the Government had made a mess of it up to that point but that their own sense of self-preservation would make them clear up that confusion, explain how the confusion arose, state clearly what the present position is and the exact method of calculation of the sum involved so that we could have confidence in the figures, which do not tally with what is in the Council's resolution as reported in The Irish Times. I had expected the Taoiseach to say where the money would come from, whether from the European Investment Bank or by a supplementary estimate, so that we would be able to judge how it might be used. I had expected him to say what constraints there would be on the use of the money. These are the facts we need in order to assess what the Government turned down, without ever discussing what the Government should now look for. I would ask the Taoiseach to remedy the gross inadequacy of the statement by putting all that information on record in the Dáil Library at once, so that we and the media can at last be enlightened as to what happened two days ago.

I believe the way this has been mishandled is damaging—I hope not fatally—to the chances of renegotiation. The evidence that the Government did not understand what they were offered is not the best position from which to start in going back to look for more. Our message at this stage is to sort out the mess and publish the facts fully as to what was offered in terms people can understand and believe, which is not the case so far. The Government must decide among themselves what they have achieved and when they have agreed on that they should tell us. They should then attempt to obtain a better deal.

There have been some reports from Paris of the possibility of second thoughts. It is in the light of that situation and in the light of the fact that it is not in the interest of France that Ireland and Italy should be outside and that the President of France may, under the pressure of the moment, have miscalculated his own country's interest and the interest of Europe that I believe the Government should seek to renegotiate. I urge them to do so. I would hope that any renegotiation in the next few days would be on a Community basis. Any extra provision will need to be very large even to reach the figure which the Government thought necessary if Britain joined—it would need to be treble the present £45 million cash grant. The renegotiation should be pressed quickly. It is a good moment in that there may be second thoughts in France. There is certainly deep regret in Germany. It is obvious that the German Chancellor is very disappointed at what has happened. He was willing to go further.

According to some newspapers, including French newspapers, the obstacle would appear to be the Taoiseach's allies, the Gaullists. The more I see of that alliance the more damaging to the national interest it seems. They are the one party in Europe whose interests totally diverge from ours. Any time we try to achieve anything for this country, whether it is keeping hold of fish for our own fishermen off our coasts or whether it is in an area like this involving additional transfers from the Regional Fund, who sabotage it? The Gaullists sabotage it with their pressure on the French President. I do not blame him. He is under great pressure. He has a minority in Parliament and depends on the support of the Gaullists vis-à-vis the Communist and the Socialist opposition. He is not completely free and is not to be blamed if he gives in to these pressures. What is the value of the alliance with the Gaullists if the Taoiseach cannot prevent them at every stage from sabotaging Irish interests?

Surely the whole purpose of an alliance with any party is to be able to ensure that whatever they do they do not work against our interests, that they try to accommodate our interests and that whatever proposals they put forward take full account of our interests. That is the case in relation to our alliance with the Christian Democrats and the Labour Party alliance with the Social Democrats. It works, When matters come up in the European Parliament the small delegations we have can persuade our colleagues that by doing something a little differently they will be no worse off and will avoid hurting us. That is the purpose of the system in the European Parliament. Why belong to a party who never listen to Irish interests, who ruthlessly sabotage Irish interests and at this stage a vital Irish interest? I trust the Taoiseach will draw the consequences and will disalign himself from that group.

Mr. Colley

The Deputy has missed the whole point of what happened at the meeting.

Mr. E. Collins

We do not even know.

Dr. FitzGerald

This is not a three-card trick; it is now a four-card trick. I have not been dogmatic as to what the Government have achieved. I have pointed out the incompatibilities in the different stories given, right up to the speeches this morning. I have asked the Government to clarify it, write it down in simple English and simple arithmetic and put it in the Dáil Library. It is a reasonable request and if that is done perhaps the Irish people will find out what it is the Government have turned down.

I suspect, and it seems to me, that the Taoiseach was right to turn it down. I am not arguing that the Taoiseach should have accepted it. It seems that what was offered was grossly inadequate. What I find puzzling is why it was so inadequate. We must recall what the Taoiseach said to us this day week in the Dáil. The Taoiseach said at column 413 of the Official Report of 30 November 1978 that the French President had:

... recognised the merits of our case for assistance.

At column 414 of the same report the Taoiseach said that after his German visit he was

... greatly encouraged by the Chancellor's very positive response.

which indicated that he would be prepared to support transfers to Ireland in the fullest possible degree. The Taoiseach also said on that occasion at column 413 that the British Prime Minister

... showed the utmost goodwill and understanding of our position.

The Taoiseach came away full of optimism, conveyed that optimism to the Irish people, and he went off to a meeting where two of the three people concerned do not seem to have been much bothered about the Irish position. The German Chancellor would appear to have done what he could in the circumstances. The Taoiseach seems to have derived a wrong impression, or at any rate to have conveyed to the public and the press a wrong impression, of what was said to him by the French President and the British Prime Minister. I had expected that in his own interests the Taoiseach would have today told us what they said—if they gave him grounds for believing that a package of the order of magnitude we were looking for was possible, but that, as the Press reports, fed by the Government spokesman, said, it might not come wholly in the form of grants, it might be partly in some soft loans and partly in some grants through the regional fund. If the Taoiseach got that impression from these discussions, in fairness to himself he should convey that to the House. The people are wondering whether he was conned by certain gentlemen or whether he misled himself or whether he was not misled but gave a wrong impression to the papers. The Taoiseach should clarify that so that some of the doubts that surround the results of this discussion can be resolved. It is not good for a country that its head of Government should leave himself in a position where perhaps he was misled and does not make that clear. I hope that the Taoiseach will clear himself of any imputations in this area, that he got it wrong, which may be incorrect. I hope that the Taoiseach was misled, that he did not get it incorrect or mislead the Press.

I would like the Taoiseach to tell us about his discussions with the British Prime Minister and about what happened at the European Council. The Taoiseach said that the British Prime Minister said he would show the utmost goodwill and understanding of our position. I have my interpretation of that and of the press reports which enlarged on that, that Britain would not stand in our way. From knowing the way the system of negotiation works I was aware that it was an absolutely fixed principle of French policy that there could be not transfer through the regional fund to Britain if France did not also benefit. Having fought that battle over a period of 18 months from the time we came into Government until it was finally settled at the end of 1974 it was quite evident to me that the pressure of the Gaullists, the Taoiseach's allies, on the French President is such that he is not free to allow Britain to benefit from the regional fund unless France will benefit. The final arrangement that Britain got was 26 per cent and France got about 16 per cent. France had to get substantially more than half of what Britain got or would not agree to the fund. That was a crucial characteristic of the regional fund, the French unwillingness to let Britain benefit if France did not benefit. That being the case—obviously there could be no question of France benefiting from the regional fund for the purpose of EMS—I took it that if the British said they would not stand in our way they meant that they would not seek money from the regional fund and that therefore the regional fund would be left clear for Ireland and Italy. There have been Press reports since that at the Brussels meeting the British Prime Minister sought transfers from the regional fund, and it has been suggested that it was this that sparked off the hostile reaction of the French President which contributed to the debacle of the meeting. Will the Taoiseach enlighten us on this? Was the Taoiseach misled by the British Prime Minister? Did he, as I did, take it that the British would not seek transfers, the very act of doing which would spark off an immediate French veto? Was that the impression the Taoiseach had from the British Prime Minister? Did the British Prime Minister then at the meeting introduce that, knowing that in doing so he would spark off a French veto and bring the destruction of the system? I am merely speculating on the basis of limited bits of information available. I may be incorrect but the Taoiseach, from his point of view, should clear his record in the matter if he was misled by the British Prime Minister or if he was misled with regard to the recognition of the merits of our case for assistance by the French President.

What remains to be done at this stage is for the Government, despite the damage they have done by the appalling confusion they have created, to endeavour to recover from that and pull themselves together and go back to negotiations and try to use the continuing German goodwill and perhaps French second thoughts about the action of their President which has made the france the vulnerable currency in the EMS. The Taoiseach should use those points as leverage to extract from the members of the Community in the EMS on a bilateral or multilateral but non-Community basis the additional transfers that would make it possible for us to enter the system and not leave us in the position where our efforts to join it have failed not merely disastrously but in such confused circumstances as to leave a very bad taste in everybody's mouth.

Mr. Cluskey

As far as the EMS is concerned we have had one initial debate and two statements in the House by the Taoiseach, and at the end of that exercise people are more confused than they were before the Taoiseach first mentioned anything about EMS. The people are left to try and sort out which of the four versions that we have had from Fianna Fáil spokesmen, from the Taoiseach down, is the actual offer made with regard to our entry to the EMS. The press have been used shamefully in order to give the people a feeling of wellbeing and confidence in the Government's handling of our negotiations in the EMS.

One of the things that emerged early yesterday morning inside and outside the House was the frantic search by Fianna Fail for a scapegoat on which to blame the total mishandling of these negotiations. First the press were blamed by the Minister for Economic Planning and Development. That Minister has had quite a lot of experience in that area recently. The Minister blamed them at Clontarf and other members of the Fianna Fáil Government did so in Cork in relation to Mr. Chirac's visit here. The Minister also blamed the press, on the radio.

The Minister for Finance, in the absence of the Taoiseach, said yesterday on the Order of Business that the Labour Party and the Fine Gael Party were to blame. The reason he blamed the Labour Party in the House yesterday morning was because we had sought as one of the conditions of entry a genuine transfer of resources to the tune of £650 million, as if we had mentioned the figure of £650 million. We did mention it; we said we thought it was inadequate. But, seeing that the Government considered it adequate, we went along with it. We said that it would be impossible for us to enter short of that figure by way of grant and short of the other conditions which the Labour Party, in the interests of the people, laid down as their conditions for support of our entry.

There is a total sense of dismay. The people have been stunned by the Government's mishandling of the negotiations. The consequences for us could be severe. I do not believe that nothing happened at the summit. I think there were serious developments at the summit and that we are far worse off now than we were on Monday before the Taoiseach went to the summit meeting. One could quote extensively from statements by the Taoiseach and by the various Ministers—contradictory statements—but that has been done reasonably adequately by the previous speaker, the Leader of the Fine Gael Party. However, there are other quotations that could be used to give us an insight into the amateur way in which the negotiations were conducted from the beginning by the Government. The initial mistake was made at Bremen where we gave an enthusiastic reception to the proposed European Monetary System. When we were cautioned and when the British Prime Minister asked the Taoiseach during a side conference at that meeting to exercise some caution and to give consideration to other ways of achieving the same ends which would ensure safeguards for the weaker economies, the Taoiseach apparently dismissed him out-of-hand in what he might have regarded as a display of nationalism and a break with the ancient enemy.

The Taoiseach

Would the Deputy give whatever reference he has to this alleged aside?

Mr. Cluskey

I will give as much reference to what I am saying as the Taoiseach has given to the House and to the country since the debate started.

Mr. Colley

In other words, the Deputy is, as usual, making it up.

Mr. Cluskey

If what I am saying is untrue, the Taoiseach is at liberty to say so; but he is not saying that because it is true.

The Taoiseach

In that event, would the Deputy tell me how it is true? I have no evidence from the Deputy of his allegation.

Mr. Cluskey

The Taoiseach participated in the discussion.

An Leas-Cheann Comhairle

If the Taoiseach says that something did not happen his word must be accepted.

(Interruptions.)

An Leas-Cheann Comhairle

Deputy Cluskey to continue.

Mr. Cluskey

I invited the Taoiseach to say that it did not happen, if it did not happen, but the Taoiseach has not said so.

The Taoiseach

I have never turned down any suggestions from anybody that would assist Ireland in its membership of the EEC and in its progress.

An Leas-Cheann Comhairle

Deputy Cluskey to continue.

Mr. Cluskey

I am endeavouring to do so. The Taoiseach interrupted me.

An Leas-Cheann Comhairle

My understanding is that questions should not be asked during statements and that there should not be any interruptions.

Mr. Cluskey

In the absence of an unequivocal denial by the Taoiseach, I am entitled to accept that it did take place. The consequences for us of that out-of-hand dismissal to even examine, or allow to be examined, other ways of achieving monetary stability within Europe could be costly to our interests and our future development. The Taoiseach, again, gave an equivocal answer to whether or not this discussion between himself and the British Prime Minister had taken place. He is engaging in what has come to be known as "Lynch speak". We have all examined the document presented to the House last week by the Taoiseach and we have all read the accounts given in that document of his meetings with the various Heads of State. We were told that there was a tremendous amount of goodwill from the President of France and from the Chancellor of Germany. We were told that the Taoiseach came away from the meeting firmly convinced that that goodwill would be translated into transfers of resources; that that verbal goodwill would be translated into hard action and support for a transfer of resources on our entry into the EMS. We have seen what happened. The Taoiseach was a victim of the more sophisticated continental version of "Lynch speak". Unfortunately, he fell for it and we have seen the disastrous results.

We would have to go back a bit to see just how amateuirsh our negotiations were. The Taoiseach engaged in a series of visits to Heads of State. He put Ireland's case for a transfer of resources and he received assurances from the Heads of State that they had great understanding of, and sympathy for our position. But a firm commitment was not given by them at any time that their expressions of sympathy and understanding would be translated into actual support when the time came to discuss hard cash by way of transfers. One of the questions that we should ask, and which should be answered, related to the preparation that went before the series of visits and before the discussions took place. One of the many contradictory things that emerged from press reports of the summit meeting was that, when the proposal that might have given Ireland some transfer of resources by way of grant was mooted, the Italians, as they were entitled to do, said "Yes, we agree, but we must get the same in proportion to our circumstances", which would have meant extensively more in real cash terms. In the series of visits which he made, the Taoiseach did not seek to meet Mr. Andreotti, the Italian representative at these talks. During an RTE interview with John McAllese in Brussels after the meeting it dawned on the Taoiseach that such a meeting might have been a necessary exercise, indeed not only necessary but crucial to the outcome of the talks. I will quote from the interview:

John McAllese: Was there a misunderstanding between you and Chancellor Schmidt or—

The Taoiseach interrupted him here:

The Taoiseach: No. I still believe that there is the utmost goodwill towards us. There was certainly a very great degree of understanding of our position, and that was expressed by Chancellor Schmidt during the course of the Council meeting today. But unfortunately there were other members who were regarded as the less prosperous countries and they did, of course, expect that they proportionately would get what we would get. So I think that was an inhibiting factor.

It suddenly dawned on the Taoiseach, after the meeting, after the total failure and humiliation of the Government and the country, that one of the most important elements in these negotiations was to ensure that we would have the support of or at least an understanding with other countries in a similar position, that Ireland could not be made a special case and that if the EEC were to be used to channel money to Ireland, other countries in a similar economic position automatically would have access to similar resources. This was not done, and it is one of the most serious aspects of the Government's preparation for these discussions.

It is difficult to know precisely what was offered at the summit meeting—it is impossible to get information on the conditions that were attached to the offer that was made. From the information we have we can estimate what the result would be in terms of cash to this country. It did not involve transfer of resources from the richer part of the Community to us. Indeed if you examine it objectively, the reverse is the case—a loan, repayable, on which interest would be charged. Under the offer that we now understand to have been made to us, we would have to pay substantially for the privilege of enjoying the EMS.

One feels somewhat inhibited in this debate—one must try to be careful about what one will say—because we understand from the Taoiseach that we are still in what could be described as a negotiating position. I honestly believe that if we fail to get acceptable entry terms, having picked on the Press and having tried to pick on the Opposition, the Government would try to make the charge that things said in this House to-day had undermined their position in regard to these negotiations. However, there are things that can be said which by no stretch of the imagination could fall into the category of an undermining of any negotiations that may still take place. One can only hope that any such negotiations will be more successful than those that have taken place so far.

The Taoiseach in his voyage to Europe for the EMS summit was somewhat like Columbus on his voyage to America. The Taoiseach set off, he did not know where he was going, when he got there he did not know where he was and when he came back he did not know where he had been. The only thing one can be definite about is that he did it all on borrowed money. That is quite definite as far as the offer is concerned.

The only thing we have been offered is the facility, which we could have had anyway, to borrow substantial sums of money. In regard to the EMS offer, I cannot understand the Government, who have declared repeatedly that one of the most serious defects in our approach to our economy has been the extent of our foreign borrowing, and who declared that 13 per cent of GNP as foreign borrowing is exclussive and extremely damaging to our future progress and that therefore they intended to cut back substantially on that percentage of foreign borrowing. If we are to take the figure that has been mentioned by way of borrowing, apparently we could get £1,125 million over a period of five years. For that we would be subsidised to the extent of 3 per cent of the 9 per cent of chargeable interest, leaving us with a net 6 per cent interest payable.

That means that in the first year we would get £225 million and a subsidy of £45 million, making a total income to us in the first year of £270 million. The rate of interest we would pay on that in the first year would be £20 million, leaving a net income to us of £250 million. After a five-year period we would have got all the money and all the interest subsidy, leaving us liable to pay, by way of interest, £100 million a year. How can the Taoiseach or the Government even suggest that an offer entailing such repayments could be described as a transfer of resources or that it would in any way cushion us against entry? During the transitional period, such a situation would have serious repercussions on our industrial sector.

Some people seem to think that we have failed to negotiate acceptable terms for EMS entry and that we are just standing still—that if we do not succeed in any negotiations that may still be going on we can carry on the same trading terms with the UK, with the other EEC countries and the rest of the world. That is not so. As a result of the formation of the EMS involving six countries there is now a de facto two-tier EEC. Mr. Tindemans put forward a proposal some years ago which was resisted successfully by the smaller countries but which is now a reality. We now have de facto a two-tier EEC structure in which the stronger and richer economies will continue to grow stronger and richer while the poorer and weaker economies such as ours will become weaker and poorer.

The UK have reserved their position with regard to EMS entry. They have left the matter open until they see how things will develop. Mr. Callaghan's Government have made no secret in a period of years of their total dissatisfaction with the operation of the CAP. I believe that one of the conditions they will insist on for EMS entry is a total fundamental review of the operation of the CAP. That is the only mechanism by which this country benefits in any way substantially from our membership of the Community. If Great Britain succeeds and there is every possibility that she will succeed in negotiating a review of the operation of that system, such revision would undoubtedly be to our disadvantage. These are two fundamental changes that will take place as a result of the summit that has proved to be so disastrous for us.

I do not intend at this stage to go into any great detail on the EMS. There will be an opportunity for doing so next week when, as the Taoiseach has told us, there will be a debate on the issue, but I must point out at this stage that the conditions and the offer that have been made to us are totally unacceptable so far as this party is concerned. The Taoiseach has said he is not prepared to recommend either to the Government or to the House that the offer be accepted. Having regard to the gross mishandling of the situation that has occurred up to now in the negotiations I do not think it is possible to be offered conditions that would justify our joining the system.

There is one question, though, that I must put to the Taoiseach. If we cannot negotiate acceptable terms for entry at this stage and, consequently, if we decide to stay outside the EMS, what would be our position should Britain decide, say, in the autumn of next year, to join the system? Would we then seek entry under the conditions which are now being offered or would we stay out? The Taoiseach's statement regarding what took place at the summit meeting is notable mainly in one respect, that is, its lack of the detailed information that we should be given. A request has been made to the Taoiseach to ensure that before the debate next week detailed information of all conditions attaching to the loan being offered and to the various other matters that have been raised in the course of this morning's statements be available to the House in order to make possible a meaningful discussion of the interest of the country in general and of the seriousness of the position arising from the mishandling of the situation by the Taoiseach, by his Ministers and by his advisers. My thoughts in full and the approach of this party to the EMS will be put forward during the debate next week but in the meantime we trust that the Taoiseach will make available all the relevant and necessary detailed information. We do not expect the Taoiseach to be a prophet. A prophet can foresee the future but the Taoiseach cannot tell us what happened, let alone what might happen. Surely it would be reasonable to expect that during the week-end he will be able to ascertain precisely what we were offered at the summit and what conditions were attached to that offer. We need this information in order to have a full debate on the matter next week.

An Leas-Cheann Comhairle

That concludes the statements.

Dr. Browne

As the most consistent and persistent opponent of the EEC from its beginning, am I not to be allowed to make a statement.

An Leas-Cheann Comhairle

In accordance with Standing Order No. 38 and as the House is constituted only three speakers may participate in a debate of this kind but next week I am sure the Deputy will have an opportunity of addressing the House.

Dr. Browne

But surely the reason for the Taoiseach going——

An Leas-Cheann Comhairle

The Chair is governed by Standing Order No. 38 which provides for a statement by the Taoiseach or a Minister and by two other Members of the House.

Dr. Browne

Would the Chair not agree that we are dealing with very exceptional circumstance.

An Leas-Cheann Comhairle

The Chair did not draw up Standing Orders. There is no point in the Deputy battling with the Chair now. I am sure Deputy Browne will be called next week when this subject is before the House for debate.