Dáil Éireann díospóireacht -
Thursday, 1 May 1980

Vol. 320 No. 3

European Council Meeting: Statement by Taoiseach

The Taoiseach

I attended the meeting of the European Council of Heads of State or of Government and of Foreign Ministers in Luxembourg on Sunday and Monday last, 27 and 28 April. At the meeting I was accompanied by Deputy Lenihan, Minister for Foreign Affairs. As Deputies will be aware, meetings of the Agriculture Ministers of the Nine were taking place concurrently in Luxembourg, and Deputy MacSharry, Minister for Agriculture, attended.

The agenda for the Council was:

(1) (a) economic and social issues; (b) energy; (c) the Report of the Committee of Three on the functioning of the Community institutions; (d) pollution of the sea;

(2) (a) convergence and budgetary questions; (b) monetary and financial co-operation;

(3) Political co-operation items including Afghanistan, Iran and the Middle East.

The agenda does not convey the number and complexity of the problems confronting the Community before the Luxembourg meeting. These include, in particular, the difficulties over the British contribution to the Community budget, a number of extremely important items relating to agriculture, the rapidity with which Community expenditure is moving towards the 1 per cent VAT limit, an increase in the amount of the regional fund and the blocking of the non-quota section, the failure of the Community to establish a credible and viable energy policy and differences over sheepmeat, fisheries and other matters. I am not listing these items for their own sake but to illustrate the range, importance and diversity of subjects on which deep differences now exist within the Community. However important any one of these subjects is to the Community or any grouping of countries within the Community, it cannot be the main concern. That must now be the proper functioning of the Community and the role of Europe in the world—how we can co-operate and act, at the political level, in the maintenance of world peace. The real issue now is whether we can maintain and increase the cohesiveness and solidarity of the Community so that in an increasingly dangerous world it can exercise its great influence in the interests of moderation.

The Community cannot be complacent or negative in its approach. And, above all, members should not seek solutions separately or nationally—as might have been possible before. This is the era of the super-powers and small or even medium sized states have little influences unless they can co-ordinate their policies to achieve what must always be the principal objective—world peace and stability. It is for us in Europe to find methods to improve the procedures which will enable us to co-ordinate our policies in the interests of prosperity, progress and peace.

While economic policies are important for the attainment of these objectives, they cannot be the only consideration. While national objectives obviously can never be far from our minds, they, in the reality of today's conditions, can never be the final motivation. To my mind, Europe and its peoples depend on each other now in a way which is without precedent in history.

That is why I regard the outcome of the Luxembourg Council with such disappointment. We were faced with problems in a number of areas, each of which was, and still is, difficult but each of which was, and still is, capable of resolution, given an understanding and acceptance of the purpose and principles of the Community. Differences might have remained in a number of these areas, as happens on most occasions when councils meet. Each country would have gained something and each would have given away something but, in total, the Community and the people of Europe would have gained. I do not think that anyone gained from what happened in Luxembourg on this occasion.

There was real and serious damage done to the morale of the Community and to the effectiveness of its institutions. That is the main comment I would like to make in this House on the outcome of the council; and that is the main problem we must face in our deliberations in the months ahead.

I outlined our attitude and approach in a meeting I had with the President of the Council, the Italian Prime Minister, Signor Cossiga, on Sunday morning last and in my contributions in the meeting itself. I stressed that we were particularly anxious to see a solution to the British problem but that any settlement must be set within a wider framework of convergence. I referred to the inadequate progress achieved so far in narrowing the disparities between member states' economies and the need for a sustained Community effort to this end. I underlined our strongly held view that any solution to the immediate issue before us should not underline the achievements of the Community or the fundamental principles on which its dynamic development depends. There must be no resort to juste retour or retreat from basic principles of the CAP such as financial solidarity and common organisation of markets. At the same time, if it is to be true to its essential nature, the Community must show itself ready to help resolve exceptional difficulties facing any member state.

There is strong resistance to the idea of discussing the problem of the UK contribution to the Community Budget at a European Council once again; but the problem remains and must be tackled, with the other problems facing Europe, if the Community is to function properly. We will support any Presidency initiative towards this and would certainly favour concentrated discussions at ministerial level. An early meeting of Foreign Ministers might indeed evoke the beginning of an understanding.

The Council in Luxembourg did discuss and come to conclusions on a number of issues, which are detailed in a Presidency document which I will be laying before the House. I apologise to the House for the delay in putting this document before the House. I assure Deputies that this is through no fault of the Government but is due to unavoidable delay in getting the document prepared in the Community and having clarification of different aspects of it.

The discussion on the British budgetary contribution took place, mainly, on the second day. It was long and detailed. What emerged was an acceptance by the Council that the British contribution should be frozen, in 1980, at the average of its amount for the preceding two years. This meant that the British would have secured a reduction of almost 1.2 billion EUAs in their net contribution to the Budget in 1980. Of course, this figure is not final. It is based on many estimates. There were difficulties over the method to be used to calculate the contribution in 1981 and 1982. I do not think that it is necessary to go, here, into details of these difficulties.

It is sufficient to say that the calculations would have been based on the figure of 538 million EUAs contributed, on average, by the UK to the budget in 1978 and 1979 and would have been influenced by the development of the budget, in total, in 1981 and 1982. This of course would have been constrained under the existing 1 per cent VAT ceiling. In the end the difference was calculated to be equivalent to a figure of approximately £100 million or less— though, of course, it is impossible in a situation like this, where there are so many imponderables, to be precise. It was on this issue of amount and the duration of the solution, basically, though perhaps also on a number of the other items I have mentioned, that the meeting failed to reach agreement. I think that the real tragedy is that, having got so near to a solution, it failed in the end.

Agriculture is of fundamental importance to Ireland and to a large section of the population of the Community. Policy in the sector has political and social as well as economic implications. I personally feel that it is particularly unwise now, in the present state of the world, even to begin thinking of policies which, by undermining the Common Agricultural Policy—a cornerstone of the Community—could threaten the production in Europe of the food which man needs for his very survival. Surely we have learned from the hard experience of oil the dangers of permitting dependence on external sources for vital commodities to grow excessively? The confidence of farmers must be maintained and agriculture must be given the support which other industries get, in other ways, from the balance and mechanisms of the common market.

Deputies will be aware that in an effort to secure a settlement of the interlinked problems facing the Community, the Presidency took the unprecedented step of convening the Agricultural Council in parallel with the meeting of the European Council. Following an informal session, an intensive round of bilateral discussions and a meeting of the Council into the early hours of Monday morning, all the delegations were agreed on the elements of the package, though this was subject to a general reservation by the UK. It was not possible to reach agreement on the inclusion in the draft conclusions of certain words relating to the responsibility of producers for the cost of disposal of milk surpluses. The Minister for Agriculture and I stood firm against conceding, even for future years, the principle of a super-levy on farmers who increase production and when the agriculture item came before the European Council the members, with two exceptions, accepted our approach.

Had we been able to bridge the gap in respect of the British budgetary contribution I have no doubt that there would have been full agreement on a satisfactory package with price increases in the range of 4 to 5 per cent for the main products of Irish interest, agreement on the main features of a Community policy for sheepmeat and adoption of the special structures programme for the West of Ireland together with the dropping of the unacceptable elements in the market balance proposals of the Commission. In the event the whole subject was referred back to the Agriculture Council.

There was a similar outcome to the discussion in the European Council on fisheries where it was not possible for the UK to accept one aspect of the proposals put before the Council.

On the economic and social situation, there was a consensus that for 1980, largely as a consequence of the further large increase in oil prices, the growth rate for the Community as a whole would fall, unemployment would rise and inflation could reach over 11 per cent.

There was also agreement with the Commission's view that the current stance of policy should be broadly unchanged. In the course of the discussion our own budget was noted as an example of the type of policy response appropriate to the current circumstances.

We also discussed the high level of interest rates. As the Minister for Finance recently said in the House, the level of rates in Ireland cannot be isolated from the realities of the international markets or of our own rate of inflation and external payments deficit. Nevertheless, none of us wants rates to be even one point higher than they have to be or maintained at current levels for a moment longer than is inescapably necessary. I am, therefore, glad to tell the House that, largely at our instance, the Conclusions of the Council invite the Council of Finance Ministers and the Committee of Central Bank Governors to maintain close co-ordination of their interest rate policies with a view to a reduction in the current high rates as soon as the necessary conditions are fulfilled.

There was considerable emphasis in our discussion on the problems created for the world economy by the huge increase in the balance of payments surplus of the oil-exporting countries and the corresponding drain on the assets of other countries, especially the developing countries which are not petroleum producers. The OPEC current surplus, having fallen to $5 billion in 1978, rose to about $68 billion last year and is expected to rise to $115 billion in 1980. The combined deficits of the non-oil developing countries may reach $68 billion this year and $78 billion in 1981. The financing of these deficits which has been effected largely through private credits could cause problems of major dimensions.

I was one of a number of Heads of State or Government in Luxembourg who raised the question of intensifying efforts at international level to developing suitable channels for recycling these funds. While there were some differences of view of the best approach—for example, as to the extent to which the ECU should be promoted and developed as a genuine international reserve asset—the Conclusions of the meeting endorsed the call to step up action on this subject and asked the Finance Council to give the matter particular attention.

This brings me to the review we undertook of progress with the European Monetary System. There was general agreement and considerable satisfaction that the exchange rate system has worked well. The Council confirmed our commitment to monetary integration and asked the Community bodies concerned to push on with their work which is designed to prepared the way for the institutional phase, embracing the definition of the role of the European Currency Unit and the establishment of the European Monetary Fund. While there are differences of view as to the pace at which progress can be made, the commitment to the objectives set at previous meetings remains strong, and such caution as has been manifested is motivated purely by the wish to ensure that the development of the system is founded on such sure foundations that it will be both successful and irreversible.

Europe's pattern of energy demand and supply is now a major danger to our future and a major constraint on progress. There was agreement that every effort must be made to reduce dependence on oil and increase recourse to other forms of energy.

Under the political co-operation heading the European Council discussed Afghanistan emphasising that the objective was not an imposed neutrality but a free decision of the Afghan people.

On Iran our main points were to indicate solidarity with the United States in their efforts to secure the release of the hostages by political and diplomatic means and to re-affirm the decisions of the Foreign Ministers of 22 April. We also wished to encourage the UN Secretary General in his effort to play a useful role in the present crisis.

On the Middle East, the Nine reiterated our belief that only a comprehensive, just and lasting settlement can bring true peace to that region. The European Council were conscious that Europe may in due course have a constructive role to play to that end and we therefore asked the Foreign Ministers to prepare a report so that we could consider the problem fully on the occasion of our next session in Venice in six weeks' time.

The European Council denounced the acts of violence committed in Southern Lebanon against members of UNIFIL and demanded that they cease immediately and that the force be permitted to carry out in full its mandate from the United Nations Security Council. Throughout we stressed the need for positive efforts to maintain world peace through dialogue at the present time.

I was glad to have the opportunity, while in Luxembourg, of having a brief private meeting with the British Prime Minister. It is not customary to say, in detail, what is discussed at meetings of this nature. Deputies will, however, wish to be aware that we agreed on a substantive meeting to be held in a matter of weeks for a discussion of a number of issues of mutual interest.

In conclusion, I should like to say that, apart from the outcome, the arrangements for this most disappointing and protracted of Councils were excellent and to congratulate Mr. Cossiga, in his capacity as President of the Council, on the hard work, patience and tenacity which he put into seeking a solution. I am sure that we are all conscious of the magnitude of the difficulties he faced and deeply appreciative of his efforts, personally and through his Ministers and officials to overcome them, in the common interest of the peoples of Europe.

Dr. FitzGerald

I should like to apologise to the House and to the Taoiseach for being a minute or so late. I was in the Dáil Library at about three minutes to 12 o'clock when copies of the Conclusions of the Presidency arrived from the Taoiseach's office. The Taoiseach has apologised to the House for this. I have to say the position is unsatisfactory. We on our side of the House were happy to allow several days to elapse before this debate took place, knowing the difficulty, when you come back from a meeting which ends in the early hours of the morning, of putting all the threads together. We felt it would be more valuable to hear from the Taoiseach when he had an opportunity to put the pieces together, especially in view of the visit of the German President.

Having waited for two-and-a-half days, that we should not have the advantage of having the Conclusions of the Presidency until three minutes before this debate is not acceptable, and I do not understand the Taoiseach's explanation. In the text I have, the type used throughout would appear to me, in all the pages up to the last two, to be the type used always in EEC documents. It was not produced in Brussels. From my experience of these meetings, these documents are available at the time and one brings them back with one.

In the last two pages there is reference to foreign policy and, except for three lines typed in a different type face, the material is that which was typed in Brussels and which normally the delegation bring back with them. I really do not understand why it should have taken so long. The last two pages were in the newspapers this morning—not the complete text but quotations from them. If they were available to the press last night, I cannot see why they could not have been available to this House earlier than at three minutes to 12 o'clock today. While nothing the Taoiseach's apology, I feel the position is unsatisfactory. I had to try to read through this lengthy document while listening to the Taoiseach's speech simultaneously. I have to say it is over-straining my mental resources to try to absorb both of these at once.

So far as this European Council meeting is concerned, it is fair to say the Taoiseach in a sense was flung in at the deep end. There can have been few European Councils as difficult and complex as this one and in which the interests of the Community were so much at stake, and consequently Irish interests. It must have been difficult for him—this was the first occasion on which he attended such a meeting—that it should have been one of such complexity, both at the level of internal EEC policies and in respect of foreign policy issues.

The economic section of the Conclusions of the Presidency, in so far as I have been able to read them while listening to the Taoiseach, appear to consist of what I can only describe as the usual economic waffle which has been in every communique of every European Council meeting since the first such meeting in 1975. The Taoiseach has told us that the average inflation rate is expected to be 11 per cent. I do not think that is in the Statement of the Presidency. It is of interest to note that, given that our inflation rate is now going to be almost double that—in the range of 20 per cent, plus or minus the fraction of a percentage as far as one can work out.

I note what the Taoiseach said about interest rates and the Central Bank being asked to look at the interest rate situation. Undoubtedly it was a constructive initiative on the part of the Taoiseach to raise that, but he must face the fact that the problem of interest rates is not just an international one. There are member countries with interests rates of half ours. The interest rate situation in this country is primarily domestic rather than related to the international interest rate position.

I want to deal for a few minutes with the question of the British contribution. I am concerned that in the Taoiseach's statement there are no details of the proposed solution to the British problem. The statement of the Presidency has nothing to say about it at all. There is an obscure reference by the Taoiseach, relating only to the contributions by the UK to the budget, which is very hard to interpret and which does not say anything about any other arrangements, despite press reports that the total amount by which the UK was to benefit, under certain proposals, would be up to £800 million which is about three times the figure mentioned by the Taoiseach in his speech, presumably because of arrangements to make certain payments to Britain in respect of certain activities in Britain as part of the proposed deal.

The failure of the Taoiseach to give us any information about that or any indication as to whether we also would benefit from proposals to increase EEC expenditure in the UK is something which we should deplore. We are in an extraordinary position in that we do not know what was proposed except for fragmented press reports which are obscure. None of those press reports that I have seen makes it clear whether the position we have taken up previously, and which is entirely consistent with the realities of the position, that any aid given to Britain on the basis of its special position as the third poorest country would be given a fortiori to the second poorest country, Italy and to the poorest country, Ireland still prevails. There is no reference to that and I have no means of knowing whether the proposed solution included benefits for the two poorer countries or whether they were confined to Britain. Nor is it clear, nor is there the slightest indication as to who was to make up to shortfall in the British contribution and who was going to pay for the extra investment in Britain. Were we, the poorest country, expected to and agreeing to contribute towards the £800 million or were we going to be exempt from contributing or get any benefits? It is remarkable that the House should be given an address by the Taoiseach on this subject in which nothing was said on the most crucial points for Ireland. We are left in total ignorance as to whether and to what extent we are to pay for what is proposed or to benefit from what is proposed. I would have thought that would have been the first thing the Taoiseach would have dealt with.

The Taoiseach

Would the Deputy like me to deal with that matter now or wait until he has completed?

Dr. FitzGerald

If the Taoiseach wishes I will give way so that he can deal with that matter now.

The Taoiseach

I hope the figures are clear but I should like to make it clear that a decision was not arrived at. It did not get to the stage in our consultations or discussions of the matters the Deputy is dealing with. There were no conclusions about them or proposals in regard to them. We were stuck at the actual amount of the British contribution. The consequential matters arising out of that were not discussed, were not on the table and had not been dealt with. I should like to reiterate what was proposed. A number of different proposals were put forward from different quarters of the table but the main proposal which we finally finished on was a Joint German-French proposal to the effect that the British contribution for 1980 would be frozen at 538 million Units of Account, the average for 1978-1979. How Britain was to be repaid the difference between her normal budgetary contribution and the frozen amount was not arrived at. There was general agreement that it would probably be a combination of the Dublin mechanism and additional Community expenditures in the UK. We did not get to that stage in the discussions. As far as 1980 was concerned that was accepted by the UK and we proceeded to talk about 1981 and further years and that is where the Council broke down. At that point all the proposals were withdrawn from the table.

Dr. FitzGerald

That has helped to clarify the point of breakdown but it has not answered the question I was raising. If the British contribution was to be frozen at 538 million UAs somebody would have to make up the difference and my question was: who would? Were we all involved in this, including us, the poorest country? Were we to help out Britain with a GDP nearly half as large as our again?

The Taoiseach

That was not discussed in any substantative way but the general implication was that all the countries would contribute in the normal way in their proportion as to the existing budget. We did not get to substantively discussing those aspects.

Mr. Cluskey

This is rather confusing and it is extremely important that we should clear the air on the point. As I understand from the Taoiseach's statement in reply to Deputy FitzGerald he said that a French-German proposal was made to the British and the UK accepted that proposal as far as 1980 was concerned. Surely we would have to know whether that was going to cost us money or not before we could indicate our position?

The Taoiseach

That would have been the next step in the discussions. If the discussions had settled the amounts then the manner in which the amounts would be contributed would have been the next step. As the original matter was not decided we did not get to that point.

An Leas-Cheann Comhairle

The Chair does not wish to intervene but the Chair is being put in an awkward position in that we were to have three statements, by the Taoiseach and the Leaders of the Opposition. If we proceed by way of question and answer the Chair is being put in a difficult position.

Mr. Cluskey

I do not wish to impose on the Chair but the Taoiseach, recognising the importance of this, replied to the original statement of Deputy FitzGerald. I am seeking a further point of clarification. The Taoiseach stated in reply to Deputy FitzGerald that it had been generally accepted that all the countries would contribute to some extent. That clearly indicates that that included Ireland and that it would cost us something. Is that correct?

The Taoiseach

It was not substantively discussed but that would have been the general implication.

Mr. Cluskey

It was generally accepted by all parties?

An Leas-Cheann Comhairle

I am calling on Deputy FitzGerald to complete his statement. This is creating a precedent which the Chair does not wish to create on statements of this type.

Dr. FitzGerald

I appreciate the Chair's difficulty but any clarification on a matter as complex as this is helpful to the House. I am grateful to the Taoiseach. for having at this stage sought to bring it a bit further, though it still leaves considerable obscurity about the situation. I am not clear as to whether the question of additional Community aid to the United Kingdom is incorporated in this formula and if so if it is to the UK only. Are we in the position of having to contribute to the finances of a country about one-third or one-half better off than we are with that country getting substantial additional investment from the Community which is not going to come to us in any equivalent form? A solution of that kind, and with all due goodwill to the UK Government, seems a strange one for an Irish Government to contemplate. I can understand our concern to be helpful in this matter. It is right that we should seek to be helpful but there are limits as to how far we should be reasonably expected to go in that respect. I will not drag that matter out any further but I hope that one way or another we will get more information as to what is proposed because we must remember that this is not the end of the matter. It will come up again at some point, hopefully soon, to be settled, We are entitled to know the sacrifices that will be required from us in terms of financial contribution towards the difficulties of the UK with its huge balance of payments surplus, compared to our deficit, and its greater GDP per head and whether if additional Community expenditure is to take place there we can or cannot hope for some equivalent given that we are a much less well-off country. Those are reasonable questions to raise and I do not think the House should be left in total obscurity because they will be up for negotiation again. Any fresh negotiation will, presumably, start somewhere around what is proposed here.

The whole question of the net UK contribution raises great difficulties. The fact is—this is not clearly understood by British opinion—that the UK net contribution is along the lines envisaged when she joined the Community. There was never the slightest doubt about the form and character of the method of financing the Community, all levies and duties from outside the Community belong to the Community, not to the State through whose ports or airports they happen to enter or across whose frontiers they passed, often destined for other States. Up to 1 per cent of VAT was provided for specifically so as to supplement this. We all knew this when we joined and we are still within this percentage though the limits may soon be reached. If the British complaints had been limited to the question of high spending on agriculture due to surpluses they could be understood although on this issue, obviously, our interests, those of the whole island of Ireland and those of the island of Britain, diverge. However, this is not apparently the issue that is being raised although it is a British complaint on that point. What the British were looking for went far beyond some restraint in agricultural spending.

If the question had been that Britain had a balance of payments difficulty, then the complaint and difficulty could be understood. Indeed, in Dublin in 1975 there was the first renegotiation in respect of Britain, when special provision was made for an alleviation of Britain's financial relationship with the Community in that event. But Britain has a balance of payments surplus. If Britain had made the case that the economically weaker members of the Community should be aided specially, this too we could understand and indeed support; but, on that basis our needs and those of Italy would take precedence over those of Britain. That is not Britain's position; she is the third poorest, not the poorest, member of the Community.

When one comes down to it the fact is that there is no logical basis for the British complaint, which is based on a reluctance to carry out the obligations accepted when membership was undertaken, when it was known that membership economically, in terms of contributions to the budget, would be likely to cost Britain money but when Britain decided to join because by joining she secured two important benefits; (1) access to the industrial markets of these countries without any duties or quota restrictions, which was a very important potential benefit for British industry, had it been able to take advantage of it; and (2) membership of a Community through which Britain could exercise much more influence, as we can ourselves, than as an individual country outside it. Britain decided to join and to pay the known costs by a known method. Nothing has changed since then in terms of the method of payment and Britain has had the benefits, even if she has not made full use of them, as might have been hoped and as I had hoped on her behalf.

Having said that about the lack of a logical basis for the British case, nevertheless the Community and its members always recognise the political difficulties of member states. For example, when the present Government got into difficulty in the EMS negotiations they were helped out by special contributions from countries like France and Germany for the two years 1979 and 1980, all of which has since been dissipated in paying for budget deficits instead of being invested in infrastructure, as was then indicated to this House. But the result of the sympathy shown by the EEC to Britain's political difficulties, despite the absence of any actual logical British case, has turned out to be somewhat perverse. It seems now that the very willingness of the Community to help the British Government with their political difficulties—largely of their own creation because their propaganda campaign has brought to light anti-Community forces within Britain, and they have created a monster which they find it hard now to control—has been to encourage a British belief that there is a logical basis for a massive reduction in her contribution.

This has now gone to the point where even an offer of an enormous reduction for the next couple of years, which as far as I can calculate would involve reducing Britain's net contribution by something like two-thirds for 1980, with provision for a review and continuance of that for several following years, has been rejected by Britain without any apparent recognition, judging by what has been said since then in Britain, of the effort involved to the Community in making this offer and the effort involved for countries like ourselves with enormous balance of payments deficits—admittedly largely of our own creation as a result of this Government's policies —and with a much lower level of gross domestic product per head in going along with special treatment for the wealthier United Kingdom with their substantial balance of payments surplus, all of this involving on our part very considerable sacrifices. It is disturbing, to say the least, that, having being offered such substantial aid when there was no logical case made for it, Britain should end up merely with a grievance against everybody who has been trying to help and with no evident recognition in anything said on the part of the British Government, political parties, or indeed the British media, of the extent to which the Community has gone, far beyond anything that could normally be expected and indeed moved away from some of its own principles in order to help Britain.

Having said that—and I think it had to be said —I accept that it is clearly important that we in this country try to help the United Kingdom out of the situation into which they have got themselves. It is right that we should go to some lengths in this respect even at the expense of our short-term national interest in material terms in view of the importance of the Anglo-Irish relationship, more especially at present when a British initiative on the North is under consideration. I would accept it is not a moment for our Government to give undue public expression to the feelings that British tactics have aroused among all Community partners. Instead we must be as patient and helpful as we can without prejudicing our long-term national interests in the CAP and in the Community financing system generally.

One thing that concerns me about developments that have taken place recently has been the rumours—to which the Taoiseach has not referred, perhaps understandably—of a developing French attitude that if Britain presses this issue the Community should return effectively to the idea of the juste rétour, that one gets back what one puts in, which is basically what the British are seeking. If the French Government changed their stance in regard to basic Community policies and moved to that position out of irritation with the British attitude this could be absolutely fatal for us in this country as the biggest single net beneficiary of EEC membership, with something like 8 per cent or 9 per cent of our current budget year after year coming from that source quite apart from the benefits to agriculture of the CAP and price structure. But, having said that, we must try to be helpful to Britain even though hitherto our efforts and those of other countries seem to have only fuelled the fires of xenophobia in that country.

At the same time, there must be very widespread concern if Britain attempts to hold the Community to ransom by refusing agreement to the agricultural package being proposed because she is not satisfied with the exceptional arrangements proposed to her in respect of her own political difficulties. This agricultural package is one which does take account of the need to reduce surpluses and involves consequent cuts in real farm prices by one means or another, whether by holding down prices or proposing levies. It gives farmers a small increase at least in current money terms—the Taoiseach mentioned 4 per cent or 5 per cent—in a year of 20 per cent inflation. If Britain were to try to prevent that happening, then from our point of view it would be a very serious matter indeed for our balance of payments and, above all of course, for our farming community. We would have to consider very seriously what action we would take in those circumstances.

The Taoiseach did not refer to reports that the French President has committed himself at some point in the not too distant future to introducing these farm price increases even if they are not agreed within the Community. We must surely consider the implications of that attitude of the French President for our policy. If that happened, what action would we take? Would we follow suit, or would we try to keep the action of the French Government and our own within the framework of the Community system? How can the Community react effectively if Britain sets out to prevent the Community decision-making system from operating in retaliation for not being satisfied with the offer made to her? I feel we must consult with our partners on this matter if it appears that British action is likely to disrupt the normal working of the CAP which would create a crisis situation for us on the agricultural front.

I hope that by some means at the Venice European Council a solution to these problems can be found. We cannot afford to let the crisis drag on. We cannot afford to allow the CAP be undermined to the point of danger. But part of the solution may lie in somewhat more effective attempts by the Commission and member states to communicate with British public opinion. The total failure to comprehend what is at stake and the obviously deep-rooted belief that there is justice in their case which has been spread in Britain so sedulously by politicians and the media has made a solution much more difficult. I do not feel the British public has been helped to understand the real issues by the anti-EEC presentation of the case in the British media which, instead of subjecting the actions of their politicians to critical scrutiny which one expects from the press, has largely succumbed to paroxysms of xenophobia in support of the politicians in question. It is tragic that all this should have preoccupied them when there were so many other items to discuss. One of these referred to in the communique was the North-South dialogue.

The Brandt report was discussed. I suspect from my knowledge of how these councils work that it was not in fact discussed but these three paragraph were prepared and one of the paragraphs states that the position worked out by the European Community in the preparatory phase of the overall negotiations within the United Nations was very much in line with some of the proposals contained in the Brandt report. This report appears to be taken into consideration in the drafting of the European position in the context of North-South relations. I would not regard that as a very strong commitment.

While I recognise that the Government are inhibited in questioning this issue in view of the totally unacceptable decision to cut development aid in real terms and to cut bilateral aid in money terms this year and this has destroyed our moral position in the matter, I must express concern that the Brandt report is dismissed so summarily. It is tragic that that important issue does not appear to have been adequately discussed because of the preoccupation of heads of government with the British issue and I would judge that the heads of government did not have sufficient time either to discuss adequately crucial world issues, in particular, the crises in Iran and in Afghanistan and in the Lebanon and the related problem of US-Europe relations. These are referred to in the last two pages of the communique in very different and almost illegible typing because the photocopying, unfortunately, is defective, making it difficult to read. This has the air of having been drafted in advance, apart from the three lines added in a different typescript stating that the Nine declare their full support for the steps which the United Nations intend to take to secure the release of the hostages in relation to Iran. These are issues to which this meeting of the European Council should have given its full attention. It should not have been so distracted by an internal issue and, indeed, given that the issue was discussed not to a conclusion but without success, it is particularly tragic that time was wasted on that when it could have been used to discuss these other matters.

The whole question of US-Europe relations, which is of vital importance to all of us whatever our status, whether members of NATO or not, is one which at the moment is preoccupying people throughout western Europe in all the countries, including the countries that are formally neutral, those that are members of NATO and those that are not members of NATO and those that are in in between positions. This relationship of the United States and Europe has always been subject to some tension. We had the problem created in 1973 by the then Secretary of State's unilateral proposal for a "Year of Europe" which led to deep misunderstandings. We had the total failure to consult over the 1973 war and the use, for example, of German territory to transport arms to Israel without the knowledge of the German Government. We had the attempts to improve consultations between Europe and the United States. But all these efforts to improve that relationship are now threatened because of the events of this year including, of course, the irrationalities that arise from this being an election year in the United States and the consequent dangers that arise from that for us all.

Looking at what the EEC countries have done, ourselves included, I can understand the rationale of what has been attempted. The Community would appear to have been attempting to prevent an over-reaction by the United States on the Iranian issue and attempting to preserve the US-Europe relationship against domestic tensions in the United States. We should co-operate in this effort in the interests of peace and security. Whatever qualms we may have about the concept of sanctions, their feasibility, practicality, effectiveness or the likely reaction to them on the part of the government and/or people of Iran, in so far as co-operation with the EEC countries in the measures taken was designed with the hope and expectation that it would prevent the United States acting unilaterally, I can understand the motivation behind it.

I would like to add here, because I think there is a lot of confusion on this issue here, that no conceivable concept of neutrality should deter us from co-operation in efforts of this kind relating to world peace. There are those here who argue allegedly for neutrality. They are not in fact arguing for neutrality as it exists as a concept in the real world; they are in fact arguing for isolationism of a unique kind in the name of neutrality. People who argue that we should play no part in contributing, through our membership of the Community, to the reduction of tensions in the world and who express such fears about our neutrality arising from this would appear to be completely unaware, for example, of the extent of the co-operation that took place between countries like Sweden, Austria and Switzerland with the EEC in the preparation of the Helsinki Agreement securing a common position between all western European countries on a whole range of issues in negotiating with the Soviet Union and Eastern Bloc countries. From things that are said here at times one would think that we are required to adopt a form of neutrality which would go so far beyond that of Sweden, Austria and Switzerland as to represent total isolationism. Some of the proposals put forward would involve swinging the balance in the other direction, towards the Soviet Union, and that balance has already, in the military sense, swung far in that direction. We cannot put ourselves into political purdah by adopting isolationist positions that ignore the reality of the East-West crisis and the need to work constructively to moderate tensions.

Having said that, the Taoiseach will, I think, be conscious of the fact that there is concern that moving with the other EEC countries in relation to sanctions in Iran with the object obviously—which was so stated informally at the time—of preventing over-reaction by the United Stated to that situation has not proved totally successful. One can only hope that further diplomatic efforts will secure a more balanced reaction to this and that in the whole process relations between the United States and Europe will be maintained. I would add that it was unfortunate that the European countries, ourselves included—though primary responsibility does not lie with us—did not react more effectively and in a more consolidated manner to the invasion of Afganistan. If we had shown more solidarity then, not just with the United States but with the non-aligned countries in the Muslim world who all are involved emotionally in this affair, then the tensions which have arisen between Europe and the United States about Iran would not perhaps have been as great. But when Europe seemed to be unhelpful to the non-aligned and Muslim world in regard to the issue of Afghanistan as well as to the United States that certainly aggravated the US tensions in relation to Iran which we have been working with our partners to reduce and which I hope can be reduced.

Finally I want to refer to the Taoiseach's reference to his meeting with the British Prime Minister. I do not of course expect him to divulge what was said on that occasion. I do not expect that very much was said because, knowing the pressures on these occasions, there is not really an opportunity to say very much especially at a meeting of this kind when the British Prime Minister was so deeply involved in her own concerns. But I am glad that, at any rate, the discussions have led to a decision that in a matter of weeks there will be a meeting between the Taoiseach and the British Prime Minister. I presume this will take place before the British initiative on Northern Ireland. I understand that the Taoiseach at that meeting will be seeking to contribute to a positive result to that initiative, as we all have been doing in our own way. Already there has been a meeting here between the Minister for Foreign Affairs and the Taoiseach and the Secretary of State for Northern Ireland, and both myself and the Leader of the Labour Party have had meetings with the Secretary of State. All of us have been seeking to contribute to a British initiative which could have some prospect of success. I would hope that the meeting the Taoiseach will have with the British Prime Minister will take place before that initiative and that he will have the opportunity also to contribute further towards a good outcome. A lot depends for this country on that. Any effort any of us can make to ensure that the British initiative is sufficiently imaginative and delicately balanced to secure even reluctant acceptance from the various parties we must make in that respect.

I thank the Taoiseach for his statement but I am concerned about the failure to get the documentation to us in advance. Something should be done to prevent this happening in future. It makes any serious discussion very difficult when one has not the opportunity to read what actually has been said.

Mr. Cluskey

I thank the Taoiseach for his statement to the House on the failure of the recent Community summit. While noting the Taoiseach's apology to the House regarding the unavailability of the President's conclusions, I would point out that while this party sought from the Taoiseach the continuance of the procedure where a statement would be made to the House on summit meetings, we did not specify any particular time or day. The Taoiseach nominated this morning and we accepted it but we naturally assumed that all relevant documentation would have been available to us to allow us to discuss the matter in a more informed way than is possible under these circumstances. I contemplated asking the Taoiseach this morning to postpone the statement in order to ensure that in the interests of the people we represent full relevant documentation would be made available to us. It is important that on future occasions that would be the case.

I confess I have some sympathy with the eight leaders who were confronted with the latest example of British intransigence on a whole range of important policy matters. Every reasonable effort was made and indeed effort I would regard as unreasonable. That only became public this morning with the Taoiseach's reply to questions put by me. The Taoiseach on behalf of the country agreed, at least in principle, that we who are poorer than Britain in the Community, would contribute voluntarily to finding a solution to the British problem. That, to me, while I recognise the desirability of finding a solution, is an effort by the Taoiseach to find a solution which is unreasonable and not in our best interests. It is contrary to the stated policy of the Government with regard to British budgetary problems in which they have maintained up to now the principle that any solution that was to be found would not be at the expense of other countries, namely, ourselves and Italy, who are in fact poorer than Britain. It is not an agreement that I would have made if I had been in the same position as the Taoiseach. Fully accepting the desirability of finding a solution, I think that went a little too far against our interests and those of the country.

The British attitude now holds out the prospect of a deliberate attempt on their part to block all progress within the Community. While it is obvious that the Community is making little or no progress at the present time there is now a real likelihood of total paralysis. Given the scale of the economic and social problems facing the people of the Nine such a situation would be unacceptable and tragic. Every effort must be made to restore some element of momentum. If the Community ceases to move forward in the general interest of its people it will soon cease to have any meaning or value for its citizens. Having said that, I must state once again that the value of frequent summit meetings of this kind is highly questionable. The European Council has no foundation in the treaties but has been grafted artificially onto the structure of the Community. I believe that far too many decisions are being pushed up to the level of meetings of Heads of Government from Ministerial Councils and that this procedure is damaging the operational efficiency of the Community's institutions. In addition, the fact that these European summits increasingly end in disarray and disharmony is damaging the credibility of the Community among the European electorate.

For these reasons I believe they should take place less frequently and that the conduct of the Community's affairs should in the main be carried through by the Ministerial and other institutions. This approach would be more efficient, in my view, and would avoid unnecessarily heightening the real differences of opinion on major policy issues which frequently occur among European political leaders. The fact that the UK budget issue was not solved at this summit leaves many other important matters in abeyance. The agriculture package has been held up. Irish agriculture is already suffering from a serious loss of confidence arising from the inept domestic policies of the Government here. It certainly does not need, in addition, a further long drawnout saga of farm-price bargaining in Europe. Agricultural prices, and the fishing and lamb market issues, are matters which should be dealt with without further delay.

I welcome the support given by the member states for the UNIFIL forces in the Lebanon. All civilised political authorities must be at one in backing the peacekeeping activities of the UN and in condemning both those who attack the peacekeepers and those who arm and finance the attackers for their own purposes.

I agree also with the general tone of the statement made on the Iran crisis. In particular I welcome the emphasis in the statement on the role of the UN in seeking to secure liberation of the hostages. But I must come back again in this connection to a point which I raised after one or two recent meetings of the European Council. I am seriously concerned about some of the implications of the process of European political co-operation which we have witnessed in the recent period. There is a danger that this process will lead this country into a situation of quasi-alliance with other nations or power blocs whereas, in fact, our stance should reflect a totally independent line.

What took place at Luxembourg was not, whatever some commentators may assert, a "Western" Summit. Still less was it a meeting of America's allies. We, in this country, are no-one's ally. This is a neutral country and our neutrality must be asserted in the most positive and unequivocal fashion. I am not satisfied that the Government affirm our neutrality unequivocally in the context of European discussions on political co-operation. Indeed, I detect a worrying erosion of our traditional stance in this regard.

Mr. B. Desmond

Hear, hear.

Mr. Cluskey

Our neutral role in the world must not be eroded. This is a matter of fundamental importance which requires serious debate in this House. I would like to see the Joint Oireachtas Committee on EEC affairs prepare a report on the subject for early consideration by both Members of the Dáil and Seanad.

It is all too easy for the fundamental aspects of neutrality to be lost sight of in the complexity of high Community politics. It is flattering to be among the great powers as they ponder the great issues. But it is precisely in such circumstances that the greatest opportunity exists for the true application of the principles of neutrality. This country has a unique role within the Community because we have no entanglements with armed alliances. Only a country which is free of such alliances can play a really worthwhile role in the continuing struggle for a new and better international order.

So, what is the net outcome of the Summit? Nothing on the budget, on agriculture and fishing. There were worthy sentiments on Iran and Lebanon but with associated danger of damage to our neutrality; a working group only on energy—in short, a setback for the Community. In some respects all of these matters were being debated and argued while the real issues were ignored. I believe that Chancellor Schmidt was correct in pointing to that fact.

The Community must address itself to a number of great issues or else cease to be taken seriously. First, there is an economic crisis which is causing 6½ million people to be out of work and which will claim two million more victims in the next two years unless there is an end to Tory policies, whether implemented by Mrs. Thatcher or by others nearer home.

Second, there is an energy crisis which is central to the whole future shape of the world's economic and social system and which calls for imaginative planning and concerted action. Where is the Community response in this vital area?

Third, there is the continuing problem of Europe's poor and deprived minorities and marginal groups. Poverty exists throughout the Community and remains as the inevitable result of an economic system which exists to benefit the rich minority instead of the needy millions.

Fourth, there is the problem of world development which is so dramatically described in the report of the Brandt Commission. Where, in a period of cut-backs in aid and reneged programmes of technical assistance, is the Community's answer to this challenge?

The Luxembourg Summit has failed to face up to any of these grave issues in a realistic manner. It has called the whole purpose of the Community into question. We must not have a repeat of this performance in Venice in June.

The Taoiseach referred to discussions he has had with the British Prime Minister, Mrs. Thatcher, and indicated that an early meeting, in the next few weeks, will be held to discuss matters of mutual interest. I appeal to the Taoiseach at least to let the people of the country know what is his policy on Northern Ireland. I do not say this to score a political point, but honestly I do not know what it is.

I had discussions over a period of two days in Belfast with various political leaders, trade unions and people involved in the social services, and I found that universally nobody in Northern Ireland knows what the Taoiseach's precise policy is on Northern Ireland or on a solution of that problem. I was able to tell them in all sincerity that as far as I and the people on this side of the Border are concerned, they are not at any disadvantage because neither do we know.

If a meeting is to take place in the next few weeks between the Taoiseach and Mrs. Thatcher on matters of mutual interest, one of the major issues that should be discussed is the question of Northern Ireland. Is it not an incredible situation when the elected representatives in this House, including members of the Taoiseach's party, and the general public do not know what the Taoiseach, the man who will represent us at the discussions, has as a precise policy on Northern Ireland? I ask him in the interests of the country clearly to spell out what his policy is in relation to Northern Ireland.