I propose to make a statement on the meeting of the European Council which I attended in Stuttgart on 17-19 June, accompanied by the Minister for Foreign Affairs. I arranged to have laid before both Houses of the Oireachtas the Conclusions of the Presidency and the Declarations issued or signed at the meeting, including the text of the Solemn Declaration on European Union as circulated following the meeting. I intend to have the Presidency text of the Solemn Declaration placed in the Library as soon as we receive it.
Deputies will be aware of the doubts I expressed in the past about the value of many of these European Council meetings. I have to say that this meeting proved to be of considerable significance for the future of the European Community. What was at issue there was whether the member states could agree to changes in the budget which are a pre-condition for the enlargement and development of the Community or whether other considerations including in particular the purely national concerns of individual member states, would cause tensions sufficient to tear the Community apart. The length and tone of the discussions reflected these basic difficulties — at times in ways that were strikingly robust. There was indeed for a time a real danger that counterbalancing pre-conditions on different sides would result in a situation of deadlock, that there would be a failure to take decisions and that, in the end, the Community would be precipitated into what would have been a dangerous, and potentially explosive crisis.
In the event, by contrast, the outcome was strikingly positive. The impulse towards the maintenance and development of the Community and its policies was strengthened, and forward-looking orientations were given for negotiations to be conducted within a specified time-table on the question of increasing own resources, taking account of possible savings, in policies, including the Common Agricultural Policy, and of enlargement and of the problems of individual member states, so that decisions may be taken on all those issues at the next European Council meeting in Athens in December.
The Minister and I, with gratifying support from colleagues, were successful in preventing damage to Irish interests in the Common Agricultural Policy. In fact, a comparison between the proposals circulating recently on that subject and the conclusions of the Stuttgart Council will show a really remarkable degree of understanding and support for the basic principles of that policy — with at the same time a rational emphasis on the need for prudent expenditure controls. In other areas, also, to which I shall refer, involving both the economic and political domains, the conclusions reached were satisfactory. Finally, all ten member states were able to sign the Solemn Declaration on European Union, an event which confirms the commitment of these European countries to closer integration and eventual union, and we also agreed on a number of foreign policy declarations.
I should like to pay a warm tribute to the exceptionally skilful handling of the meeting by the German Presidency, in the persons of Chancellor Helmut Kohl and Foreign Minister and Vice-Chancellor Hans Dietrich Genscher. In particular on the key issue of Community financing, their sensitivity and determination, their sense of balance and of the overriding Community interest, made a crucial contribution to the satisfactory outcome of the meeting. I am happy to tell the House that Chancellor Kohl has accepted an invitation from me to pay an official visit to Ireland at a time to be arranged probably in the autumn.
As arranged at the previous meeting of the European Council in Brussels, I had a friendly and constructive meeting in Stuttgart with the British Prime Minister, Mrs. Thatcher. We discussed matters of mutual concern, including arrangements for future contacts between the two Governments. The Minister for Foreign Affairs had a meeting in parallel with the British Foreign Secretary, Sir Geoffrey Howe. We now look forward to further meetings at different levels, including a formal bilateral meeting at Head of Government level, probably before the end of this year. This process will involve a complete normalisation of Anglo-Irish relations before the end of the present year.
The most difficult and intensive discussions over the three days of the Stuttgart meeting concerned the development of Community policies, the issues relating to enlargement, the British wish to receive financial relief for what they regard as the excessive share of Community own resources collected in the UK and the need, as perceived by some, for greater budgetary discipline.
Over the last three or four years, the Community has been approaching the end of its financial capacity, on the basis of current arrangements, as its expenditure has inexorably closed on the maximum permissible amount of revenue or own resources, as they are called.
The Community's own resources are drawn from three sources: the receipts from customs duties payable under the Common External Tarrif, the proceeds of levies imposed on imports under the Common Agricultural Policy and the proceeds of a rate of value-added tax which may not, under existing provisions, exceed 1 per cent. With the liberalisation of trade and expansion of Community agricultural production, the first two sources are not particularly buoyant. The base on which VAT is assessed has been expanding somewhat faster, but still at a rate insufficient to keep pace with the expenditure demands as Community policies have developed. As a consequence, it has been necessary, from one year to another, to strike higher rates of VAT.
The VAT rate originally settled for the 1983 budget was 0.79 per cent. However, since the beginning of the year, expenditure under the CAP has been running up more than 30 per cent above expenditure in the corresponding period of last year. This calls for a supplementary budget which may have to provide additional funds also because of an apparent underestimation of the amount payable arising from the arrangement the British secured last October in regard to the 1983 budget. These developments will bring the rate of VAT very close to the 1 per cent ceiling this year, and they leave no doubt that the limit on own resources would be reached in 1984-1985 in the absence of measures to deal with the situation. The Community could thereafter be unable to finance even existing policies.
It has been a common view of successive Irish Governments over the last four years that the limit on own resources should be raised. Last February the Commission published a Green Paper and in response to the guidelines from the March meeting of the European Council finally put forward last month proposals for new own resources.
There are two central elements in the Commission's proposals, both based on the VAT mechanism. In the first place, they propose replacement of the existing 1 per cent ceiling, not by a new ceiling but, rather, by a system of increases every five to seven years, by steps of 0.4 per cent or roughly £4.5 billion. Such increases would have to be approved by the Council, acting unanimously, and by the European Parliament through a majority of its members and three-fifths of the votes cast.
Secondly, the Commission proposed that, as long as CAP guarantee expenditure exceeded 33 per cent of the budget, the share of VAT that member states would normally pay to the budget would be adjusted for the excess proportion. At present, for example, this would mean that for 25 per cent of the overall budget, member states' VAT contributions would be assessed differently from the normal method which could continue to apply to the rest of the budget. The adjustment of VAT shares would be by reference to three indicators, two of them measures of relative prosperity and overall benefit from the operation of the Community, the third being the member states' share in the value of the Community's final agricultural production.
It appears that the operation of this system might confer a small net advantage, in purely budgetary terms, on Ireland, but there would also be disadvantages. Irish reactions to the proposals had been made clear by the Minister for Foreign Affairs at three meetings with his colleagues in the Council this month and last, and to representatives of the Presidency and of the Commission who have visited Dublin.
Other member states also made known their views. In some cases there was predictable emphasis on the need for savings in spending on the Common Agricultural Policy and, indeed, this view appeared to be fairly widely held. The overriding British concern was, of course, to obtain agreement on a rebate of their contribution to the Community budget. They saw both satisfaction on this and achievement of substantial savings on agricultural spending as preconditions for agreement, even in principle, on increasing own resources. Both they and some other member states had other ideas about adjustments to the Community's financial system which would have gone far towards "juste retour" and the consequent subversion of the financial and common policy basis of the Community.
The Presidency drew up a report in which it sought to strike a balance between the varying viewpoints of the member states. When this was circulated, in advance of the special meeting of the Council held on 13 June, our assessment of it was most adverse. Our views were put forward trenchantly by the Minister. Nevertheless, the basis presented to us for our discussions in Stuttgart was this Presidency paper essentially unchanged, accompanied by statements of member states' reservations.
There was in this draft a totally disproportionate emphasis on savings and limitations on expenditure: as one of my Community colleagues sardonically observed, the word "dynamic" appeared in this draft only in relation to cuts. There was even the suggestion that the achievement of agreement on the future financing of the Community should be conditional on savings on the CAP, and the terms of reference for consideration of measures to adjust the CAP were, from an Irish standpoint, unbalanced.
In my intervention on the first day I made these points and said that the starting point of the discussion must be the consistent and strongly-expressed view of the Commission that new own resources are urgently required. I recalled my reservation in March about this use of the term "budgetary imbalances" which as Chancellor Kohl had himself recently emphasised, can mislead people.
On the suggested examination of expenditure under the Common Agricultural Policy, I stressed, inter alia:
—the need to take proper account of farm income requirements, long-term food security and the Community's balance of payments,
—the acceptability of any proposals that would be directed towards freezing existing production levels in member states where these are well below the Community average and where there is far greater dependence on the farm products involved, as is the case with milk, for example, in the Irish case,
—the need for stronger action against distortions in the market caused by MCAs, national aids and other internal barriers,
—the need to tackle the problem of excessive intensification of agricultural production, involving the so-called factory farms.
Not surprisingly, some other interventions were in the opposite sense. However, the theme running through most of the contributions was, strikingly, the centrality and importance of the CAP and full acceptance that it should not be made the scapegoat for all the difficulties within the Community.
The debate on new own resources, the British rebate and savings brought us through three further drafts before we reached agreement on the Declaration issued last Sunday. This Declaration represents a balanced outcome which, I am confident, opens the way towards new own resources and, in its own words, the provision of a solid basis for the further dynamic development of the Community.
The exigencies of obtaining agreement have led to the use of oblique language in delicate equilibrium. All the member states have agreed that decisions will be taken on all the issues, including future financing, at the end of a major negotiation involving Ministers for Foreign Affairs, Finance and Agriculture, which is to be completed this year. Consideration of the own resources aspect will be on the basis of, inter alia, the development of Community policies and enlargement. No savings that are feasible or conceivable could offset the requirements arising in these areas. The emerging facts and logic of the situation must lead to a decision to increase own resources without delay; but I must emphasise to this House that that decision still remains to be taken. We think that the logic of events must compel it — but until it actually happens we should not assume, with certainty, that it will.
In regard to compensation to our British partners, the European Council agreed, pursuant to our decision of last March, that an amount of 750 million ECU — about IR£540 million — would be incorporated in the draft Community budget for 1984, to be tabled by the Commission. The draft budget has, of course, to be considered by the budgetary authorities, the Council and the European Parliament. The financing by the member states of any rebate would be a matter for further consideration but I registered the belief that, in view of Ireland's lower level of national output per head than in the UK, Community, solidarity should be reflected, as before, by arrangements to, in effect, abate Ireland's contribution to the rebate.
The declaration states that there is to be an examination of the CAP, to result in concrete steps compatible with market conditions being taken to ensure effective control of agricultural expenditure by making full use of available possibilities. The declaration contains a list of areas or questions to be examined. I am glad to say that we have succeeded in having a number of important changes made to this list, both by way of inclusion of items omitted from the original draft or elimination of items in that text or subsequently suggested by other delegations which could have been damaging to us. We succeeded in having inserted references to Community preference — relevant in regard to New Zealand butter and other concessionary imports; to the type, as well as the size of farms; to "the particular situations of the various categories of farmers", by reference to which we can pursue our points about low farm productivity consequent on historic factors in Ireland; to internal barriers to trade e.g. health regulations, genuine or otherwise; and to problems of regions at a disadvantage for economic, as well as natural features. A helpful inclusion, at the instance of a like-minded member state, was "external agricultural policy", where there is scope for the Community to be more active, both in promotion and in defensive action in traditional markets.
It was also accepted on my proposal that national aids and their effects could be considered under the item "aids and premium arrangements". Following earlier negotiations in which we had been active, the list already referred to MCAs. The whole section on the CAP is, of course, introduced by an express commitment that the basic principles of the policy will be observed in keeping with the objectives set forth in Article 39 of the Treaty of Rome.
The Council spent some time on other aspects of Community affairs, on which there are Presidency Conclusions. On the subject of economic recovery, the European Council considered that the prospects for sustained and non-inflationary economic recovery should be reinforced by developing and defining more precisely the action being taken throughout the Community. The Commission were requested to review the nature and extent of recovery and national measures taken to consolidate and accelerate it; to make full use of Community financial instruments to support the recovery; and on this basis to indicate what new factors the member states and the Community can bring forward to underpin the recovery, as and when necessary.
In view of the inconclusive outcome of the Williamsburg Summit and the still hesitant and vulnerable nature of the recovery in Europe and internationally, I was reasonably content with these guidelines for action. A number of my ministerial colleagues and I had made considerable efforts, in contacts with our counterparts, to secure adoption of a more positive Community attitude at Williamsburg — for which a particularly good position recommended by the Commission was, unfortunately, not adopted as the Community position for that Summit.
There are now more than 4,500,000 young people in the Community without jobs. The meeting welcomed with some satisfaction the recent decisions of the Social Affairs Council on the reform of the European Social Fund which proposed a 40 per cent increase in the fund next year and which will allow a high degree of priority to be given in allocating this greatly increased sum to the fight against youth unemployment. I was glad to join in this expression of satisfaction on an outcome which had represented a notably successful negotiation by the Minister for Labour. That Council had decided that 75 per cent of the fund's resources should be allocated to actions to relieve unemployment among young people aged up to 25. These decisions have been expressed in a way that will suit the particular composition of the age group in question in Ireland.
Secondly, the Minister obtained a decision that 40 per cent of the fund's resources should be reserved for the six super-priority regions, including Ireland and Northern Ireland, despite the fact that some member states were opposed to any regional allocation, although 50 per cent of resources had previously been reserved for a wider group of less developed regions — involving all those eligible for aid from the Regional Fund.
Our applications will now have less competition, with a 40 per cent share of a growing figure guaranteed to regions which, over the last three years, together received an average of 38 per cent. The youth and regional earmarkings combined should ensure that we in Ireland, with the youngest and fastest growing population in the Community, will be able to increase further our efforts directed at providing employment, training and work experience for our young people.
The European Council also welcomed the resolutions on vocational training in the eighties and vocational training measures in relation to the introduction of new information technologies, recently adopted by the Council. We also asked the relevant Community bodies actively to pursue their consideration of recent communications from the Commission on the promotion of youth employment and the reduction and readjustment of working time.
I raised in Stuttgart, as I had said I would do, the use of new forms of protectionism to influence the location of mobile international investment. I referred to the distortions caused by procurement policies in some states and to the increasing use of technical and health regulations as forms of protectionism. I underlined the need we saw for the continuation and extension of the work already undertaken at the Internal Market Council meetings, held during the German Presidency, in order to strengthen the integration of the Community market. The final paragraph of the Presidency's Conclusions on the Internal Market has, on our proposal, been phrased in such a way that our concerns can be taken up in further work on promoting a Community-wide market.
The Conclusions also contain a section on the Sixth UNCTAD Conference due to open soon in Belgrade and to the economic position and development of the Third World countries. The positive tone of the section reflects particularly the efforts of the Netherlands and Irish delegations.
Finally, on the Community side, the European Council reached conclusions on the need to strengthen Community policies in the areas of steel, transport and the environment. In the discussion of European Political Co-operation topics, we reviewed some of the main problem areas in the world. The first of these was Poland, a country on which the attention of the world is now focused because of the current visit of His Holiness the Pope. We expressed our conviction that only a national reconciliation, which takes full account of the aspirations of the Polish people can lead Poland out of its present crisis.
Secondly, we promised that our Governments would examine in a positive spirit the important initiative recently taken by the Spanish Prime Minister to unblock the present stalemate in the negotiations at the meeting of the Conference on Security and Co-operation in Europe in Madrid. We appealed to the Governments of other participating States to do likewise, in the interest of securing the adoption of substantial and balanced conclusions to the conference which would register progress in the human rights area and open the way to a Conference on Disarmament in Europe.
Thirdly, on the Middle East, we expressed our conviction that the return of sovereignty and peace to Lebanon requires the complete and prompt withdrawal of all foreign forces from that country, with the exception of those, such as international peacekeeping forces, whose presence may be requested by the Lebanese Government.
I am aware of the deep interest and concern of Irish Public opinion at the tragic conflicts which beset Central America, where Irish missionaries and civilian volunteers are working in conditions of great hardship and constant danger. Ireland was particularly active in ensuring that the Heads of State and Government would put on record their views on the situation in that troubled area of the world.
Deputies will note from the conclusions of the Council that the Heads of State and Government expressed full support for the current regional initiative of the Contadora Group of countries, and readiness to continue contributing to further development of that area, in order to promote progress towards stability. I am sure that the House will agree that the European Council made two points of particular importance and value on the situation in Central America:
first, the Ten clearly pointed to the causal link between socio-economic conditions and political tensions in the region; and they called for strict observance of human rights;
second, the Ten, who are an important force in world affairs, have stated unequivocally that the problems of Central America must be solved by political and not military means, from within the region itself and with full respect for the principles of non-interference and inviolability of frontiers.
We hope that these two conclusions will be heeded by all concerned in the tragic situation in Central America.
As the House will be aware, the members of the European Council at Stuttgart signed the Solemn Declaration on European Union. The text of this document has been laid before the House. I should like to pay special tribute to the initiative and vision which inspired the original co-sponsors of the Declaration of European Union, the Foreign Ministers of the Federal Republic of Germany and of Italy, Hans Dietrich Genscher and Emilio Colombo. They and we have reason to be satisfied that as the Community faces into a very difficult debate which has crucial implications for its future, the Heads of State and Government meeting within the European Council, by adopting and signing the Solemn Declaration have reaffirmed their commitment to the basic ideals which inspired the founders of the Community.
I was naturally happy that it fell to the Minister for Foreign Affairs and myself to sign the Solemn Declaration on behalf of Ireland. In our view, it brought to a positive conclusion the negotiations which have been conducted under successive Governments. The Irish approach in these negotiations has consistently, under different Governments, reflected the following national concerns. Ireland, when we joined the Community, accepted and committed herself to the goals of European Union, for two basic reasons:
first, because of a belief that progressive and systematic movement towards European Union was good for the European Community and Europe as a whole and, therefore good for Ireland;
secondly, because of a conviction that the future development of the Community and of collectively funded Community policies centrally administered, could be a crucial factor in the economic and social transformation of this country.
In line with this approach, during the negotiations on the Solemn Declaration, Ireland consistently emphasised the importance of the link between developments in the economic and political areas if effective progress is to be made towards European Union. We have argued that closer political integration must be based on greater economic convergence and that the evolution of common policies in the political areas will depend on the deliberate development and promotion of a growing community of interests in the economic area.
In our view, support on the part of public opinion here and in Europe for movement towards European Union will be more readily forthcoming if the Community is seen to be willing to address in a practical way the problems, such as unemployment, inflation and industrial decline, which bear directly on people's lives. It must be seen to devise and fund effective Community-wide policies to deal with these issues. It is for this reason that sucessive Irish Governments have adopted a generally positive attitude towards the Genscher/Columbo proposals from the outset and, in particular, to those elements in the Solemn Declaration which are aimed at drawing together the economic and political achievements of the Community and of the Ten so as to facilitate greater institutional coherence and responsiveness on the part of the Community.
The Government therefore hope that the adoption of the Solemn Declaration itself, the approach which it contains, and the framework which it provides will help to inform the major debate which has now begun on the future financing of the Community and the future of Community-wide policies. It is essential that the Community be given the means, both financial and institutional, to ensure that the provisions of the Solemn Declaration can be transformed into realities and so that the public support which is crucial for progress towards European Union may be ensured.
I wish to draw attention to a number of specific features of the Solemn Declaration of a special concern for Ireland. The section dealing with the European Communities contains a number of useful affirmations from an Irish point of view. The emphasis given to the need for an overall economic strategy in the Community to combat unemployment and inflation and to promote convergence is very welcome. So is the importance given to the defining of Community instruments and mechanisms which will permit action geared to the situation and specific needs of the least prosperous member states.
The Declaration also stresses the importance of continuing the development of the CAP and maintaining the principles of unity of the market, Community preference and financial solidarity. This is especially welcome at this time because of the doubts which have arisen about the attitude of some member states to the CAP. The Solemn Declaration acknowledges that the problems of the less favoured agricultural regions merit special attention.
The text stresses that the development of the regional and social policies of the Community implies the transfer of resources to less prosperous regions. This emphasis is also timely having regard to the current debate in the Community.
Finally, I should refer to the provisions of the Declaration in regard to foreign policy. The text sets out practical ways and means by which the process of European political co-operation may be strengthened and the co-ordination of the foreign policies of the member states made more coherent. In effect the Solemn Declaration incorporates and draws together a series of practical improvements which have been made in this connection over recent years.
It is important to be clear about the provisions of the Declaration in regard to consultation and co-ordination between member states on issues and questions relating to the political and economic aspects of security provisions which have had the formal endorsement of successive Governments through the period of negotiations. The co-operation and consultation entailed fall explicitly within the framework of foreign policy co-operation. They relate essentially to the diplomatic activities of the Ten in regard to security-related issues arising in fora where the Ten are present as such — for example, in the CSCE in Madrid or the Disarmament Commission of the United Nations. The "economic aspects of security" mentioned in the text relate to issues such as the security supply of raw materials and questions relating to East-West trade. Issues relating to defence or military operations are outside the scope of the Solemn Declaration and, indeed, as Deputies will be aware, in the course of the negotiations a draft provision which might have permitted discussions involving meetings of Defence Ministers was deleted.
All in all, it is to be hoped that the effect of the provisions of the Solemn Declaration in relation to Foreign Policy Co-operation will be to enable the Ten to speak and act more effectively, coherently and autonomously — as I think they did at this Council — both in our relations with third countries and in regard to the many difficult problems, political, economic and developmental, which we must face together in an interdependent world.
I have taken more than the normal time to describe the outcome of the Stuttgart Council, but from what I have said I think that Deputies will understand the reason. The Council extended over three days, working long into the night on each of the first two days. It covered a range of matters of unusual importance and complexity. In the conclusions we reached there is, I think, a reasonable balance between the competing demands of member states and the need of the Community for both financial and political impetus. In short, this most difficult Council, instead of being a damaging failure as it might well have been, was a success with which all the participants can be reasonably happy.
