Vol. 398 No. 5
11 Mr. Barry asked the Minister for Foreign Affairs if the General Affairs Council of the EC have examined the impact on (i) EC Budget (ii) EC Regional Policies and (iii) the Common Agricultural Policy of the unification of Germany in the current year and in future years.
The General Affairs Council has been continuously monitoring developments in relation to German unification since the end of last year. At each of our monthly meetings the Foreign Minister of the Federal Republic has briefed his colleagues on progress in the unification process. Similar briefings are provided by German Ministers to their colleagues in other Councils including in particular, ECO/FIN and Agriculture. The Special European Council held on 28 April considered the question of German unification and the informal General Affairs Council held in Dublin on 21 April 1990 to prepare for the special European Council, considered inter alia, a report drawn up by the Commission on the implications for the Community of German unification.
The Commission states in its report that while the integration of East Germany into the Community does not amount to accession in formal terms, the problems posed are similar to those of recent accessions. Integration will need to proceed by stages and will require transitional measures to facilitate the gradual application of existing Community legislation. Temporary derogations will be required. The transitional arrangements will be based on Commission proposals and will be decided by Council following reference to the European Parliament.
As regards the impact on the Community Budget of the GDR's integration into the Community, the Commission's view is that any figures are bound to be guesswork at this stage. It is expected that the position will become clearer when the arrangements for inter-German monetary union are finalised.
On the revenue side of the Community Budget much will depend, in the Commission's view, on the transitional arrangements and the macroeconomic impact of German unification. In general terms the Commission expects to see vigorous economic growth in the GDR, generating higher demand throughout the Community and an increase in imports from other member states. This additional growth, which could add up to one half of one per cent to the Community GNP, will be reflected in additional revenue to the EC Budget. On the expenditure side, the cost will largely be determined by the impact of integration on the Common Agricultural Policy and the scale of intervention under the Structural Funds.
The Commission states that as from unification the territory of the GDR will be entitled to Community aid under the Structural Fund's regulations and assumes that the GDR will be eligible under one or more of the structural policy objectives. In particular as far as the Social Fund is concerned the Commission expects that particular emphasis will be placed on vocational training and occupational integration.
The overall volume of Structural Fund assistance to the GDR will depend on the classification of the regions of the GDR with reference to the various objectives of the structural policies. Chancellor Kohl has stated that German unification will not affect commitments already made to member states regarding the Structural Funds and that these will be fully met.
In relation to agriculture the Commission points out that the pattern of agriculture in the GDR differs very considerably from that in the FRG. Co-operatives and state farms dominate and cover almost 95 per cent of cultivated land. The average size of farms is very large and family farm ownership almost non existent with the rural population largely employees rather than land-holders. Overall productivity is below West European standards, mainly due to its organisation and excess labour force. The trend of produce prices in the GDR will depend on how quickly its agricultural economy is phased into a market economy as from the entry into force of German Economic and Monetary Union. Substantial consumer subsidies in the GDR will have to be phased out. Overall the problems for East Germany, including the question of land ownership, are considerable.
As I mentioned, the European Council of 28 April considered the German unification issue. The conclusions of that meeting which have been circulated to Deputies, warmly welcomed German unification and expressed confidence that it will be a positive factor in the development of Europe as a whole and of the Community in particular. The European Council said that the Community will ensure that the integration of the territory of the GDR is accomplished in a smooth and harmonious way. The Heads of State and Government were satisfied that this integration will contribute to faster economic growth in the Community. They agree that it will take place in conditions of economic balance and monetary stability. Unification will come about without revision of the Treaties and the European Council saw integration becoming effective as soon as unification is legally established, subject to the necessary transitional arrangements.
After the very lengthy reply which the Minister has just given, surely he does not expect us to believe at this stage that some estimates have not been made as to the costs of unifying Germany and bringing in an additional 16 million people into a unified Germany? What effects will this have on the Structural Funds? Where will the money for this economy to achieve structural stability and increased infrastructural development come from, if it will not come from the already announced Structural Fund allocations? I find it difficult to believe that nobody has made any estimates yet of the cost on the rest of Europe of the reunification of Germany.
I refer Deputy Owen briefly to the fact that the Commission has stated in a document, which it presented to us and which I am taking steps to have laid in the Library — even though we have not got enough for everybody as of yet — that any figures at present would be guesswork figures, that is the word that the Commission uses. As things develop we will have a clearer idea and as I have said in my reply, the position will become clearer when arrangements for the inter-German monetary union are finalised.
Again, I refer Deputy Owen to the statement made by Chancellor Kohl, which said that German unification will not affect commitments already made to member states regarding Structural Funds and that these will be fully met. Further, in the number of areas I tried to cover in the course of my reply to Deputy Barry's question, I clearly pointed out where there is quite a number of complex situations to contend with but these have been worked on. As I have already said, the Deputy can have regard to the official views of the Commission which will be laid in the Library in as short a time as I can possibly manage.
That concludes questions for today.
