Enda Kenny (Mayo, Fine Gael) | Oireachtas source

I am pleased to brief the House on the outcome of last week's European Council meeting in Brussels on 18 and 19 October. I am happy to report that the outcome of the meeting was very positive from both an Irish and a European perspective. At the insistence of a number of member states, including Ireland, we explicitly reaffirmed the commitment we had made in June to break the link between banking and sovereign debt and to provide for the recapitalisation of banks by the ESM. This will be done in full respect of the decisions taken in June. We agreed that legislation on the establishment of a single supervisory mechanism for banks was a priority and that the legislative framework should be in place by 1 January 2013, with work on the operational implementation to take place during 2013. As a result, a firm timeline is now in place. The supervisor will be up and running next year and we are further down the path towards a functioning and effective banking union. The objective is clear, but it must be based on quality and competence.

I said last week when I briefed the House ahead of the meeting that progress on banking union - especially the single supervisor - was of pressing urgency, not just for Ireland but also for the euro area, and that it was a priority issue for me. Last week's decisions are, therefore, particularly welcome and significant. It will, of course, be important to maintain the pressure for implementation and delivery. There can be no slippage or drift, particularly in view of the fact that over 6,000 banks across the eurozone will be involved. Maintaining momentum is important to the European Union's credibility and this will be a key focus for me in the period ahead.

The main focus of discussions at our meeting last week was on strengthening economic union, with a particular focus on advancing towards banking union as an essential element of this work. At the beginning of the meeting we heard the report of the President of the European Parliament, Mr. Martin Schulz. President Van Rompuy presented his interim report, which is based on the four essential building blocks he identified in June, namely, an integrated financial framework, or so-called "banking union", an integrated budgetary framework, an integrated economic policy framework and democratic legitimacy and accountability. His report was well received and we agreed that he should continue with informal consultations with member states and the European Union's institutions before making his final report in December. This will include a specific and time-bound roadmap for the way ahead. It will also include specific proposals. As part of his work he will explore, in particular, the possibility of having fiscal capacity for the euro area which, in practice, is another term for a possible eurozone budget and potential contracts between member states and the EU institutions, perhaps covering the country-specific recommendations. While these are interesting ideas, we need considerably more detail before we can assess whether they might have a contribution to make. We will continue to engage in these consultations constructively and with an open mind.

On banking union, the European Council agreed that we need to move towards a more integrated framework but one that will be open, to the greatest possible extent, to all member states that wish to participate. A considerable amount of our discussion focused on how to ensure that outcome, which is a particular concern of those member states that are not, as yet, part of the euro. As I have said, we agreed to move forward on the single supervisory mechanism as a matter of priority, with the objective of agreeing on the legislative framework by 1 January. Work on implementation will then take place in the course of 2013. In this regard, we agreed that protecting the integrity of the Single Market was crucial.

On bank recapitalisation, we agreed that the eurogroup will draw up the exact operational criteria "in full respect" of the June euro area summit statement.

We restated the imperative need to break the vicious circle within banks and sovereigns and we reiterated that when an effective single supervisor is established, the ESM could have the possibility of recapitalising banks directly. As I have said, Ireland was part of a group of member states that insisted that reference be made to what was agreed in June to underscore that the commitments entered into at that time stand and that they will be fully respected in the work that lies ahead. At the meeting I raised the specific circumstances of this country and the need to fulfil the commitment to examine the sustainability of our programme as agreed in June. Our focus was on working through how the commitments on banking union in particular were to be advanced. However, as the House knows, I had a good conversation with Chancellor Merkel on Sunday evening in the wake of her comments about banks in Spain at her post-European Council press conference. I regret that some Members of the House and others chose to jump to the conclusion that these comments referred to Ireland, or that the June commitment with regard to Ireland was no longer valid. These comments were opportunistic and misguided and I hope that those who made them will use the opportunity of this debate to withdraw them. In my conversation with Chancellor Merkel, she registered a genuine appreciation of the steps the Irish people are taking to turn our economic situation around and her full support for our efforts to get back to the markets. Like us, she believes that a positive outcome for Ireland would be good news also for the euro area and the wider European Union. Her support is well expressed in the joint statement we issued after our conversation. It makes it clear that the commitments made to Ireland at the end of June stand, and that this vital work will be taken forward by the Minister for Finance, Deputy Noonan, and his colleagues in the eurogroup. The Chancellor was pleased to put on the record her recognition that Ireland is a special case and to state that this would be taken into account in the discussions ahead, within the mandate given to the Eurogroup.

I also had an excellent meeting with President Hollande in Paris on Monday. He, too, made his support for our case clear both in the meeting and in the subsequent press conference. He expressed in clear and welcome terms his appreciation for the special situation that Ireland faces - that we had moved early to put large amounts of money into our banks in the interests of wider stability in Europe's banks and our common currency - and the need for the Eurogroup of finance Ministers to take this into account as it works out the modalities of how to implement the commitments agreed by all leaders in June. This is the mandate given to the Eurogroup. These statements are a welcome reassurance that, in keeping with the June agreement, Ireland's particular situation will be addressed. As my colleagues in Government and I have said on many occasions, our goal is to secure the best possible deal for the people of Ireland, one that makes our debt more sustainable and our return to the markets more certain. We have agreement from our partners to work with us on this. The approach we are taking has yielded results and I am confident it will lead to a positive outcome. We appreciate that it will take careful and patient work, often behind the scenes and away from the glare of publicity. The negotiations are complex and sensitive and the stakes for our country are high. I will not say to the House that we will have a deal on our banking debt by a particular date, nor will I say how such a deal will be structured. The Government has always said that getting the right deal is better than getting a rushed deal. However, the very public acknowledgements by both Chancellor Merkel and President Hollande over recent days of our particular circumstances and the necessity for those circumstances to be fully taken into account as work is taken forward are, I believe, positive developments for Ireland and lend weight to the case we will continue to press.

The House will recall that in June we agreed the compact for growth and jobs. The compact provides a very useful framework for actions at national and EU levels, which are directed at returning the Union to sustainable and job-creating growth. I argued strongly for an emphasis on the growth and jobs agenda to match the necessary focus on structural reform and consolidation. We have always spoken up for a balanced approach and I indicated that this would be a priority issue for our forthcoming Presidency. In that context, I warmly welcomed the return of the leaders at last week's meeting to review implementation.

With the compact, as in other areas, it is imperative that what is agreed at the level of Heads of State and Government is actually implemented, and without undue delay. As I have said in this House previously, this is a matter of credibility for the European Union. What we agree must be implemented. I made this point clearly to my colleagues in Brussels last week, as did a number of other leaders.

I am glad to report to the House that considerable progress has been made in taking forward the various elements of the compact, but it was also made clear - including through presentations by President Van Rompuy, the Cypriot Presidency and President Barroso - that more needs to be done if it is to realise its full potential in boosting growth and achieving an environment for the creation of sustainable employment across the European Union.

In advance of this summit meeting, we sought to strengthen the language on the need to take further steps to see the Single Market - especially in the digital area - deliver the growth potential that I am certain it holds. We must complete work on the first set of measures under the Single Market Act - due to be agreed by the end of the year - while taking forward work on the second set of measures recently published by the Commission. This work will be an important component in our Presidency workload during the first half of 2013. Research and innovation, through the new programme, Horizon 2020, as well as through the new programme for competitiveness of enterprises and SMEs, will contribute significantly to converting research and innovation into competitive advantages from which European business can benefit, thus supporting European employment.

An area that I was keen to see properly recognised in our conclusions on the compact for growth and jobs was the potential of trade as a real engine of growth. As a trading nation, we know well the critical importance of trade to our economic well-being. Indeed, our recovery thus far has been export-led and I intend to do everything possible to see the Union's trade opportunities pursued vigorously. I am satisfied that the European Council called for progress over the coming months in progressing free trade agreements with Japan, Canada and Singapore. I am delighted that European leaders have committed the European Union to working towards the goal of launching negotiations on a comprehensive transatlantic trade and investment agreement during 2013. It will not be concluded in 2013 but it will tally very closely with the priority we will be giving to developing EU-US trade during the term of our Presidency next year. These efforts will include the hosting of an informal ministerial meeting here in Dublin on this theme during the spring. In truth, each aspect of the compact supports Ireland's vital national interest. We understand and appreciate that recovery in Ireland depends significantly on recovery in Europe. We now need to make a reality of the compact; yet again, we need to implement it and be seen to do so.

On Friday morning last, leaders had a good exchange on the EU's relations with its strategic partners, most notably China. This kind of discussion - especially one in which we are not trying to reach agreement on conclusions or on an outcome document - is especially valuable, as colleagues avail of the opportunity to share experiences with a genuine view to strengthening the Union's hand in our external engagements. There was a general sense that we need to do more to ensure our approach at bilateral level is consistent with that being pursued at EU level. This makes good sense. Our approach in engaging with China across the broad range of issues needs to be an open and constructive one. For my part, I shared with my colleagues our recent experience in our engagement with China, including the high-level visits in both directions. We look forward to developing our bilateral relations with China as well as advancing EU-China relations during our Presidency.

Before concluding our meeting on Friday, we also adopted a comprehensive set of conclusions on a range of foreign policy issues which are currently pressing. The European Council took stock of the deteriorating situation in Syria and endorsed the conclusions reached by EU Foreign Ministers, including the Tánaiste on behalf of Ireland, at the meeting of the Foreign Affairs Council in Luxembourg on 15 October. The High Representative of the Union for Foreign Affairs and Security Policy, Catherine Ashton, gave a detailed briefing to the meeting about persecution of religious minorities and other issues pertaining to Syria. With regard to Iran, we expressed our serious and deepening concerns about that country's nuclear programme. We reaffirmed our commitment to a dual-track approach of restrictive measures as well as efforts by the High Representative to engage Iran in meaningful and constructive discussions. The situation in Mali and the Sahel region was addressed, with the European Council expressing its serious concern at the continuing political, security and humanitarian crisis in that area. This matter was raised by President Hollande in his contribution.

Before concluding, I note that last week's European Council also adopted conclusions recognising the award to the European Union of the Nobel Peace Prize. I warmly welcome the award.

It is a reminder to us at a time of real challenge that earlier generations of Europeans came together to build, out of the rubble of the devastation caused by the Second World War, a new kind of community and union which would bind the states of Europe together for our common good and an area of peace and prosperity that our Continent has never before seen. This is a perspective we need to keep in mind as we deal with our difficulties today. Europe together and united has, in the past, overcome existential challenges. Similarly, we will see our way through this current crisis, working with our partners in a true spirit of co-operation and solidarity.

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