Enda Kenny (Mayo, Fine Gael) | Oireachtas source

Next week's meeting of the European Council was originally scheduled to be the first of 2014. However, as the House is aware, an extraordinary meeting of EU Heads of State and Government was called in Brussels last week to discuss the deeply worrying situation in Ukraine. For next week's European Council, therefore, there is an extensive and substantive agenda, including Ukraine. As is traditional for the spring European Council, the focus is on economic issues. The main agenda items are the European Semester, the Europe 2020 strategy, industrial competitiveness, climate and energy, and external relations.

In Brussels next week, I also expect that we will review ongoing work on taxation issues, as well as progress in completing banking union. Negotiations are continuing and I remain optimistic that we can reach agreement within the next few weeks. Securing agreement on the single resolution mechanism is the next essential step in completing banking union. It remains a key priority.

I also look forward to having a good engagement next week on the key economic challenges facing Europe. As we start to see more signs of recovery, we need to discuss what we need to do to support and strengthen the fragile return to economic growth and job creation. The discussion on climate change and energy also addresses a central strategic challenge for the union. Before getting into detail, however, I wish to say a few words about Ukraine.

What is happening in Crimea has rightly been described as the worst crisis which Europe has faced since the end of the Cold War. The EU, the Irish Government and most of the international community have strongly condemned Russia's actions over the past 12 days and have called on it to immediately withdraw troops to their barracks. Russia's actions are in flagrant violation of international law and of its obligations to respect Ukraine's sovereignty and territorial integrity.

It was against the backdrop of the deepening crisis in Ukraine that I attended last Thursday's informal meeting of Heads of State and Government in Brussels, convened by President Van Rompuy to formulate a clear and carefully calibrated EU response. Before our internal deliberations, the new Prime Minister of Ukraine, Arseniy Yatsenyuk, briefed the Council on the exceptionally difficult situation in his country and sought our assistance on a number of fronts. I was impressed by his measured and sophisticated approach, notwithstanding the intense pressure he is under. He came with three clear messages: talk to President Putin, press for the cancellation of Sunday's referendum in Crimea and urge Moscow to open direct talks with Kiev. As expected, he focused for the most part on the highly charged situation in Crimea, strongly condemning Russia's violation of existing treaties and also rejecting the resolution of the Crimean regional assembly regarding the referendum on leaving Ukraine and joining the Russian Federation.

I strongly agree with the Prime Minister Yatsenyuk that the decision to hold the referendum this Sunday, coupled with the wording of the question on the voting paper regarding Crimea's possible reunification with Russia, is clearly a significant escalation of an already dangerous situation. Despite this provocation, it is worth recalling that the Ukrainian Government has shown restraint and not reacted militarily to Russia's illegal actions or declared martial law. In our statement after the meeting, EU leaders applauded the courage and resilience of the Ukrainian people, as well as commending the measured response shown so far by the Government in Kiev.

I was encouraged by the Prime Minister's assurances that the Government's proposed language law, diminishing the status of Russian, which caused a great deal of unease, will not be signed into law and that a task force has been established to consider that issue. I welcome his commitment to reforms, including tackling corruption. Prime Minister Yatsenyuk argued that Ukraine is not anti-Russian and, indeed, views Russia as a friendly country, but that Ukraine will not be dominated or intimidated by Russia. He concluded there is no time to lose, and asked that the political chapters of the association agreement be signed immediately and that the EU expedite measures on visa liberalisation.

We adopted a number of measures which we believe can make a powerful contribution to the stabilisation of Ukraine's macroeconomic situation, as well as helping the new Government in a broader political sense. We endorsed the comprehensive assistance package prepared by the European Commission which has a value of approximately €11 billion. We tasked all relevant Council bodies to process this rapidly and we recalled the need to work with the IMF in order that assistance can be unlocked. Prime Minister Yatsenyuk pointed out that he needs €2.5 billion in cash now to pay for gas bills that are due. The immediate priority is to restore macroeconomic stability through sound fiscal, monetary and exchange rate policies. At the same time, the Government must urgently launch an ambitious set of structural reforms, including the fight against corruption, and introduce greater transparency. The Council has also frozen the assets of persons identified as responsible for the misappropriation of state funds. The intention is to recover those assets and return them to the Ukrainian people. We also made clear that we are prepared to respond immediately to requests for humanitarian assistance.

On the broader political front, we reiterated the EU's commitment to signing the association agreement, including a deep and comprehensive free trade area, with the Ukrainian authorities. It is worth recalling that it was the announcement on 21 November last year by Ukraine's then President Yanukovych of his decision to postpone preparations for the signature of the association agreement at November's Eastern Partnership summit in Vilnius that triggered major protests in Ukraine. The initial protests were overwhelmingly peaceful yet were met just over a week later by heavy-handed police action which only served to inflame the situation. We agreed last week that, in the interim and as a mark of solidarity with Ukraine, we will shortly sign all the political chapters within the association agreement. I expect that to happen very soon. The European Union also intends to adopt unilateral measures which would allow Ukraine to benefit substantially from the advantages offered in the deep and comprehensive free trade area. These kinds of measures would entail an offer to apply provisions related to the import of goods by reducing tariffs and opening tariff rate quotas by so-called autonomous trade measures. Finally, we pledged to continue to work on the visa liberalisation process. These were the main demands of the Ukrainian Prime Minister.

There was a great deal of speculation in the lead-up to our meeting as to whether the EU would agree to impose sanctions against the Russian Federation, with much being made of the supposed divisions within the Union on this question. In the event, the statement delivered a clear and unequivocal message to Moscow, strongly condemning its unprovoked violation of Ukrainian sovereignty and territorial integrity, and setting out our collective response to the Russian Federation. We made clear that negotiations between the Governments of Ukraine and the Russian Federation need to start right away and need to produce results within a limited timeframe. In the absence of such results, the EU will decide on a second set of additional measures, such as travel bans, asset freezing and the cancellation of the EU-Russia summit, as well as broader economic issues that might be taken into account. EU Ministers at the Foreign Affairs Council on Monday will consider the next steps and, of course, the European Council meeting next week will discuss the situation in the Ukraine and the EU's response.

I turn now to the economic agenda for next week, starting with the European Semester. As the House is aware, following our successful exit from the EU-IMF programme in December, Ireland is a full participant in the 2014 process. This is the fourth European Semester cycle, the third under the enhanced governance arrangements introduced by the six-pack and the first under the further enhancements introduced by the two-pack.

The discussion at next week's European Council takes place in the context of improving economic conditions across Europe. Last year saw GDP in both the EU and the eurozone area back in positive territory for the first time since late 2011. The most recent purchasing managers' data for February suggests that economic activity is now at its highest level in 32 months, while through the ECB's bank lending survey, we have seen some first signs of the easing of credit constraints for Europe's SMEs. Most importantly, there are now signs that this improvement in economic conditions is feeding through to the labour market. Many member states, including Ireland, have returned to net job creation. Our own employment growth rate of over 3% in 2013 is currently the strongest in the EU. However, unemployment remains unacceptably high at around 11% for the EU and 12% for the eurozone area. The rate in Ireland is also 12%. We must remain focused on the need to effectively tackle this. Job creation remains the priority.

Against this broader background, the spring European Council will finalise guidance to member states on the preparation of national reform plans for 2014. This process began with the annual growth survey presented by the Commission in November last year and will conclude with the June European Council endorsing country-specific recommendations for member states. As part of this process, the Commission last week also published in-depth reports on macro-economic imbalances in 17 member states, including Ireland. We are, of course, studying the report on Ireland. It acknowledges that we have made significant progress in addressing imbalances which arose over the last decade. We have noted the remaining challenges highlighted by the Commission and we remain firmly committed to addressing these by building on the reform measures which we undertook during the EU-IMF programme. Work on the European semester is being led by my Department, working closely with the Departments of Finance; Public Expenditure and Reform; Jobs, Enterprise and Innovation; and other relevant Departments. The objective remains to submit our 2014 national reform plan to the European Commission in April.

As part of the European semester discussion, the European Council will also examine Europe 2020 - the EU's strategy to support smart, sustainable and inclusive growth. It is a ten-year plan, adopted in 2010, based around five headline targets in the areas of employment, innovation, climate and energy, education and social inclusion. These are translated into specific goals for each member state, with progress monitored within the framework of the European semester. The Commission's stocktaking exercise shows quite clearly that overall performance against these objectives is mixed. This is not surprising as, in many ways, implementation of the strategy has been overshadowed by crisis resolution in the euro area. Now, however, is the moment to properly re-engage with Europe's post-crisis growth strategy.

I expect that our exchanges at the spring European Council will be followed by a full public consultation on the strategy which run until the autumn. The outcome of this public consultation will then be taken forward by the new European Commission. When Commission Secretary General Catherine Day met the Oireachtas Committee on European Union Affairs on 23 January, she emphasised the importance of strong stakeholder engagement with this renewal of the Europe 2020 strategy, including, of course, from national parliaments. The Commission's 2030 climate and energy framework proposals, to which I will return shortly, are likely to form an important strand of this wider process.

The spring European Council will also focus on industrial competitiveness. Exchanges here will be informed by the recent Commission communication "For a European Industrial Renaissance" and by discussions at the Competitiveness Council on 20 February. Ireland has been proactive in the preparatory discussions in this area as I believe that a competitive and innovative industrial sector will be an important element of Europe's recovery. The Minister of State, Deputy Donohoe, will expand on this in his contribution.

The European Council will also hold a first policy debate on the climate change and energy framework for 2030. Discussions will again be informed by a Commission communication issued in January and the debate will be followed closely at a wider international level in view of the importance of EU engagement and influence in the international climate process under the UN framework convention and the Kyoto Protocol.

I wanted to set out our initial thinking on the communication as we approach the European Council meeting. In the first place, the communication is a basis for a timely policy debate on the next phase towards the EU's objective of transition to a competitive, low-carbon European economy by 2050. We recognise the benefits of increasing the share of renewable energy in our fuel mix, both from the economic and the environmental perspectives. The issue requires careful consideration in terms of both the challenges and the opportunities of global transition to a low-carbon future. Both ambition and flexibility are important features of the package but we must also reach an outcome that is sustainable for the EU as well as for individual member states on environmental, economic and competitiveness grounds. We can only build momentum towards a low-carbon society if our vision is founded on a policy framework that is affordable, fair and transparent and takes account of member states' specific circumstances and capacities. The principles and objectives for the 2030 framework must be translated into concrete achievements. To do this, we must at an early stage reach a shared understanding of the assumptions underpinning the Commission's impact assessment.

Our own initial technical analysis of the communication has raised some issues of serious concern from a national perspective about the projected overall costs. We look forward to engaging constructively with the member states and the Commission to deepen understanding of the national implications of the proposals. We note the recognition in the communication that renewable energy has an important contribution to make to the 2030 framework. Effective transition to a low-carbon future requires that the 2030 framework provides for cost-effective implementation without placing a disproportionate burden on EU energy consumers or taxpayers and without undermining EU competitiveness. While the proposed 27% renewable energy target for 2030 for the EU can be welcomed, we hope that the EU as a whole can surpass 27% and that potential investors are convinced - beyond any doubt - of our collective commitment to an ambitious renewable energy future.

We are interested to hear the Commission's views on how the EU-wide renewable energy target post-2020 will be achieved and on how the export of renewable energy from areas of high resource to areas of high demand can play a role in achieving this target. We must send a clear message to industry that delivering the innovation needed to open up new renewable resources will be rewarded. Public acceptance of energy infrastructure and renewable energy development is crucial. We cannot underestimate the importance of placing the concerns of local communities at the heart of the transition to renewable energy. Citizens must perceive that such developments are being made primarily for their benefit and on an equitable and cost-effective basis.

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