Eamon Gilmore (Dún Laoghaire, Labour)
Link to this: Individually | In context | Oireachtas source

I thank the Chairman. As always, it is a pleasure to have this opportunity to meet the Oireachtas Joint Committee on European Union Affairs and to brief it ahead of this month's meeting of the General Affairs Council which will take place in Brussels on Monday, 24 September. The General Affairs Council will meet for a morning session next Monday. I will represent Ireland and will be joined by the Minister of State, Deputy Creighton. The primary focus of the meeting will be the multi-annual financial framework, MFF, preparation of the October European Council and the European semester. Over lunch, we will have a discussion on the working methods of the General Affairs Council.

Discussions on the MFF will be based on an updated negotiating box which the Cypriot Presidency circulated yesterday evening. It does not, as yet, contain figures. These will probably not appear until after the October European Council. As the committee is aware, negotiations on the MFF are intensifying. The Cypriot Presidency and European Council President Van Rompuy want negotiations to conclude at the 22-23 November European Council. We strongly support this timetable and we will do what we can to support the Cypriot Presidency in its efforts to broker a deal. In any case, it will fall to us during our Presidency to steer underpinning sectoral legislation through the European Parliament.

Our position on the MFF is quite clear. As the committee knows, we want a properly funded and properly functioning EU, with the right mix of priorities, fair allocation of resources and a firm focus on jobs and growth. We see a need for continued food security and safety, which warrants only gradual changes to the CAP. We also have an express national interest in defending our share of CAP payments. In particular, we want the MFF to reflect the importance of job creation as well as growth. We have stressed to partners the importance of the agrifood sector for growth.

While we are slowly approaching agreement on the MFF, it is clear there are still wide gaps between the positions of member states and there is a long way to go before we can get agreement on this dossier of vital importance for the medium-term future of the Union. The key issues, and the most difficult ones, in the MFF negotiations in the coming months will be the overall size of the MFF, the relative proportions allocated to CAP, Cohesion and other headings, and the funding of the EU budget, including arrangements for rebates and corrections.

The General Affairs Council will also prepare for the October European Council through consideration of the annotated draft agenda for that meeting which has been made available by President Van Rompuy. He has identified three main issues for discussion, namely, economic policy, strategic partners and foreign policy issues in light of events. Under the economic policy heading, President Van Rompuy will present his interim report to the European Council on strengthening Economic and Monetary Union, building on his first report prepared in collaboration with the Presidents of the Commission, the ECB and the Eurogroup in June. His final report is due to be made before the end of the year.

President Van Rompuy is investigating in more detail what might be required under the four headings he set out in June. These are: an integrated financial framework, often referred to as "banking union"; greater economic policy co-ordination; more fiscal or budgetary integration; and democratic accountability and legitimacy.

An essential process of consultation is now under way, with a round of official level bilateral meetings taking place this week – Ireland's bilateral will take place in Brussels tomorrow, 20 September – to be followed early next month by collective meeting of all member states with President Van Rompuy's team.

Of the elements President Van Rompuy is pursuing, banking union is being taken forward with real urgency. The Commission made its formal proposals for a single supervisory mechanism for banks in the euro area last week. Given the link between getting the concept of a supervisor off the ground and activating the possibility of the ESM directly recapitalising banks, there is a particular urgency to this work. The June summit set an ambitious deadline of the end of this year. This is, of course, an issue of importance for us, and President Van Rompuy has signalled that he wants the October European Council to assess progress being made and, as necessary, to set further orientations. Like us, he wants to see what was agreed in June implemented. Before concluding on this point, I would like to note that since the European Council and euro area summit meetings at the end of June, we have seen greater stability in the markets. Key to this has been the decision of the ECB to adopt its outright monetary transactions initiative, which opens the possibility of its buying the bonds of member states in difficulties.

The decision of the German Constitutional Court in Karlsruhe on the ESM was also very positive and welcome. The Commission's proposals on banking supervision have also contributed to a sense that we are getting to grips with what now needs to be done. However, to maintain this sense of increased confidence, we need to press forward urgently with implementation of what was agreed at the end of June. There can be no back-sliding. Confidence is fragile and a lack of progress could easily set us back again.

In October, leaders will also take stock of progress in the implementation of the compact for growth and jobs which they agreed in June. If required, they will set further orientations to promote growth and employment. The compact for growth and jobs is important reinforcement of political commitment to an EU growth agenda. The key task for us in the period ahead is driving it forward with real commitment and momentum. This is a vital national interest. Irish recovery depends on European recovery.

The compact provides a clear framework for actions at three levels: actions to be taken by member states; the contribution of European policies to growth; and EMU related growth factors. Ireland has been among those pushing most strongly for accelerated progress on the Single Market in particular, including the digital single market, as well as highlighting the role of international trade as an engine for growth. In particular, we look forward to the Commission's proposals for a new round of measures in the autumn under the Single Market Act, and to sustaining momentum in this area under next year's Irish Presidency.

There will also be a €10 billion increase in the European Investment Bank's paid-in capital on foot of the June meeting. This could expand the bank's lending capacity by some €60 billion over the next three to four years, and unlock a further €120 billion from other finance providers. The key Irish concern is that the approach must be sufficiently flexible to target investment where it is most needed, including addressing the particular circumstances of programme countries. This was the focus of our meeting with the new EIB president, Dr Werner Hoyer, when he visited Dublin on 6 July. On foot of that meeting, we have we have set up a high level working group with the EIB to examine the full range of issues involved in strengthening its support for Ireland. An initial report is expected in the coming weeks.

The October European Council will also discuss the EU's relations with key strategic partners. President Van Rompuy is keen that EU leaders consider relations with strategic partners on a regular basis and provide high level guidance on important issues, as necessary. While it is not anticipated that conclusions will be adopted on this issue, it will provide an opportunity for a free-flowing exchange of these critical relationships for the EU. It can be expected that the October European Council may also address certain foreign policy issues, as required.

This meeting of the GAC will contribute to a review of the operation of the European semester, which is under way, that aims to identify lessons learned from the experience in 2012, including a particular focus on procedures for the handling of country-specific recommendations. Given that Ireland will be presiding over the Council during the next European semester cycle, this exercise will be of particular interest to us.

Discussion will be on the basis of a paper prepared by the Cypriot Presidency. The Commission has also made proposals for more regular and structured contacts with member states. The second European semester cycle in 2012 operated under the enhanced economic governance arrangements introduced last December, and there was some disquiet about the preparatory arrangements in this regard. Ireland's CSR in 2012, as in 2011, is to ensure continued implementation of our EU-IMF programme. As the committee will be aware, the semester is the Union's annual cycle of economic and fiscal policy co-ordination and it is clearly growing in importance. The key aim is that policies implemented by member states reflect jointly agreed priorities.

The third semester cycle in 2013 is further reinforced by the compact for growth and jobs, as well as agreement in June that ESM assistance will be conditional on CSR implementation. The focus of the Cypriot Presidency paper is on lessons learned in 2012. It suggests that procedural improvements that might be considered include earlier presentation of the Commission's new alert mechanism report in November, alongside the annual growth survey; greater dialogue between the Commission and member states around the development of the Commission's CSR proposals, beginning with bilateral meetings in October taking stock of the 2012 CSRs; better organisation of the work of the committees supporting the ECOFIN and EPSCO Council formations, where there is important overlap on issues such as wage settlement, income tax and pensions policy; and the important Presidency role in striking an appropriate balance in this regard, including through greater involvement of COREPER ambassadors.

Initial discussion at next week's GAC will inform further consideration by both the EPSCO and ECOFIN Council formations. Refreshed arrangements on foot of the review under way will then be reflected in an Irish Presidency roadmap for the third European semester cycle. This is likely to be presented to the GAC in December.

Over lunch, Ministers will discuss the working methods of the GAC. To focus discussions, the Cypriot Presidency has circulated a paper focusing on the key role of the GAC in ensuring consistency in the work of the different Council configurations and in preparing and following up the work of the European Council. As the incoming Presidency in particular, we are especially interested in ensuring the GAC plays its full role in executing its responsibilities as regards the European Council, and we will be working closely with partners and with President Van Rompuy's office, as appropriate, to that end. This timely lunchtime discussion on working methods arises, in part, in response to a joint letter sent to the Presidency in July by the Minister of State for European Affairs, Deputy Creighton, along with her Finnish, Spanish and Italian colleagues.

The Cypriot Presidency has indicated that issue of the Roma community should be included on the agenda of this meeting of the GAC. We expect that this will largely be an information point, as it is anticipated that the Commission will make a presentation on its evaluation of national efforts aimed at inclusion of the Roma population. To this end, it will be noted that Ireland submitted its national Traveller-Roma integration strategy at the beginning of this year.

I appreciate the attention of members and I look forward to hearing their comments. I will be very happy to respond to any of points or queries.

Eamon Gilmore (Dún Laoghaire, Labour)
Link to this: Individually | In context | Oireachtas source

I agree with Deputy O'Reilly that the priority and the focus in Europe now needs to be on jobs and growth. As he said, there has been, quite rightly, a strong emphasis on budgetary discipline over recent times. Obviously, that will remain. We all have to recognise that if the European economy is to recover, there has to be economic growth. In particular, there has to be employment. The challenge of youth unemployment, especially, needs to be addressed. That is clear across Europe and in this country. That is why a compact for jobs and growth was agreed at the June Council meeting. That is why the European Council meeting in October will resume the discussion on how the compact for jobs and growth is to be implemented and driven forward. I expect and hope that the European Council will give some specific directions in that regard. The agreement that was reached in June represents an important reinforcement of political commitment in this area. The approach in the compact is threefold. First, its sets out the actions to be taken at member state level. Second, it sets out the contribution of European policies to growth. Third, it sets out the approach with regard to EMU related growth factors.

Deputy O'Reilly also asked about the issue of flexibility with regard to Common Agricultural Policy payments.

Again, this does not pose any particular difficulty for Ireland. We are in favour of allowing member states the flexibility to transfer funds between the two pillars according to their needs and priorities. We also support the suggestion to exempt from co-funding funds that are transferred from pillar 1 to pillar 2.

Deputies Joe O'Reilly, Bernard Durkan and Seán Kyne referred to the Common Agricultural Policy in the context of the multi-annual financial framework. We need to consider the current position as regards the multi-annual financial framework because a number of issues remain to be resolved. There is the question of what will be the ultimate size of the European budget up to 2020. As everyone is aware, there are differing views among member states as to what should be the size of this budget because this will have a major influence on the ultimate size of the Common Agricultural Policy budget. Ireland's position is that we support the proposals that were brought forward by the European Commission. The European budget must be fit for purpose and, in particular, capable of delivering the measures needed to promote growth and jobs. In that context, the Common Agricultural Policy is important for this country in respect of food security and the major contribution the agrifood sector makes to employment. We are very pleased with the extent to which the sector has grown and is contributing to economic growth and recovery.

When member states are considering the European budget, it is important that they do not approach the issue with a view to identifying how much can be pared from this or that area but in terms of what the European budget can contribute to stimulating economic recovery in the member states, whether in the area of cohesion, research and innovation, education and training or the Common Agricultural Policy. The continuation of a dynamic, consumer-focused agricultural production base in Europe is one of the areas where the European Union can add value.

Senator Reilly raised a number of issues. It is important that we first recognise that this is a process which is following on from key decisions made in June. In that context, I refer to Deputy Kyne's comment regarding a pattern of decisions being made at European level which brings confidence for a few days before such confidence slips back again. That is a fair description of the action taken in response to the crisis in the 12 to 18 months prior to the June meeting. The June meeting was different, however, because we have seen a retention of confidence in the markets since that meeting, as reflected in bond yields. Everyone knows the figures in respect of the yields. This retention of confidence is dependent in turn on the implementation of the measures that were agreed in June. There cannot be any backsliding. A critical element of the decision taken in June related to the compact on jobs and growth. The compact must be driven forward and it is one of the issues I expect we will discuss on Monday and subsequently at the European Council meeting in October.

To respond directly to Senator Reilly's question on the bank deal, it was agreed in June that bank debt would be separated from sovereign debt. The conclusions of the June meeting made specific reference to addressing the Irish position and the Government has been following through on that matter. There is not a day that engagement does not take place either at official or ministerial level, whether this involves the Minister for Finance, the Taoiseach, me or the Minister of State, Deputy Lucinda Creighton, engaging with our counterparts in other member states and the European institutions about working the deal through at a practical level. We did this also in respect of the interest rate issue and leading up to the June summit when we secured agreement on the issue. We will conduct discussions with our partners in private and confidentially. We are confident of securing an outcome that will be to the best benefit of Irish people and taxpayers.

We need to be careful when listening to or reading comments made by other Heads of State, whether Chancellor Merkel or anybody else, that we do not parse them too literally. I interpret Chancellor Merkel's statement that there has been no change in respect of the bank deal for Ireland as meaning there has been no change from the decision that was made in June. What we have to do is to work through that decision and seek agreement on it.

On the issue of own resources raised by Senator Reilly, the Commission has proposed new ways of funding the European Union, including through an EU VAT measure and a financial transactions tax. The view of the Government has been that direct payments from member states as opposed to new lines of tax are the fairest and most effective way to proceed. As the Senator is aware, concern has been expressed about the effect of a financial transactions tax on our financial sector if it were not applied globally or at least across all 27 member states.

On the Future of Europe group, this is a very informal group of foreign ministers who, in the course of frequent meetings, are placing in the public domain some collective thoughts for consideration. These ideas do not constitute a formal proposal. The political cycle across the member states is such that when I counted those around the table at the most recent meeting of the Foreign Affairs Council, I discovered I was in the top half of those present in terms of longevity. Given that I have only been attending Council meetings for 18 months, members will have some idea of the cyclical nature of these matters.

Eamon Gilmore (Dún Laoghaire, Labour)
Link to this: Individually | In context | Oireachtas source

Deputy Dooley raises the interesting question as to whether a small state like Ireland should be rocking the boat. The problem with rocking a boat is that it makes one seasick. I prefer to think in terms of helping to steer the boat. That is the space we are in. At an organisational level, when we take on the Presidency of the European Union at the beginning of next year we will be in that position. We have done much preparation for the Presidency. The Taoiseach and I, with about ten other Ministers, will be meeting the EU Commission on 3 and 4 October to have a full discussion about the Presidency and our objectives during that period. There will be visits to Ireland by Commissioners and by senior figures from EU institutions and the committees of the European Parliament.

With regard to whether we should seek a larger budget, we must take a realistic approach to the EU budget. Most member states, including ourselves, are making budgetary adjustments. It is understandable that member states, particularly those who are big contributors to the EU budget, would say that if they are making big adjustments to their own budgets the European Union should, perhaps, adjust its budget also. That is the debate that is taking place. We can argue that all member states are interdependent and that the economic recovery of individual member states is entirely bound up with the recovery of the European Union.

Deputy Crowe made a fair criticism. We often talk about European Union issues in a unique eurospeak language, much of which is institutional and technical. We must be clear about what we are trying to achieve. We are trying to achieve employment, good economic conditions and a good standard of living for people. We also want to set a threshold of decency below which we will not go. Some people describe this as the social Europe idea. It means the maintenance of good working conditions and good environmental standards.

To do all of that we must pay our way. The difficulty with meeting targets is that the targets are not arbitrary. The one thing we learned during the boom years is that we cannot, or should not, spend what we do not have. If one tries to spend what one does not have one gets into a huge amount of trouble, as we have found out to our cost. If the country is borrowing three euro of every ten we spend, there is no point in saying we do not want to meet the targets. We cannot go on fooling ourselves forever. We do have to meet the targets, not to please someone else but because it is the sensible thing to do. We must make our finances sustainable and pay our way in the world. That is bound up with what we want to do with regard to the European budget.

This brings me back to Deputy Dooley's question. We must support the Europe 2020 strategy for jobs and growth while reflecting current budgetary consolidation imperatives in member states. Ireland seeks to ensure that adequate funding is available for investment in economic growth and the creation of employment, and that countries in our situation, especially in relation to unemployment, can access all EU growth enhancement programmes. Ireland is, therefore, strongly supporting the Cypriot Presidency in its efforts to finalise agreement on the European budget by the end of 2012.

Deputy Paschal Donohoe raised a number of questions, some of which were also referred to by Deputies Crowe and Keaveney. The situation in Syria is appalling. At the meeting of the Foreign Affairs Council in Cyprus the weekend before last we received an update on the situation in Syria. The degree to which Syrian people are being killed is truly shocking. There have been repeated attempts to make progress. We saw the attempts by Kofi Annan and the United Nations, and there have been more recent efforts. The inability of the UN Security Council to agree on a robust resolution, particularly because of the positions of Russia and China, is an issue. The European Union has imposed sanctions on the Syrian regime. We discussed those in Cyprus and we will be returning to that discussion. I will be attending the UN General Assembly. During that week, I will meet the UN Secretary General and the crisis in Syria will be among the issues we will discuss. Ireland, and the European Union, are taking an active role. At EU level, we will shortly have a meeting with the Russian Foreign Minister. I hope to have an opportunity to meet him when I am in New York at the General Assembly and to discuss Syria with him.

Eamon Gilmore (Dún Laoghaire, Labour)
Link to this: Individually | In context | Oireachtas source

The issue the Senator has raised relates back to Deputy Donohoe's questions regarding banking recapitalisation. It is important to take stock of how far we have come in this regard. When the Government came into office 18 months ago, shortly after the agreement of the EU-IMF-ECB programme, the State was unable to borrow money from any private source. That is the position in which we found ourselves. It is vital that we meet the troika targets in order to continue borrowing the money we need to run the country. We are in an exceptional set of circumstances where, regrettably, we were obliged to approach the lender of last resort, namely, the troika at the end of 2010. When a bank manager sets out the conditions of a loan, the borrower is obliged to meet them or the loan instalments will cease. That is the exceptional scenario in which we are operating.

The immediate reward for meeting the targets set by the troika is that we continue to receive the loan money we require. Our success in meeting those targets - in fact, we are ahead of target in some areas - means we will be able to exit the programme on time and recover our economic sovereignty. Our achievement in this regard has restored confidence in this country among international investors. That can be seen in our continuing strong performance in the area of foreign direct investment, with several major jobs announcements since the beginning of the year. As a consequence of some of those investment announcements, we are now beginning to see resumed activity in a range of sectors, including construction. These investment decisions are translating in immediate terms into construction jobs.

We have attained several important objectives in regard to the implementation of the troika programme. We successfully secured a reduction in the interest rate, for example, and achieved a flexibility in the programme which allowed the Minister for Public Expenditure and Reform, Deputy Howlin, to announce a stimulus programme during the summer which allowed for the construction of additional schools, primary care centres and so all. All of this will translate into jobs. While there is no immediate solution to the problem of our bank debt, we have had several notable successes in securing a deal more favourable to us. We have, for example, obtained an agreement on the separation of sovereign and bank debt. We secured a specific commitment at the June Council meeting that a dedicated arrangement for Ireland would be agreed. In fact, the conclusions of that meeting included a specific reference to Ireland's success in meeting its commitments under the programme.

This is where the issue of European solidarity is hugely important. The bottom line is that there is a strong desire throughout Europe to see Ireland succeed. Europe needs a success story and this country is probably the best candidate for that honour. Ireland's successful emergence from its programme will, in turn, facilitate a broader European recovery and restore confidence in the European project. Without wishing to oversell or overstate the case - such matters are not resolved overnight - this will translate, over time, into investment, job creation, improved living standards and ultimately an improved financial situation which will enable us to take the type of action that is not currently possible.