Ruairi Quinn (Dublin South East, Labour)

The media have overplayed the outcome of this summit. It would be wise to reflect on what remains in place. Some headlines over the weekend suggested that the Union was finished, that it had failed to agree a budget and a rule book, and that the euro was likely to disappear. There is a rule book, namely, the five treaties. The constitutional treaty was an attempt to consolidate and improve the decision-making process within that rule book, but the French and Dutch have rejected it. The indications are that they will not revisit it in its present form. We must all decide on the way forward.

There is a budget, and the new budget will not take effect until 2007. There is a set of rules, even if their application in some areas is cumbersome.

Our friends in Britain are taking on the EU Presidency at a time when the Prime Minister, Mr. Blair, could give strong, positive leadership. He is the strongest political leader among those of the four largest countries in the Union. One need only consider the domestic circumstances of Chancellor Schröder, President Chirac and Mr. Berlusconi to realise that. Mr. Blair, however, seems to have responded to President Chirac's provocation after the defeat of the constitutional treaty in France to put the rebate back on the table for discussion.

Perhaps Mr. Juncker, despite his wide experience, should have considered how to handle that aspect of the summit in advance. The expectation that we would get a budget deal was never justified. As the Taoiseach said today, in the early period the 1% club attempted to restrict expenditure but obviously we need to return to Mr. Delors' original proposal, when the cohesion funds were created after the Maastricht treaty, and consider 1.44%. We will not achieve many of those things on which Mr. Blair rightly wants us to focus at European level with a small budget, 25 member states and the prospect of two or three more coming in.

I was in Mr. Blair's presence at several events organised by the Party of European Socialists where he suggested that he wanted to put Britain at the heart of Europe. Sadly for Europe and Britain and for many people living there, and by extension ourselves, he seems to have lost that opportunity. There is a much better, detailed analysis of this on the opinion page of yesterday's Financial Times by Wolfgang Münchau in which he cites four, if not five, downsides to the actions taken by Prime Minister Blair. However, that decision has been taken and we find ourselves in the present position.

Perhaps the Taoiseach or the Minister for Foreign Affairs, Deputy Dermot Ahern, might respond to this. The inference that I draw from the Taoiseach's comments is that because Britain has such a vested interest in the budgetary process, it is difficult to see it in the role of honest broker and compromise seeker while at the same time maintaining a clearly if not stridently asserted national position. Therefore, we are faced with the prospect of the Austrian Presidency having to sort out the budget at the beginning of next year.

It is nevertheless sad, since, on the positive side, the European Union, for all the criticism that people throw at it, is one of the few international organisations in the world that people want very passionately to join and that has been an absolute success. Perhaps in retrospect there should have been less pride from Joschka Fischer and a few others and we should have entitled the treaty, as a friend of mine said, "A Treaty to Consolidate and Integrate Five Existing Treaties" and bore people instead of frightening them by letting them think that we were getting a new constitution. To use the word "constitution", as distinct from "constitutional treaty", which Giscard d'Estaing wanted to do, was, in retrospect, a bridge too far.

I welcome what the Taoiseach has said. As far as we in the Labour Party are concerned, we cannot say to people that they got it wrong. The turnout in the two referenda in the Netherlands and France was double what it was for the first Nice referendum in this country. There was a sustained and substantial debate in both countries. It was extremely well informed about what was in the treaty and showed concern about things that were happening to people.

We are simply ignoring the elephant in the living room if we ignore the question of Turkey, raised in particular by the right-wing "no" campaign in France but also of major concern to ordinary citizens. It is not that such people are racist or anti-Islamic as such, although some may very well be both, but they are fearful of the future and for their identity.

It is not sufficient to say that to the people who have the reputation for being the most tolerant, the Dutch, who took in economic and religious refugees, starting with the Sephardic Jews in 1492. It was a different kind of Netherlands, but essentially the same region. Antwerp and other places became a haven, first for Huguenots and subsequently for Jews and others. The quid pro quo of that kind of open door policy was that, over time, those generations allowed themselves to be absorbed into Dutch culture and, broadly speaking, took on Dutch values.

What seems to frighten some in the Netherlands is not the first or second generation immigrants who have worked their way up and made a contribution to the economic life of the country. The third generation children of Islamic immigrants seem to be quite fanatical, and there is a similar phenomenon among a minority across the water in the United Kingdom.

Therefore, when such things happen, people's fears are real. They are tangible and can be measured. We must understand what is making them fearful. Part of it is globalisation, and part is the failure of two big economies, for totally different reasons, to sustain and generate substantial economic growth. The problems of Germany were caused by the crazy unification proposals and the one-for-one exchange policy of Helmut Kohl. Those in France are quite different, many having been caused by very bad government under President Chirac. As Mr. Sarkozy, the leader of the right-of-centre French party, the UMP, said, a social model that has produced 10% unemployment for the last 20 years is not exactly one that is working terribly well, and that must be examined. To pose that question in his position is to recognise the obvious.

There is no question in anything that Tony Blair has said that countries such as Ireland, the Netherlands or Finland, which have reformed their labour markets and introduced change, are attempting to throw the baby out with the bathwater and completely demolish or dismantle the welfare state. Britain now spends more money on its welfare state than ever before, and the sorts of simplistic accusations thrown across about the so-called Anglo-Saxon neo-liberal model being imposed on the European Union simply do not fit the facts. However, the facts are as people perceive them, and therefore what should happen over the next few months and years is a much bigger engagement with what people are concerned about and how their fears can be assuaged.

The Treaty of Rome has a famous phrase that we have always cited: "The peoples of Europe, in creating an ever closer union". We are now reaching the stage where people want to know the final destination and what the Union will look like when it is finished.

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