Bertie Ahern (Dublin Central, Fianna Fail)

I welcome this opportunity to speak to the House on the current situation in the European Union. As we come to the end of the year, it is timely to look back and reflect on the main events in Europe and their implications for the future. Without doubt, the referendum results on the European constitution in France and the Netherlands were a wake-up call for all Europeans. We cannot deny that the rejection of the European constitution in two of the founding members of the European Union was a severe blow. However, the referendum results also serve as a spur to drive forward debate on Europe in all member states. We have an opportunity to have a good, serious and factual debate about what Europe has done for us, what we have contributed to the Union and where the Union is going in the future.

The European Council took advantage of this opportunity when it initiated a process of reflection and debate in all the member states at its meeting in June. For our part, the Government is committed to ensuring that our national debate is open and inclusive. The National Forum on Europe is playing a key role in taking it forward and is facilitating contributions from all sectors of society. The Government has published the White Paper on the European constitution to help inform the debate. The Department of the Taoiseach has produced a user-friendly report on Ireland's goals and objectives in the Union. Both the White Paper and this report have been circulated as widely as possible. In addition, the Department of the Taoiseach has today launched a new website which will make available key documents outlining the Government's position on Europe to aid the debate.

The outcomes of the French and Dutch referendums undoubtedly suggest a level of disenchantment with the direction of the European Union. It may be that European citizens feel that the EU does not support them sufficiently in the issues they must face in their daily lives, such as unemployment, social justice, the fight against cross-border organised crime, terrorism and the challenge of integrating immigrants. Self-doubt and a lack of direction in the EU are bad for Europe and bad for Ireland.

The benefits our EU membership has brought us are well known. Aside from the important direct financial benefits reflected in a net transfer of resources to Ireland of approximately €35 billion, we also receive very significant indirect benefits. Since we joined the EU, our identity, national self-confidence and our sense of place in the world have been greatly strengthened. Membership of the European Union has also been the critical ingredient in breaking the cycle of poverty and emigration which held this country in its grip for more than a century. We are justifiably more confident and more optimistic than at any time since the foundation of the State. Our European Union membership has played a vital role in this transformation and we must not take this for granted. We need to continue to work hard to promote and protect our national interests in the EU and, equally importantly, work for the success of the Union as a whole.

Ireland continues to punch above its weight in Europe. In recent weeks one Irish citizen, Catherine Day, succeeded another, David O'Sullivan, in the top post in the European Commission. Also during the year, the Government succeeded in securing official and working status for the Irish language in the EU. While its continual success is a core national priority, I do not want to play down the very real fears that many people in the European Union have, including people in Ireland. People fear a loss of jobs to low cost countries and a race to the bottom in social standards. They are struggling to come to terms with immigration. Many citizens are suspicious of economic reform when it seems to bring only pain and very little evidence of any gain.

However, we must recognise that the world outside the Union is changing rapidly. When the economies of China, India and the other emerging economies were putting in place the policies and investments necessary to harness globalisation to the development of their national economies, Europe's focus was inwards. We struggled to cope with the aftermath of the collapse of communism, the fall of the Iron Curtain and the reunification of Europe after decades of division. We worked to ensure the institutions and the common policies of the greatly enlarged European Union were strong enough to protect and promote the interests of all its people. We need to make Europe work, but we cannot do this in a vacuum. We also need to look out at a world that has changed dramatically over the past ten years.

Last month, an informal meeting of European Union Heads of State or Government at Hampton Court discussed the challenges facing the Union. The European Commission submitted to the meeting a useful report, European Values in the Globalised World. It was sobering to be reminded that there are now 19 million people unemployed in the Union, that over the coming decades, Europe will change from having four people of working age for every elderly citizen in 2004 to a ratio of 2:1, that Indian universities are turning out more than a quarter of a million engineers every year and that research spending in China is set to catch up with that in the European Union by 2010. Twenty years ago, just 10% of manufactured goods came from developing and emerging countries, but within 15 years China's and India's shares alone could be as high as 50%. In 2004, China's share of global merchandise trade surpassed that of Japan.

The meeting at Hampton Court showed the willingness of the European Union Heads of State or Government to work together to deal with these challenges. While many of the levers of economic reform are in the hands of national governments, there remains much that we can do together in Europe to support our national efforts. At Hampton Court, I emphasised the need to take the bigger picture into account when we are developing and implementing EU policies. A particular example is state aids. Too often we behave as if competition between the member states is on the same level as the competitive challenge we face from China and India. We must take broad economic considerations, particularly the challenge of globalisation, into account in all areas of EU decision-making.

I welcome Prime Minister Blair's encouragement to Europe's leaders to confront the challenges we face. However, if we are to equip a Union of 25 or more member states to deal with those challenges, we will inevitably return to the European constitution. Some 13 countries containing a majority of the Union's citizens have ratified the constitution, including two in national referendums. Given the current situation in the European Union and the fact that we are engaged in a period of debate and reflection, I do not see a national referendum on the European constitution being held in the lifetime of the current Dáil. Nevertheless, while the ratification process may be suspended and the future is uncertain, I cannot see the European constitution going away indefinitely.

The setback in the ratification process for the European constitution does not mean that business in Europe has come to a halt. The reality is quite the contrary. Two issues that will be the focus of our attention in the coming weeks will be the negotiations on the future financial perspectives and the Doha development round of trade negotiations in the World Trade Organisation.

The failure of the June European Council to reach political agreement on the financial framework for the period 2007-13 reflects the current state of uncertainty. On future financial perspectives, it is very important that we reach a deal at the European Council in December. Europe badly needs some successes. We need to show our people that the Europe of 25 can take the key decisions affecting the future of the Continent. We came very close to agreement in June. It will be important to retain as much as we can of the good work done during the Luxembourg Presidency as we work for agreement next month.

The October 2002 agreement on CAP funding is a central element of the European Union's financial perspectives. Agriculture is one of the most sensitive issues in the WTO's Doha development round of trade negotiations. The far-reaching CAP reforms agreed by the Union in 2002 and 2003 were a major contribution to the Doha development round of trade talks. The Government is strongly in favour of a successful and balanced outcome to the Doha round. We know these negotiations are important for the future development of our economy and hold great promise for the integration of poor countries into the global economy.

I mentioned some of the challenges facing the Europe of the 21st century, challenges that can only be addressed by states working together. This in itself poses another challenge, that of making enlargement work and continuing the enlargement process. The ten new member states which joined on 1 May 2004 are adapting rapidly to the Union and are making an important contribution to its work. The European constitution provides that membership of the Union is open to all European states which respect its core values. It is on this basis that the ten new member states joined the Union. Similarly, we look forward to the accession of Bulgaria and Romania.

I welcome the opening of accession negotiations with Croatia and Turkey. The opening of negotiations with Croatia shows that the European Union is determined to support peace-building and reconstruction in the western Balkans. The perspective of EU membership for these countries will help underpin political stability in the region and the need to rebuild their economies after the vicious Balkan wars. The opening of accession negotiations with Turkey is a welcome step forward in the already close relations between the Union and this important and influential neighbour. The negotiations are likely to be long and difficult, and their outcome, as in any negotiation, cannot be determined in advance. However, the objective on both sides is membership.

The European Union is at a critical juncture in its development. We must meet the immediate challenges of achieving agreement on the financial perspectives and the WTO Doha development round. We must also look to the longer term. While the outcomes of the constitutional referendums may have cast light on the concerns of the citizens of Europe, they also brought into focus the wide degree of agreement on what Europe needs to do to meet these concerns.

Europe is already deepening co-operation between the member states in the fight against international crime, terrorism, illegal immigration and trafficking in people and drugs. The Hague programme, which the European Council adopted a year ago, provides the basis for much of our common effort in this area. In this age of globalisation, when goods, services, information and communications flow relatively unrestricted across our borders, we must work together to prevent international criminal syndicates, drug traffickers and others from exploiting our more open world for their own criminal ends. The role of the European Union in breaking up international criminal gangs, preventing terrorist attacks and securing our borders against people traffickers and illegal immigration is not well understood or appreciated by many people. However, it is critical to the security and functioning of our communities. It is an area where significant improvements in co-operation between member states have been introduced and where we will see more progress in the years to come.

The creation of the Internal Market has been of immense benefit to the people of Europe. Work on the Internal Market remains important as we seek to remove unnecessary barriers to growth. We, together with the UK and Sweden, have granted free movement to workers from the ten new member states. This has been a positive experience for us. The new workers are making an important contribution to our economy and our society. I look forward to the other member states, which have not yet opened up their labour markets to the ten, adopting a similar approach.

We also need to push forward the EU's legislative agenda on the Internal Market. The draft directive on services has attracted much controversy, reflected in the huge number of amendments the directive has attracted in the European Parliament. The vigorous discussion in the Parliament of this important directive shows that the concerns about its implications, particularly from workers, are being taken into account in the EU's legislative process. The principle of a free market in services is one that we have long supported and will continue to support. With 70% of the modern economy devoted to services, it is essential that we create a real European market in services. However, it is the Government's view that there must be adequate safeguards to ensure that the services directive does not result in a race to the bottom in terms of labour and environmental protection.

Europe needs to do more in the world. It is already the world's largest donor of development assistance and plays a key role in promoting peace in regions of instability and political turmoil. It leads international efforts to support the reforms of the United Nations proposed by Kofi Annan. However, it needs to expand and deepen its engagement with the world in the years to come on the basis of our common values. It must promote its commitment to effective multilateral institutions and its solidarity with the poorest people in the poorest countries.

Our fellow European citizens in each of the member states are now holding similar debates on Europe. I am confident that our collective thoughts and ideas will provide direction to the Austrian Presidency in the first half of 2006 on how the Union of 25 should advance to ensure that the expectations of all its citizens are fulfilled.

When I report to the European Council next year on the outcome of our national debate, I want to say that there is a deep-rooted commitment in Ireland, a commitment that is shared by almost every party in this House, to Europe's values, to the success of the European Union and to the continuing construction of a Europe that reflects the needs of our people. As we face a rapidly changing world, I am more than ever convinced that our EU membership is fundamental to our continuing economic and social success and to the future of our young people.

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