Bertie Ahern (Dublin Central, Fianna Fail)

I attended the European Council in Brussels on 15 and 16 December 2005, along with the Minister for Foreign Affairs, Deputy Dermot Ahern. The conclusions of the Council have been laid before the Houses of the Oireachtas.

This European Council came at a critical time for the European Union. The rejection of the European Constitution in the French and Dutch referendums, and the failure to reach agreement on the financial perspectives at the June European Council, were blows to the confidence of the European Union. The agreement on the main item on the agenda, the future financial perspectives for the European Union for the seven years 2007 to 2013 was, therefore, a very welcome development. The agreement owes much to the political leadership and courage of the British Prime Minister, Tony Blair. In the best spirit of the EU, a compromise was reached which both protects the vital national interests of each member state and at the same time allows the enlarged EU to move forward on a sound financial basis.

The agreement provides for €862 billion in commitment appropriations for the years 2007 to 2013, a very significant sum. I would have preferred to see a larger overall amount but welcomed the eventual compromise as this went beyond the proposal which was on the table at the outset of the December Council.

Throughout the negotiations, we had a number of clear key national objectives. First, the issue of future CAP funding was central to our interests. I wanted to ensure the European Council fully honoured its October 2002 agreement on future CAP funding. This objective was achieved. Any other result would have called into question the credibility of decisions taken at the highest level in the EU. This was a matter of principle for me.

Overall, over the seven years 2007 to 2013, Ireland is expected to receive €10.4 billion in CAP payments and market supports. The commitments we made to our farmers in October 2002 about the level of future financial support will be honoured in full. The overall amount provided for in this heading of the financial perspectives will also cover future CAP payments to Bulgaria and Romania. In this context, the European Commission, at my request, has given a written declaration that the level of direct payments to farmers envisaged in the October 2002 agreement and the 2003 CAP reform programme will be respected.

Over the course of the negotiations I also worked to obtain a good outcome on EU support for rural development. As a result, the amount available to Ireland under this heading is substantially greater than the British Presidency's proposal at the outset of the European Council. Ireland will receive its allocation of EU rural development funds on the same basis as the other 14 original member states with a special additional allocation for Ireland of €500 million.

While the precise details remain to be finalised by the Commission, it is expected that our receipts under rural development should be in the region of €1.9 billion. This will ensure our rural communities will continue to receive EU aid as they modernise and adapt to the reformed CAP. Second, we consistently supported generous structural and cohesion funding for the new member states. This has been achieved. Over the next seven years, the new member states will absorb over 50% of all cohesion funding. In financial terms, they will receive around €174 billion to support them in their efforts to bring their living standards up to the average EU level. This is a seven-fold increase on their current level of EU support.

The new member states now have the best opportunity in generations to revitalise their economies through high growth and sustained economic development. The flow of EU structural and cohesion funding will ensure they become increasingly important markets for Irish goods and services over the next decade.

As far as Ireland is concerned, the Government accepted that our increased prosperity meant that we were no longer eligible to receive EU structural and cohesion funding on the scale that we had in the past. However, I was determined to ensure adequate cohesion arrangements for our regions in transition. On the basis of the December agreement, we will receive some €800 million in structural funding up to 2013. This money will be spent in the BMW and south-east regions in accordance with the EU rules for regional development funding.

The financial perspectives also include a further strong pledge of support by the EU to the peace process through an allocation of a further €200 million for the continuation of the EU's PEACE programme. In addition, the conclusions of the European Council include a provision on the International Fund for Ireland. This requests the Commission to take the steps necessary to continue EU support for the fund as it enters the crucial final phase of its work up to 2010. Taken together, these commitments are an indication of the continuing solidarity of our EU partners and the European Commission in the efforts of the two governments to promote peace and reconciliation. The commitments made by our partners will be particularly welcomed in the Border counties.

Third, we strongly believe that the costs of enlargement must be fairly shared between the member states. From the outset, this was one of the most difficult issues to resolve and required a significant level of compromise. I am pleased the European Council finally succeeded in reaching agreement on the British rebate. The agreement provides that from 2013, at the latest, Britain will fully participate in the financing of enlargement costs for countries that acceded to the EU after April 2004, except for CAP market expenditure. In order to achieve this, Britain's budget rebate will be adjusted through a progressive annual reduction. Over the period 2007 to 2013, Britain will therefore forego a maximum of €10.5 billion of its rebate.

The overall effect of this agreement means the British rebate will remain on all expenditure in the EU 15 and on all CAP expenditure in the EU of 25 or 27 countries. However, the EU will avoid the absurd situation in which Britain would have been substantially shielded from most of the costs of enlargement and the poorer new member states would have ended up contributing to a steep rise in the British rebate.

I was also determined to ensure that any agreement reached in the negotiations would last for the full seven years. We were always willing to have a review mechanism in the financial perspectives agreement but only on condition that any outcome need not take effect until after 2013. The agreement includes a review clause under which the Commission has been invited to report in 2008-09 on both the expenditure and revenue sides of the budget. Unanimity will be required for any decisions taken under this review. As far as I am concerned, the review will not in any way prejudice our CAP funding up to 2013.

In addition to CAP, rural development and cohesion funding, the financial perspectives also include other elements which, at constant 2004 prices, are of significant importance to Ireland. EU spending on competitiveness, growth and employment will increase by almost 65% between 2007 and 2013 with a refocusing of expenditure on support for the Lisbon Agenda. The European Council also agreed to establish a globalisation adjustment fund designed to assist workers made redundant as a result of major structural changes in world trade patterns. The maximum amount of expenditure through the fund will be €500 million per year. The EU will greatly strengthen its engagement in the fight against terrorism, drugs and in dealing with illegal immigration through a 167% increase in spending under the freedom, security and justice heading.

From Ireland's perspective the overall result was excellent. We expect that over the seven years covered by the perspectives, our receipts will amount to €14 billion while our contributions are expected to be €13 billion, leaving us with a net gain of €1 billion. We anticipate that notwithstanding our economic success and our increased national prosperity, we are likely to become a net contributor to the EU budget only near the end of the seven-year period.

In addition to reaching agreement on the financial perspectives, the European Council adopted important conclusions on other issues. It decided to grant candidate status to the former Yugoslav Republic of Macedonia. In taking this decision, the European Council made clear that further steps would have to be considered in the light of the debate on the EU's enlargement strategy. Immediately before the European Council, Foreign Ministers agreed that it was necessary to have a further discussion on enlargement strategy in 2006. Such a debate is useful and necessary at this stage. The views of our citizens need to be taken into account in this debate and we also have to pay particular attention to the absorption capacity of the European Union. In our discussions and negotiations with candidate and other countries who aspire to eventual membership, the EU needs to ensure, in a fair and rigorous way, that the conditions laid down for membership are fully met. At the same time it is necessary for us to give encouragement to the candidate countries, and to all the countries of the western Balkans, by reconfirming their European perspective. Membership of the European Union must remain open to those European states that meet the criteria for membership.

The European Council also adopted a new strategic partnership between the EU and Africa, a new global approach to migration with a focus on Africa and the Mediterranean and an EU counter-terrorism strategy.

On the external relations side, the European Council adopted a comprehensive declaration on the situation in the Middle East. There have been significant developments in the region since our meeting. I know the House will join me in sending our best wishes for the recovery of the Israeli Prime Minister, Mr. Sharon. I have communicated to the Acting Prime Minister, Mr. Olmert, and to our Palestinian friends that we and our partners in the EU will continue to give our strong support to political leaders on both sides who have the courage to take the difficult decisions needed for a lasting and peaceful settlement of the Israeli-Palestinian conflict.

I welcome the determination of the Palestinian Authority and of President Abbas in particular in proceeding with the democratic legislative elections, which are being held today. In Israel, campaigning is already under way for the elections at the end of March. In these circumstances, it is important that the EU has made clear that it remains firmly committed to working with the parties in the search for a viable, two-state solution, based on the principles and the practical steps outlined in the Quartet roadmap.

On Iran, the European Council strongly condemned the calls by the Iranian President for the eradication of Israel and his denial of the Holocaust. The declaration also underlined the grave concern of the EU at Iran's failure to build the necessary confidence that its intentions in developing its nuclear programme are exclusively peaceful. Regrettably, in recent weeks Iran has taken further steps to resume sensitive activities, which had been suspended. It has failed to co-operate fully with the International Atomic Energy Agency and has now breached all the previously agreed conditions on the basis of which the EU has sought to negotiate with it. An emergency meeting of the IAEA board of governors will take place on 2 February and it seems likely it will be forced to decide to report the issue to the UN Security Council.

The European Union remains committed to a diplomatic solution, in which the IAEA should play a central role. We are fully open to a resumption of dialogue, provided Iran gives real grounds for believing that it is sincere. We all want to avoid an escalation of the situation and we believe that the international community should remain united in its approach. However, Iran should not underestimate the gravity of the concern with which its actions are viewed by the European Union and by the wider international community.

This was a very successful European Council and a fitting end to the British Presidency. For our part, we have ensured that our farmers can plan for the future with the certainty that their direct payments under the CAP are secure up to 2013 and that the European Union will continue to be a strong supporter of rural development.

In the broader EU picture, the successful conclusion of the negotiations shows that the EU of 25 is capable of making the difficult compromises necessary for the EU to function and to develop. With this major negotiation now out of the way, we can focus our energies on promoting economic growth and development in the EU, taking advantage of the opportunities of globalisation, tackling the challenge of securing Europe's energy supplies, fighting crime and terrorism and making Europe relevant to the citizen.

The message from this European Council is clear. The European Union continues to work for Europe and its member states. Ireland continues to benefit at every level from membership of the European Union. When faced with seemingly intractable problems, the Europe of today is able to tackle them through collective common action rather than, as in the past, falling into division and conflict. This is a cause for great optimism into the future.

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