Brian Cowen (Laois-Offaly, Fianna Fail)

I attended the meeting of the European Council in Brussels last Thursday and Friday, 25 and 26 March. The Council's formal agenda indicated that discussion would centre on the new European strategy for growth and jobs, and climate change. In the event, and as is often the case with European Councils, the build-up was dominated by a topic not formally envisaged on the agenda. This time, as in February, it was the situation in regard to Greece. On this occasion, the topic was discussed at two levels - first by the Heads of State and Government of the euro area, and then more broadly by the European Council. I propose to brief the House on the discussions first.

The House will recall that on 11 February at an informal meeting of the European Council, we decided that euro area member states were willing to take determined and co-ordinated action, if needed, to safeguard the financial stability in the euro area as a whole. A statement to that effect was adopted. In the days prior to the Spring European Council, there was clearly an expectation that this commitment and preparedness would be fleshed out to some degree. What is at issue is the question and nature of support for Greece, should the need for such support arise.

Members of the House will be aware of the differences of emphasis among some of our partners on matters such as how that support might be organised, the circumstances under which it might be made available, and the role the International Monetary Fund might best play. There were contacts between governments in the build up to last week's meeting, and on Thursday evening, the Heads of State and Government of the euro area met separately to discuss the situation and try to reach agreement. I am very pleased that it was possible to reach agreement. I have already strongly welcomed the outcome on behalf of Ireland.

The mechanism agreed is first and foremost about safeguarding financial stability in the euro area. That is essential for Europe, for euro area member states, and for Ireland. There are a number of important elements to the agreement. First, we reasserted the necessity that all member states live up to their responsibilities, domestically and to each other, for the economic and financial stability in the area, and that this requires us all to conduct sound national policies in line with agreed rules. In this regard, we made clear too our support for the Greek Government's actions, including the additional measures it has announced to ensure it meets the 2010 budgetary targets.

We emphasised that what we were agreeing was a contingency arrangement - a last resort measure - to be used only if necessary. The mechanism, if needed, would involve a combination of IMF finance and eurozone finance, with the eurozone contribution being more than 50%. Eurozone support to Greece would take the form of bilateral loans. Any decision to disburse the loans would be taken by the euro area member states unanimously, based on an assessment by the Commission and the ECB. All euro area member states are expected to participate in this collective effort. In that context, I signalled this country's willingness to play its proper part in this collective effort to protect our currency, should the need arise.

Much of the detailed implementation arrangements remain to be worked out. One important point to note is that the interest rates to be charged would be "non concessional", that is to say each participating country's costs will be fully covered. In addition, the euro area Heads of State and Government agreed that we need to strengthen and complement the existing framework for economic co-ordination, and to enhance the area's capacity to act in a time of crisis. There is now a widely held view that we need to co-ordinate our economic policies more closely so that they are more effective. This is particularly so in times of crisis.

At the same time, a balance must be struck to ensure we do not adversely constrain member states' room for action as we face varying challenges in what are sometimes quite different circumstances. Bearing that in mind, euro area leaders agreed, in wording that was subsequently adopted by the European Council, to invite the President of the European Council to establish, with the Commission, a task force that would report to the Council on measures to this end before the end of the year.

Before concluding on this item, I would like to stress two important points. First, Greece has not asked for funding. In this regard, I note the positive developments in recent days in terms of the successful Greek bond issuance. However, if it should prove necessary to provide support, the mechanism by which it would be provided is now clear. Second, the agreement balances the solidarity that exists among member states and which lies at the core of the Union, with the requirement that Greece, as with any member state, must meet its obligations and deliver on its commitments.

Turning now to the scheduled business of the European Council itself, much of our discussion focused on the issue of competitiveness, both as a topic in its own right and in the context of the proposed new European strategy for jobs and growth, often referred to as Europe 2020, or EU 2020.

At our informal meeting in February, the President of the European Commission laid out in very persuasive terms the nature of the challenge facing us in coming decades. There are mounting challenges from the developing world, demographic challenges within Europe, considerable budgetary challenges arising from the recent exceptional measures, and the challenge of funding pension and social security systems. We need to begin acting on many of these. In our case, a number of important measures were flagged at the time of the last budget.

My view, which I know is shared by many of my colleagues on the European Council, is that we will have to address a number of these challenges in tandem, either because co-ordination is essential to achieving reform or because it is helpful in the context of partners confronting similar challenges in similar ways, thus avoiding the creation of distortions.

We had a good discussion on the proposed strategy, much of which focused on the five headline targets. These flowed from a proposal by the European Commission in the weeks before the Council meeting. Appropriately, the first target deals with labour force participation rates. The aim is to increase our participation rate to 75% of those aged from 20 to 64 years by 2020. The current rate of participation in Europe is approximately 69%.

We agreed to maintain the target of 3% of GDP being invested annually in research and development. This is consistent with our national target. The 3% figure is a combined figure for public and private investment and compares to an existing figure of just below 2%.

We recommitted ourselves to reducing greenhouse gas emissions by 20% against 1990 levels, increasing the share of renewables in energy consumption to 20% and improving energy efficiency by 20%. These are essential in terms of environmental sustainability, energy security and broader economic development, having regard to Europe's dependence on external supply of energy. Setting these 20% targets as part of our economic strategy in no way reflects any change in our readiness to move to a 30% reduction in greenhouse gases if others make commensurate commitments.

We agreed to set a target for educational attainment although we have not yet specified a numerical target. Education is a national competence and in some countries it is also a regional competence. More discussion is required before all member states can sign up to any target in this regard.

The fifth and final headline target relates to the reduction of poverty. There is a direct link between jobs and growth and the alleviation of poverty. However, there are diverging views across the Union on how poverty is best measured or benchmarked. We agreed that further work would need to be done, probably at both expert and sectoral Council levels, before we return to this in June.

It remains the intention that the European Council will adopt the new strategy at its next scheduled meeting in June. Before then, member states will be considering national targets and taking account of national contexts and circumstances. This will be done in dialogue with the Commission and will, in turn, feed into discussions at sectoral Councils. These will have a crucial role to play in elaborating and filling in the detail of the strategy.

Member states will then draw up national reform programmes setting out how they are to implement their respective strategies. Our approach will take account of consultation with the social partners, in keeping with the importance of consistency of approach across the economy and society in pursuing shared objectives.

As should be clear, Ireland is very supportive of the overall thrust of the strategy, which echoes our own approach domestically, particularly in terms of the smart economy and the emphasis on innovation. One area that was of particular concern to us in the build-up to last week's meeting was the need to ensure that sufficient recognition would be accorded in the strategy to the important role agriculture and the food industry should play in Europe's future growth and job creation. In the documentation circulated in advance, agriculture and the food industry were conspicuous by their absence. In view of this, I, along with a number of other Council members, pressed strongly at the meeting to have this imbalance redressed. We were not seeking any special status for food and agriculture but simply to have its essential role recognised. Agriculture is a primary industry in respect of which Europe has real advantages over its competitors in terms of quality and safety standards. It underpins the food and drinks sector, Ireland's largest manufacturing sector. We are all aware that global demand for food will grow in the coming years, and it is important that Europe, including Ireland, positions itself to secure a share of that growth and the jobs it will bring.

I am pleased to report to the House that my views were accepted, and the conclusions adopted by the Council on Friday reflect well the role a competitive, productive and sustainable agriculture sector can play in Ireland's future economic strategy, in addition to the importance of the Common Agricultural Policy.

We also discussed climate change, the aftermath of the Copenhagen conference and the prospects of advancing the international negotiations meaningfully. Europe is implementing a 20% cut unilaterally, and we remain prepared to make that 30% if others are prepared to make comparable efforts. Regrettably, there is little evidence that others are in fact prepared to sign up to the more ambitious arrangements that Europe would like to see. That poses something of a tactical dilemma for Europe in that some of our partners are wondering whether we should drop our level of ambition or continue to press for very ambitious and binding targets. At last week's meeting, we agreed to press ahead with the provision of fast-start financing within the Copenhagen accord framework, alongside contributions by other key players.

This should be seen in the context of our continued determination to press on towards an effective global solution to climate change. We agreed we needed to strengthen our engagement with others and to make use of all fora, including the G20, to put climate change back on top of the international policy agenda.

The Council also took a number of formal or procedural decisions, including appointing Mr. Vitor Constâncio as Vice President of the European Central Bank.

All in all, it was a very satisfactory Council meeting from an Irish perspective. We took the necessary decisions to safeguard the euro area's financial stability and we advanced work towards developing a coherent economic strategy for Europe for the coming decade. Of particular note from an Irish perspective on that front is that we can expect greater priority will be attached to the agriculture and food industries within our overall economic strategy as a result of the discussions we had last week.

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