Enda Kenny (Mayo, Fine Gael)

Our relations with our European partners and our standing in Europe are of vital importance to our national recovery. This Government will work in a co-ordinated and concerted way to see that they are improved. We also need to improve the standing of the European Union at home. In particular, the Government wants to see a step change in how European business is conducted in the Oireachtas. In our programme for Government we have set out a number of important initiatives in that regard.

As the elected representatives of the people, the Oireachtas must engage seriously with the passage of EU legislation if that law is to have the legitimacy it deserves in the eyes of our people. It must also play an enhanced role in holding the Government to account for the positions it takes and the decisions it makes at EU level. I have, therefore, committed myself to providing briefings prior to attending regular meetings of the European Council, and I am pleased to do so now.

As the House will be aware, the European Council is due to meet on Thursday and Friday of this week and I will represent the Government at those meetings. As the House will also be aware, I attended meetings of both the European Council and of the heads of state or government of the euro area in Brussels on 11 March. As these were important meetings for Ireland and for Europe, and as they laid much of the groundwork for what lies ahead, I thought it might be helpful to say a little about what happened then before looking forward to the Council meeting at the end of the week.

The meeting of the European Council on 11 March was an extraordinary one, convened to discuss developments in Libya and the southern Mediterranean region and to set the political direction and priorities for future EU policy and action. We saluted the courage of the people of the region and called for accelerated political and economic reform. In particular, we welcomed developments in Tunisia, including the announcement that elections will take place on 24 July, and we expressed our support for the democratic transition in Egypt. At the time of the meeting, the position in Libya was already a cause of grave concern. In calling for the immediate departure of Colonel Gaddafi, the European Council expressed strong solidarity with the people of Libya, condemned their violent repression and called on all parties to allow access for humanitarian assistance. Matters have clearly moved on considerably in the period since 11 March and the matter will arise for discussion again when the European Council meets this week, a point to which I shall return later in my statement.

Discussions among member states within the euro area normally take place at the level of Finance Ministers. Meetings at Head of State or government level are rare and in the past have been convened only when the most serious issues are in play. The meeting on 11 March was, therefore, a relatively unusual occurrence. As this was my first meeting as Taoiseach with my euro area colleagues, I took the opportunity to let them know that this Government is committed to a fresh approach to our relations with the EU and we want Ireland to be a respected and influential member of the European family. I told them of the strength of our mandate, briefed them on the severe economic challenges Ireland faces and the pain that this had meant for the Irish people. I reiterated our commitment to achieving a 3% deficit rate by the end of 2015, in keeping with the EU and IMF programme, and I stressed the importance of getting Ireland back on to a sustainable track. I emphasised the necessity of a lower interest rate in this regard.

I also briefed the meeting on the position in our banks, noting the stress tests currently under way, and I said that we should have firm figures by the end of the month. The meeting was an important stepping stone towards the meeting of the European Council that will take place later this week, where it is hoped to adopt a comprehensive package of measures to address the economic challenges facing Europe. It endorsed what has been termed a "pact for the euro", aimed at fostering competitiveness and employment, and at contributing to the sustainability of public finances and to restoring financial stability. This will now be presented to the European Council at this week's meeting.

Progress being made by Ireland and Greece in implementing their respective EU and IMF programmes was welcomed. Greece undertook to complete a €50 billion programme of privatisation speedily and to introduce a strict and stable fiscal framework. For our part, Ireland reiterated our intention to introduce a fiscal framework, with the strongest possible legal basis, and to stick to fiscal targets.

The meeting also invited Ministers for Finance to complete work on the European Stability Mechanism, ESM, and European Financial Stability Facility, EFSF, in time for the European Council this week. It was agreed that the ESM should have an overall effective lending rate of €500 billion and that, until the entry into force of the ESM, the agreed lending capacity of €440 billion will be made fully effective.

It was also agreed that, to maximise the cost efficiency of the support offered under the ESM and EFSF, they may also intervene in primary debt markets in the context of a programme with strict conditionality. Importantly from Ireland's perspective, it was agreed in principle that the pricing of the EFSF should be lowered to better take into account the debt sustainability of recipient countries. Greece, which does not receive its loans from the EFSF, received a 1% reduction in the interest rate it pays for European Union moneys. It also had the maturity for all loans it receives increased to 7.5 years.

As the House will be aware, in what were at times difficult exchanges it was not possible to find an agreed basis on which to secure a reduction for Ireland. As has been widely reported, some partners were seeking a commitment from Ireland in the area of corporation tax which I was not prepared to enter into or cede. Discussions are ongoing and I will continue to press Ireland's case. I am convinced that with goodwill on all sides it will be possible to find an agreed basis on which to move forward. I do not, however, wish to enter into the detail of ongoing negotiations, as I am sure the House will understand and appreciate.

The meeting of the European Council this week will be an important one for the European Union. As the House will be aware, for some time the EU has been working hard to respond to the economic crisis it has faced. Some have criticised it for adopting a piecemeal approach. Therefore, when we meet later this week the European Council will adopt a wide range of measures - a full and comprehensive package designed to lay the ground for sustainable and job creating growth. As part of this effort, the European Council is expected to endorse the first set of priorities for fiscal consolidation and structural reform under the new European semester. These were identified by the Council on the basis of the Commission's annual growth survey.

Priority is to be given to restoring sound budgets, reducing unemployment through labour market reforms and making new efforts to front-load growth patterns. Member states will be expected to translate these priorities into concrete measures as part of their stability or convergence programmes and national reform programmes which are to be submitted next month. In Ireland's case an extensive range of such measures is already committed to in our EU-IMF programme.

Actions at EU level also have a role to play in restoring growth and job creation. In particular, the Single Market, if operating well, offers great potential. I hope reforms under the Single Market Act, which the Commission intends to publish shortly, will make a real contribution. Now that the "pact for the euro" has been endorsed by those member states whose currency is the euro, it will be

submitted to the European Council, at which other non-euro area member states may indicate a wish to participate. If it is to have impact, the pact must translate into concrete actions. Participating member states will, therefore, be expected to move rapidly to identify steps which they can commit themselves to achieving within the next 12 months.

The European Council is also expected to welcome progress on the package of six legislative measures - to ensure fiscal discipline and to avoid macroeconomic imbalances - which is currently being progressed within the legislative process. The package includes the reform of the Stability and Growth Pact to enhance surveillance of fiscal policies and apply enforcement measures earlier and more consistently. It is intended that work on these measures will be completed by June of this year.

I expect the European Council will also take note of the importance of the banking stress tests being carried out by the European Banking Authority and other relevant authorities. This is a separate exercise from the testing of Irish banks currently under way. The results of the European exercise are not expected to be known until the early summer. However, it is intended that member states will have prepared strategies for the restructuring of vulnerable institutions and provision of government support in case of need before the results are published.

As Deputies will be aware, the results of the stress tests on Irish banks are due at the end of this month. Once they are available, the Government will elaborate a comprehensive response, including in consultation with the European Union.

The European Council is also expected to adopt the final wording for a change to the Treaty on the Functioning of the European Union to provide a foundation in law for the new European Stability Mechanism. The change was proposed by the European Council in December and has been progressed under the simplified treaty revision procedure. Once adopted, it will be for all member states to ratify the change in keeping with their respective constitutional requirements. The draft wording was examined by the previous Government and Attorney General and the view was taken that it did not have implications for our Constitution, Bunreacht na hÉireann, and, therefore, a referendum was not required to enable Ireland to ratify. We will examine the final wording carefully before deciding the best and most appropriate way to proceed.

The European Council will also take stock of international developments, particularly the unfolding situation in Libya. While European Union member states are contributing in different ways to resolving the crisis, we are determined to act collectively and resolutely. The people of Libya deserve an agreed and a democratic future. The regime of Colonel Gadaffi, which has a long and vicious record of violence against those who oppose it, has neither the agreement nor democratic endorsement of the Libyan people. Colonel Gadaffi should order an immediate and genuine cessation of his military offensive. It is now clear that he and his family should surrender power and allow the Libyan people to peacefully determine their own shared future.

I expect the European Council will work to increase the pressure on and international isolation of the Gadaffi regime by adopting further EU sanctions against Libya in implementation of UN Security Council Resolution 1973. I also expect a thorough discussion of the wider region and to hear from High Representative Ashton on her ongoing high level contacts with the countries of the region, including Egypt and Tunisia. High Representative Ashton also gave a detailed briefing to the meeting of eurozone leaders in Brussels.

The situation in Japan following the earthquake and devastating tsunami on 11 March will also arise. The focus of deliberations will be on the European Union's emergency and humanitarian response to date and the provision of additional assistance, if requested; the ongoing nuclear situation and the lessons Europe can draw from events in Japan; and the need to closely monitor the economic and financial consequences for the world economy.

At the meeting of the General Affairs Council on Monday, Ministers received an update on the EU response to the humanitarian emergency from EU Commissioner Georgieva. Ireland has provided €1 million in emergency funding for the Red Cross relief operation in Japan and made available blankets, mattresses and water tanks from our stockpiles of these items. This morning I signed a book of condolences at the Japanese Embassy and had a discussion with the Japanese ambassador who expressed strong appreciation of the contribution made by Irish people to the distress of people in Japan. The ambassador and I also discussed the ongoing difficulties with nuclear reactors. It is difficult to comprehend the scale of the tragedy unfolding in Japan. The ambassador pointed out that the recent tsunami was the equivalent of a three storey wave coming ashore over 500 miles of coastline. The emergency services in Japan have responded in the best way possible.

The issues before the European Council this week are important ones. Clearly, Ireland will support measures that can contribute to a restoration of confidence in the markets, foster economic growth and job creation and help Europe move beyond the economic crisis. While I will continue my efforts to secure a better deal for Ireland, including in regard to the interest rates attaching to our loans and in respect of the situation in our banks, I cannot yet say how much progress will be made this week as the final figures from the banking stress tests are not yet available. I assure the House that I will continue to fight on behalf of the Irish people and to do everything in my power to protect and defend our country's interests. I know I will have the support of the House in doing so.

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