Micheál Martin (Cork South Central, Fianna Fail) | Oireachtas source

In recent days, I attended a special meeting of the European Council in Brussels. The meeting, which was the first physical meeting of European Union leaders since February, began on Friday, 17 July. The meeting continued through the weekend and concluded in the early hours of Tuesday, 21 July. Even leaving aside the duration, it was by no means a normal meeting. We met against the backdrop of the Covid pandemic which has affected the economic, political and social well-being of the Continent and further afield in recent months. That was evident in the special health and sanitary precautions that were put in place for the European Council. It was to the forefront of the mind of every leader as we worked over the course of four days to agree to an unprecedented budgetary package to address this unprecedented collective challenge.

Despite the unusual circumstances and the gravity of the agenda, I was glad to have an opportunity to meet my European Union counterparts for the first time since becoming Taoiseach. As I informed the House last week, I travelled to the European Council ready to approach discussions in a constructive manner. I was clear that I would only agree to an ambitious deal for Europe which also protected Irish interests. I am pleased to report that in spite of sometimes very difficult negotiations, we succeeded in reaching agreement on a fair, balanced and ambitious €1.8 trillion package to support Europe's economic recovery and drive the climate and digital transformation on which our future well-being and prosperity rely.

Much of the commentary during and since the summit has dwelt on how long it took or on seemingly acrimonious exchanges between some leaders. However, such commentary ignores or dilutes the complexity and significance of what was at stake and what was achieved. Every seven years, when the European Union negotiates its next seven-year budget, the discussions are long and difficult. This year, those negotiations took place against a backdrop of Brexit, which removed the United Kingdom, a former sizeable net contributor, from the equation. Additionally and more significantly, we were attempting to craft an unprecedented and ambitious instrument to respond to a health and economic crisis on foot of a pandemic of which we did not even know a few short months ago.

Although the focus of the meeting was predominantly on the multi-annual financial framework, MFF, and the next generation European Union budgetary package, on Friday we also endorsed the European semester 2020 country-specific recommendations and recommendations for the euro area. Relations between the European Union and Turkey and Russia were also raised in the course of the meeting. The Minister of State with responsibility for European Affairs, Deputy Thomas Byrne, will provide more details on those matters in his wrap-up remarks this afternoon.

The European Council meeting began on Friday morning with an exchange of views with Mr. David-Maria Sassoli, President of the European Parliament,. Although most of our discussions on Friday took place in plenary meetings, from Saturday onwards the pattern of meetings varied between plenary meetings and meetings between Mr. Charles Michel, President of the European Council, and various groupings of member states. Ms Ursula von der Leyen, President of the European Commission, also played an important role in the discussions. I presented Ireland's position to President Michel, including at a joint meeting that I and the Prime Ministers of Belgium and Luxembourg had with him and the President of the Commission on Sunday. I also participated in one-to-one meetings.

More generally, intensive discussions largely focused on five key issues: the overall amounts in the budget and recovery proposal and the distribution of funds across programmes, the balance of grants and loans, the allocation of the new recovery and resilience fund and its governance, a rule-of-law mechanism to protect the European Union budget and rebates for the highest net contributors.

As the House will be aware, there were significant differences in particular between a small number of net contributor countries that took a firm position in respect of the overall size of the recovery fund and the proposed balance of grants and loans. Those same member states were also calling for a governance framework for disbursing funds that would give the member states more oversight on whether the funds deliver the objective set out in member states' recovery and resilience plans. A number of net beneficiaries, particularly those most affected by the Covid crisis, sought to protect the overall size of the recovery fund as proposed in the negotiating box on the table, and grant elements in particular. There were also strongly held views around the table on the link between rule of law in member states and the operation of the Union's budget, an issue that has been pulled into sharper focus by developments in some member states in recent years.

In my interventions, in addition to insisting that Ireland's concerns had to be addressed, I sought to take a constructive and positive role, working with others in support of an outcome of sufficient scale to enable member states, especially those most affected, to respond to Covid-19 and to help their economies recover. In this I made clear my view that the package had to include a large volume of grants as well as loans. Where member states are facing into a crisis of this dimension already burdened with significant debt, it was not appropriate in my view to offer a solution based only on making further debt available. I was also clear that a significantly smaller budget, which some were arguing for, would not have enabled us to deliver our priorities as a Union. The Common Agricultural Policy, CAP, and Cohesion are successful programmes that work and that are deserving of continuing support. Similarly, in coming years the Union will need resources to enable it to undertake climate and digital transformations in a fair, balanced and just manner. We will also need to be in a position to support those most affected by Brexit.

I am pleased to report that a compromise proposal tabled by the President of the Council was ultimately accepted unanimously by the European Council. I hope it will be helpful to Deputies if I briefly outline the key elements of the package and the significant benefits of this deal for Ireland. In summary, the size of the recovery fund was preserved at €750 billion with a balance of €390 billion in grants and €360 billion in loans. A new allocation methodology was agreed, with 70% of the recovery and resilience fund committed over the next two years, and the remaining 30% allocated in 2023 based on the measured economic impact of the crisis over this year and next. A new seven year budget of €1.074 trillion was agreed with substantial funding for Cohesion, CAP, Erasmus, Horizon, migration and asylum, and the EU's neighbourhood and development instrument. To support climate action, an ambitious target has been agreed, with 30% of spending in the budget and recovery fund to contribute to climate action, including meeting the objectives of the Paris Agreement and EU climate neutrality by 2050. A just transition fund will be established with more than double the funding originally proposed before the Covid crisis.

I am pleased to report to the House that the outcome is one that fully protects Ireland's interests and that delivers on our priorities. As I have said many times, an EU recovery is of vital importance to our own economic interests and this agreement sends a strong signal that the European Union is determined to chart the pathway to recovery together and in solidarity. It demonstrates that Europe works for its citizens. Ireland benefits greatly from membership of the Single Market and access to a market of more than 450 million people. This substantial €1.8 trillion package will not only help to drive recovery but it will also support the transformation of our economies in line with the climate transition, research and development, and digital agendas. This is not only fully aligned with priorities in our programme for Government, it will open a wealth of opportunities for Irish enterprises.

Like its predecessor, the Government made clear that for Ireland, maintaining a strong Common Agricultural Policy that supports our farmers, farming families and rural development was a priority. I am pleased to inform the House that the outcome is a very good one in that regard. The initial proposals made by the Commission just over two years ago would have reduced the proportion of the budget for CAP to just 28%. The final agreement now sees this increased to 31%. From an Irish perspective, I can confirm to the House that current levels of funding for Ireland have been maintained. This includes a special allocation of €300 million for Ireland in recognition of structural challenges facing our agricultural sector. Given the very significant pressures to reduce the funding available for CAP, this is a very significant achievement.

I also very much welcome the inclusion of a Brexit adjustment reserve of €5 billion to address the impacts on sectors and regions most impacted by Brexit. It is clear that for some member states the economic damage of Covid-19 will be compounded by the impact of Brexit, the real effects of which will be strongly felt from the start of next year. Now that the special allocation has been agreed, the Government will work hard to ensure that a significant portion will be available to support Ireland and Irish enterprises. We have already had to make significant investment in infrastructure, including customs infrastructure, as result of Brexit. The increase to 25% in the amount of collection costs for customs duties that a member state can retain is therefore especially welcome and appropriate. We will also receive funding under the recovery fund over the next two years, with further funding to be made available in 2023 for those most impacted economically by the crisis. Again, we will be working to maximise Ireland's drawdown.

We will also receive Structural Funds worth more than €1 billion for our regions. The €120 million provision for a new PEACE PLUS programme will help to build a significant fund to further reconciliation and North-South co-operation, and continue the work of the current PEACE and INTERREG programmes in a post-Brexit context. This is not only of real and practical benefit to those who will benefit, it is a strong and symbolic signal that the European Union will continue to stand beside the people of Northern Ireland as it has done throughout the peace process and throughout Brexit.

I am also pleased to note the increased provision for Horizon under this MFF when compared with its predecessor. The Government wants Ireland to be at the cutting edge in research and development and we will work to ensure that Departments and agencies proactively support Irish researchers, institutions and enterprises in accessing this important funding.

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