Bertie Ahern (Dublin Central, Fianna Fail)
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I attended the European Council in Brussels on 16 and 17 June. I was accompanied by the Minister for Foreign Affairs, Deputy Dermot Ahern, and the Minister of State with responsibility for European Affairs, Deputy Treacy.

The Presidency's conclusions have been laid before the House. The European Council had a challenging agenda. First, it had to deal with the setback to the ratification of the European constitution. While ten countries have approved the constitution, voters in France and the Netherlands rejected it. Second, the Council sought to reach agreement on the future financing of the Union for the years 2007-13. Agreement on the funding package would have given the Union a much-needed political success.

This was a difficult and, ultimately, very disappointing European Council. At a moment when the EU needed a strong demonstration of solidarity and unity, the European Council had a bad tempered and unproductive negotiation about future funding. The failure to reach agreement on the financial perspectives was a further setback for the European Union at a time when it is still coming to terms with the result of the French and Dutch votes on the European constitution. While I do not want to exaggerate the implications of the breakdown in these negotiations, I believe the EU is now facing one of the most challenging periods in its history.

I indicated after the meeting that the outcome was bad but I also indicated my confidence that the European Council and the Union will weather this particular period of turbulence, as it has done many times previously. Member states seek a strong and effective Union and I will devote my efforts to ensuring the earliest resumption of smooth and forward looking business relations.

While the outcome of last week's Council might not, at first sight, encourage optimism, I believe the Union will find the strength to move forward in a united and determined way. The new member states made an important contribution to the discussions last week. In their interventions, many of the Prime Ministers of the ten states showed a deep understanding of how the EU works and a deep commitment to its future development. Their willingness to compromise and their support for the concept of a Europe based on solidarity was striking and encouraging.

While the discussions on the future financial perspectives were difficult and robust, the European Council had a positive exchange on the European Constitution. The discussion was serious and amicable and there were no recriminations. There was an overwhelming sense that the European constitution was in Europe's interest and that it should not be renegotiated. The discussion at the Council confirmed there is no plan B and the European constitution remains on the table. The Council adopted a declaration on the European constitution that helps chart the way forward. The Council agreed that the ratification process should continue.

At the same time, there was an appreciation of the particular situation of the member states committed to holding referendums.. These countries will need more time to engage in debate and dialogue and, therefore, the Council agreed to have a period of reflection and debate in all the member states. It is accepted the timetable for ratification may be altered in a number of member states and there is a general understanding that the original target date of 1 November 2006 for entry into force is almost untenable.

Each member state will determine, in the light of its own circumstances, how best to proceed. The European Council will assess the situation in the first half of 2006 under the Austrian EU Presidency. The Government remains committed to ratifying the European Constitution. Following the discussion at the European Council, we will not at this stage set a date for the referendum or progressing the referendum Bill. We will, however, continue to prepare for a referendum. We will use the period of reflection to intensify our engagement with the European Constitution and Europe generally.

The National Forum for Europe has done much to promote debate and the Government will continue to support it. It will play a key role in facilitating in Ireland the broad debate envisaged by the European Council. The Oireachtas will also have an important role to play in this debate. The Government will consult the Opposition parties on the scheduling, at an appropriate time, of a full debate in the Dáil and the Seanad on the situation in the EU. In September, the Government's White Paper on the European constitution will be published. This will ensure comprehensive, accurate and factual information is made available to the public. I strongly believe that the ratification of the European constitution remains a valid and important objective for Ireland and for the Union. The pause in the ratification process will allow the governments of the member states to listen to the voters, to communicate the importance of the EU and to revitalise public engagement with Europe and its role in the world.

The second key issue on the European Council's agenda was the negotiation of the future financial perspectives. In the months preceding the Council, the Luxembourg Presidency managed through great skill and determination to narrow the differences between member states. The package on the table at the Council contained all the elements for an agreement. However, the political will was lacking and no agreement was reached. Ireland's overall approach throughout the negotiations was to ensure the Union is fully equipped to meet the challenges of the years ahead and to enable it to meet the expectations of our citizens. The final package tabled by the Presidency would have been a good result for Ireland and for the Union.

I indicated at the Council that in the interest of compromise and solidarity, Ireland could have accepted the final proposal of the Presidency. Our particular national concerns were to safeguard the October 2002 agreement on the funding of the Common Agricultural Policy, to ensure adequate cohesion arrangements for our regions in transition, to ensure as fair a deal as possible with regard to our contribution to the EU budget, and to secure future EU support for the peace process.

On the CAP, the Presidency's proposal would have ensured that the funding was sufficient to cover both the commitments made to our farmers under the October 2002 agreement and also the costs of the extension of the CAP to Bulgaria and Romania on their accession. In the discussions on CAP funding at the Council, I emphasised that the October 2002 agreement on CAP funding by the European Council was a milestone. It had resulted in a fundamental overhaul of the CAP and paved the way for a decline in the CAP's share of the overall EU budget. Our farmers accepted the deal on the basis that it had been agreed by the European Council and provided certainty for the years up to 2013.

Efforts to reopen the deal called the credibility of agreements reached at the European Council into question. Efforts to link the CAP to other issues, such as budget rebates, did not take into account the very far-reaching and significant reforms already made to the CAP. Subsidies have been decoupled from production and the CAP's share of the overall EU budget has significantly reduced over time. The European model of agriculture makes an important contribution economically, socially and environmentally to European society. I regret that many of those, who are perfectly free to take a different view on the future of the CAP than the one I take also feel free simply to ignore the facts.

The Presidency's final package also included €200 million in support of the peace process over the coming period. The funds would have been spent in Northern Ireland and the Border counties on a range of cross-Border and cross-community projects. The continuing commitment represents both practical and symbolic support by the Union in the cause of peace and reconciliation in Ireland.

The issue of the British budgetary rebate was one of the main stumbling blocks to reaching a final agreement on the financial perspectives. I strongly argued that the future cost of all rebates should be kept within reasonable limits. Following the failure to reach agreement on the financial perspectives at the Council, the issue will be taken forward under the incoming British EU Presidency and, possibly, the Austrian Presidency in the first half of 2006. The European Council will return to the matter. Ultimately, the EU will find the political will to craft an agreement on the financial perspectives. It is important that such an agreement should be achieved sooner rather than later, not least to allow the new member states the time to prepare for the receipt of Structural and Cohesion funding.

I made clear, however, that Ireland's acceptance of the Presidency compromise last Friday night was on the basis of agreement at that time. The Government will rigorously resist any attempt to use that compromise as a starting point for further negotiations or a platform for further concessions. While the negotiations on the EU budget are strongly influenced by national interests and objectives, the budget is also a concrete expression of the solidarity and co-operation between the member states, which underpins the Union. It can only be agreed in a spirit of compromise and political goodwill. Short-term national political and economic interests must yield to the collective long-term interest of the future stability and credibility of the Union. We must return to the negotiations determined to reach an agreement which respects the common policies and the earlier agreements of the European Council but which also looks to the future and the global challenges facing the Union.

The conclusions of the European Council reflect the EU's support for future enlargement and to implementing the commitments it has given to accession and applicant states. The European Council welcomed the signing of the accession treaty with Bulgaria and Romania. These countries will participate as active observers in the proceedings of the European Council and its preparatory bodies. Ireland looks forward to their full membership of the Union in January 2007. The European Council also highlighted the need to implement in full the commitments given to Turkey and to Croatia at the December 2004 European Council concerning the opening of their accession negotiations.

The process of globalisation will not stop while the Union deals with its internal agenda. In the coming months, it is important that the Union continues to focus strongly on economic and social issues. It is clear from the debate in the member states on the European constitution that the challenges of globalisation are now making themselves felt across the Union and at all levels of society. This is why the revitalisation of the Union's Lisbon Agenda, launched in March 2005, must be implemented and pursued with great determination.

The European Council approved the integrated guidelines for growth and jobs 2005-2008, a key component of the Lisbon strategy. The integrated guidelines must be translated into national reform programmes to be established by member states. The Commission also presented a Lisbon Community programme, which covers all action to be taken at Community level. The national reform programme in Ireland will be developed in response to our specific national needs and the social partners and the Oireachtas will be included in the consultative process in its development.

In the coming months, the EU must also continue to work hard on dealing with a range of internal issues that affect the daily lives of our people. The fight against crime, terrorism and drugs is an area where strong co-operation between the member states is essential. The Council's conclusions, therefore, noted the adoption of both the Hague programme action plan strengthening the area of freedom, security and justice and the EU drugs action plan. The conclusions also review the implementation of the action plan to fight terrorism and set out the priority actions that must be undertaken in this area.

While the European Council was dominated by the discussions on the European constitution and the financial perspectives, it also adopted conclusions on a wide range of external relations issues. The Council's conclusions reflect the key international role being played by the EU, as it works to prevent conflicts, fight poverty and support the effective working of key multilateral bodies. It is essential that, as the Union works to overcome its current internal difficulties, it remains engaged on the international stage and continues to promote its interests and values in a turbulent world. The European Council wants to have a balanced and considered outcome to the September UN summit which will enable the UN to be reformed and to respond more effectively to the threats and challenges facing the world.

The conclusions of the European Council on the UN summit include a new commitment to increase EU overseas development assistance, including a sharp increase in the EU's ODA to Africa. The new EU ODA agreement should result in an additional €20 billion per year in EU ODA by the end of this decade. The conclusions set out the EU's views on a range of key summit issues such as disarmament and non-proliferation, human rights, including the establishment of a human rights council, the reform of the main UN bodies, sustainable development and trade.

The European Council also adopted important declarations on Kosovo and the Middle East. The declarations reflect the important role the EU plays in regions where international efforts to prevent and resolve conflict are entering into a critical phase.

The past month has not been good for the European Union. The rejection of the European constitution by two of the founding members of the Union has delivered a shock which will take some time to absorb. We are all still reflecting on the full implications of these votes and will require time to assess how best the Union can move forward. The disagreement on the financial perspectives reflects this state of uncertainty. The launching of a debate on the European constitution and on Europe generally across the Union should help clarify our thoughts and help us to take the necessary decisions to put Europe back on track.

Now is not a time for division and dispute among us. It is a time for coming together in support of a Europe that serves the interest of all its people in a rapidly changing world. For its part, the Government will support and contribute to the national debate. We will also continue to work with all our EU partners, particularly in the new member states, in a joint effort to ensure that the EU emerges strengthened and revitalised after the setbacks of the past weeks.

Let me say to those who are now making dire predictions about the future of the EU that I am certain they are wrong. The European Union is not some wilting violet that will fade away overnight. It is a strong plant with deep roots which are nourished by the common prosperity of its peoples, its track record of unprecedented success and by the common desire of its peoples and member states for a Europe united, peaceful, prosperous and free. We must all work together and I intend to play my part in the weeks and months ahead to ensure that we do so.

Enda Kenny (Mayo, Fine Gael)
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I wish to share time with Deputy Naughten.

Séamus Pattison (Carlow-Kilkenny, Labour)
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Is that agreed? Agreed.

Enda Kenny (Mayo, Fine Gael)
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Last week's summit shows that Europe is going through a storm. However, it is not yet time to take to the lifeboats. The public comments made by Heads of Government during and after the summit were unprecedented in their tone and content. That said, it was the week that saw the anniversary of the battle of Waterloo.

Naturally, the results of the referendums in France and the Netherlands made ratification the major subject of the summit. However, the budget proved equally fractious. I will address that first. The budget negotiations have been inconclusive, divisive and have left a bitter legacy. Britain did Europe no favours by using the outcome in the referendums to link a deal on the UK rebate with a further scaling back of the Common Agricultural Policy, CAP. I regard the UK's action as dishonourable. It was an unworthy negotiating tactic and an excellent illustration of why people have become unsure about Europe. They see governments blatantly using Europe for their own domestic ends, regardless of the damage they do to the European ideal in the process.

In that sense, Britain was out of order. In terms of the CAP, it was equally so. The policy has undergone such radical reform over the last 15 years as to see spending on agriculture as a proportion of EU budget falling dramatically and so-called commodity "mountains" virtually eliminated. Further modifications in the context of world trade must be a matter of negotiation, not unilateral attack. It is wrong for a member state to attack the CAP in an attempt to gain leverage on a separate issue.

It is now said that the imminent UK Presidency of the EU will stagnate. However, that is not inevitable. In fact, the British Government now has an opportunity to repair some of the damage it did last week. If it makes a real and sincere effort to achieve progress on the budget in the context of the constitution, it can prove its critics wrong. It should live up to its duty, its people should be responsible Europeans and the country should build bridges with those member states with whom it has been in dispute.

In terms of ratification, I am pleased the Heads of Government decided to extend the ratification period. Before the European Council meeting, I joined the summit meeting of the government and opposition leaders of the EPP, which included the Council's current President in office, Jean Claude Juncker, and the Commission President, José Manuel Barroso. There were varying views as to the best way forward. I proposed, as I had previously, that instead of suspending or abandoning ratification, as suggested by the UK, it would be better to keep the process alive and extend the deadline by two years. This would allow for a more comprehensive public debate on the merits of the constitution and a deeper analysis of its rejection in France and the Netherlands.

I note our Government's decision to delay the ratification period. The decision is welcome. I have consistently held the view that proceeding with an early referendum would have been counterproductive, given the practical considerations following the French referendum. It would have been extraordinarily difficult to motivate people disposed to voting "Yes", given they would be voting on a treaty which, as things stand, cannot be ratified by all 25 member states. Last year, I proposed that all countries holding referendums on the constitution should do so on the same day to avoid unnecessary prejudice and allow countries to focus on our shared common good.

Certainly Europe has seen better times. I am confident that it will do so again. In fact, the events of last week illustrate Jean Monnet's belief that "Europe is a process, not a product". Politically, co-operation may be at a low ebb. In addition, our people are expressing uncertainty about how exactly they want Europe to proceed. However, I believe this to be part of Monnet's process. It is where politicians get another chance to explain to people the "why" of Europe, where we can lead a public debate on what it is to be European and, above all, where we can actively listen to our people and their confusion about, or their complete indifference to, Europe and its future.

Seven out of ten people in the EU say they know little about our Union. Less than half the electorate voted in the European Parliament elections last year. Just after those elections, Romano Prodi warned that we "needed to respond to the disenchantment of our citizens". We must do that here and now if Ireland is to show good example in the next part of Monnet's process. The disconnection between the political process and the reality of people's lives is enormous. I believe Ireland can show a good example. It is nothing new. Culturally, in the Dark Ages we colonised the minds of Europe. Centuries later, we used a sliver of silicon to transform ourselves economically from the poor relations into the second richest country in the Union. In doing that we held out hope to others watching, waiting and thinking that if Ireland can do it, so can they. There is no reason we cannot do it again, although this time politically.

The Irish people are highly sophisticated, educated and intelligent. They have a finely honed sense of doing right by people, standing up for people and of looking out for their fellow human beings. It is that innate sense of responsibility and intrinsic goodness which should form the basis of our debate and allow Ireland to lead the way into the next part of the process in the next two years. This will, perhaps, show that unlike our near neighbours, we are more than a nation of shopkeepers.

I was struck by a question asked by Edmund Stoiber, who was standing in for Angela Merkel at the meeting I mentioned. It suggested that people do not believe in Europe any more and that there is a necessity to explain to people what Europe is about and why it was formed. He was sitting beside Michael Howard, an Englishman. England and Germany are two of the reasons that the European Union was formed in the first place. These two worthy representatives of their countries made that starkly evident at the meeting.

It will require new thinking and a new proposition. It must be something beyond the traditionally successful sell of the one-way benefit, the prospect of what is in it for us. Certainly, there is a consumer element to the European ideal. Every time one fills one's car with unleaded petrol, one can thank Europe and its health and environmental regulations. Every time a student goes on a SOCRATES programme to broaden his or her mind and horizons, he or she has Europe to thank. If one has taken parental leave after the birth of a child, one can thank Europe's social chapter. If one is in the 1% of the population with a life-threatening food allergy, packaged food is less of a minefield since Brussels demanded definitive ingredient labelling.

However, the next stage is about more than that. It is about what we can give as much as about what we can get. With the constitutional treaty, the EU ceases to be an innocuous economic club owned, so to speak, by the governments of the various member states. Instead, the treaty signifies the EU as a political and legal entity, with all the seriousness which that implies. The political dimension of the EU has become increasingly evident in recent years. However, governments, including the Irish Government, have not just failed to address that political dimension, they have positively ignored and avoided it. That is weak leadership and now Europe, and all of us, are paying the price.

If we are serious about Europe, it is time to be serious and honest with our people. We need to give them debate and discussion on the substance of the new Europe, what it is to be European and on the type of Europe we want, and through that the type of world we want.

Furthermore, there have been mistakes in how projects have been managed. Take the example of the Schengen agreement. Citizens benefit in a tangible way from that ambitious project yet its potential remains unfulfilled. Instead of freeing people, the dismantling of borders causes them to worry about illegal immigration, increased criminality and general insecurity. This is because when they decided to dismantle the borders the EU leaders lacked the political will to step up co-operation between their police forces and judicial authorities. People see the potential but through lack of courage and half-way measures weak leadership results in failure.

Future analyses should be frank and open. For example, we must examine the role of Europe in a globalised world. Is it to spread stability beyond our borders or to provide safety and cohesion inside? How do we ring-fence the rights and demands of the individual states without thinking how they connect with the needs and the good of the whole?

It is time to communicate what it means to be European in a way that involves responsibilities as well as rights and relates to the good of the individual state and the greater good of the group. This time last year after the text of the EU constitution was agreed I said the EU was facing its moment of truth, that agreeing the constitution was one matter but adopting it another. That is the case, especially since its defeat in France and the Netherlands.

The next time we vote on an EU issue the question will be whether we are for or against the EU. The response will depend on how politicians here and outside the House engage with, respect, inform and persuade the people in the meantime. This is a golden opportunity to stop selling the EU to the people and explain it instead. We can demystify and humanise the EU and explain its absolute necessity for the 455 million citizens who, thanks to the EU, are neither allies nor enemies but members of the one European family, a remarkable achievement within 60 years.

Mr. Barroso put it well when he said there was no plan B, but there should be plan D for democracy and dialogue. We have two years within which to explain the reason for existence of the EU and to make people see that its values are theirs, that it comprises people not institutions and that they will build the Union at their pace and their rhythm. This is the only way to make people feel that the EU belongs to them, that it is a place where they have their say, are listened to and is truly their home.

Denis Naughten (Longford-Roscommon, Fine Gael)
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The European Commissioner for Agriculture and Rural Development, Ms Fischer Boel, proposed to the European Council last week that a cut of 4% in each farmer's single farm payment should take place from 2007 as a means of alleviating the looming crisis in the EU budget from that date. It is shocking that the Commissioner charged with defending the rights of farmers and the agriculture sector seeks to undermine the Common Agricultural Policy, CAP, agreement less than three years after each member state, including the UK, signed up to it.

These cuts will come on top of the modulation cuts which will reduce farm payments over the lifetime of the CAP. The single farm payment is not index-linked and will inevitably reduce year on year. Farmers cannot be expected to take a second cut. They have not received the first single farm payment and already there is talk of changing it. The CAP deal, struck in 2002, pledged to preserve agricultural spending at its current level until 2013. This pledge must be fulfilled.

While the UK tries to squeeze the CAP budget it refuses to examine the terms of its own generous rebate scheme. The UK rebate is worth almost €5 billion annually and has operated since 1984. Mr. Blair appears to ignore the fact that in the intervening period there have been significant reductions and cutbacks in CAP. The level of spending on agriculture in the overall EU budget has fallen by 30% in the past 20 years but the UK rebate level has not fallen.

The UK and the Commission want the farming community to foot most of the €8 billion bill for incorporating Romania and Bulgaria into the European Union, but that is not acceptable. The UK recently attempted to couch its opposition to the level of subsidies paid to EU farmers in the simplistic terms of its impact on the poor African states. For example, a cut in EU sugar prices would have a negative impact on underdeveloped African countries which gain from the high guaranteed prices they receive for the amount of cane sugar they can sell into Europe.

Trócaire has called for the maintenance of these quotas for underdeveloped African countries and improved market access for them. It also recognises there must be room for domestic production in Europe. Changes to the sugar subsidy regime, however, would benefit big players such as Thailand, Brazil and Australia where sugar production remains in the hands of wealthy ranchers whose incomes increase even more, without return to their peasant workers or to small-scale sugar farmers in the everything but arms countries.

EU leaders must return to this issue to resolve the budgetary problem soon. I urge the Minister for Agriculture and Food to hold firm on the commitment to ensure the CAP will not be further eroded. The EU cannot renege on its deal. The Minister for Agriculture and Food will have her first opportunity to press home this issue later this week when Ms Fischer Boel makes her first visit to Ireland. The Minister needs to hammer home the point that the UK's attempt to revisit the CAP agreement is too late. The deal is closed and cannot be revisited. We must stand firm on this issue.

The Minister must also emphasise that farm cuts have gone far enough, particularly when one considers the cuts through modulation funding and that the Commissioner's comments do not help member states to uphold the CAP agreement.

Ruairi Quinn (Dublin South East, Labour)
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The media have overplayed the outcome of this summit. It would be wise to reflect on what remains in place. Some headlines over the weekend suggested that the Union was finished, that it had failed to agree a budget and a rule book, and that the euro was likely to disappear. There is a rule book, namely, the five treaties. The constitutional treaty was an attempt to consolidate and improve the decision-making process within that rule book, but the French and Dutch have rejected it. The indications are that they will not revisit it in its present form. We must all decide on the way forward.

There is a budget, and the new budget will not take effect until 2007. There is a set of rules, even if their application in some areas is cumbersome.

Our friends in Britain are taking on the EU Presidency at a time when the Prime Minister, Mr. Blair, could give strong, positive leadership. He is the strongest political leader among those of the four largest countries in the Union. One need only consider the domestic circumstances of Chancellor Schröder, President Chirac and Mr. Berlusconi to realise that. Mr. Blair, however, seems to have responded to President Chirac's provocation after the defeat of the constitutional treaty in France to put the rebate back on the table for discussion.

Perhaps Mr. Juncker, despite his wide experience, should have considered how to handle that aspect of the summit in advance. The expectation that we would get a budget deal was never justified. As the Taoiseach said today, in the early period the 1% club attempted to restrict expenditure but obviously we need to return to Mr. Delors' original proposal, when the cohesion funds were created after the Maastricht treaty, and consider 1.44%. We will not achieve many of those things on which Mr. Blair rightly wants us to focus at European level with a small budget, 25 member states and the prospect of two or three more coming in.

I was in Mr. Blair's presence at several events organised by the Party of European Socialists where he suggested that he wanted to put Britain at the heart of Europe. Sadly for Europe and Britain and for many people living there, and by extension ourselves, he seems to have lost that opportunity. There is a much better, detailed analysis of this on the opinion page of yesterday's Financial Times by Wolfgang Münchau in which he cites four, if not five, downsides to the actions taken by Prime Minister Blair. However, that decision has been taken and we find ourselves in the present position.

Perhaps the Taoiseach or the Minister for Foreign Affairs, Deputy Dermot Ahern, might respond to this. The inference that I draw from the Taoiseach's comments is that because Britain has such a vested interest in the budgetary process, it is difficult to see it in the role of honest broker and compromise seeker while at the same time maintaining a clearly if not stridently asserted national position. Therefore, we are faced with the prospect of the Austrian Presidency having to sort out the budget at the beginning of next year.

It is nevertheless sad, since, on the positive side, the European Union, for all the criticism that people throw at it, is one of the few international organisations in the world that people want very passionately to join and that has been an absolute success. Perhaps in retrospect there should have been less pride from Joschka Fischer and a few others and we should have entitled the treaty, as a friend of mine said, "A Treaty to Consolidate and Integrate Five Existing Treaties" and bore people instead of frightening them by letting them think that we were getting a new constitution. To use the word "constitution", as distinct from "constitutional treaty", which Giscard d'Estaing wanted to do, was, in retrospect, a bridge too far.

I welcome what the Taoiseach has said. As far as we in the Labour Party are concerned, we cannot say to people that they got it wrong. The turnout in the two referenda in the Netherlands and France was double what it was for the first Nice referendum in this country. There was a sustained and substantial debate in both countries. It was extremely well informed about what was in the treaty and showed concern about things that were happening to people.

We are simply ignoring the elephant in the living room if we ignore the question of Turkey, raised in particular by the right-wing "no" campaign in France but also of major concern to ordinary citizens. It is not that such people are racist or anti-Islamic as such, although some may very well be both, but they are fearful of the future and for their identity.

It is not sufficient to say that to the people who have the reputation for being the most tolerant, the Dutch, who took in economic and religious refugees, starting with the Sephardic Jews in 1492. It was a different kind of Netherlands, but essentially the same region. Antwerp and other places became a haven, first for Huguenots and subsequently for Jews and others. The quid pro quo of that kind of open door policy was that, over time, those generations allowed themselves to be absorbed into Dutch culture and, broadly speaking, took on Dutch values.

What seems to frighten some in the Netherlands is not the first or second generation immigrants who have worked their way up and made a contribution to the economic life of the country. The third generation children of Islamic immigrants seem to be quite fanatical, and there is a similar phenomenon among a minority across the water in the United Kingdom.

Therefore, when such things happen, people's fears are real. They are tangible and can be measured. We must understand what is making them fearful. Part of it is globalisation, and part is the failure of two big economies, for totally different reasons, to sustain and generate substantial economic growth. The problems of Germany were caused by the crazy unification proposals and the one-for-one exchange policy of Helmut Kohl. Those in France are quite different, many having been caused by very bad government under President Chirac. As Mr. Sarkozy, the leader of the right-of-centre French party, the UMP, said, a social model that has produced 10% unemployment for the last 20 years is not exactly one that is working terribly well, and that must be examined. To pose that question in his position is to recognise the obvious.

There is no question in anything that Tony Blair has said that countries such as Ireland, the Netherlands or Finland, which have reformed their labour markets and introduced change, are attempting to throw the baby out with the bathwater and completely demolish or dismantle the welfare state. Britain now spends more money on its welfare state than ever before, and the sorts of simplistic accusations thrown across about the so-called Anglo-Saxon neo-liberal model being imposed on the European Union simply do not fit the facts. However, the facts are as people perceive them, and therefore what should happen over the next few months and years is a much bigger engagement with what people are concerned about and how their fears can be assuaged.

The Treaty of Rome has a famous phrase that we have always cited: "The peoples of Europe, in creating an ever closer union". We are now reaching the stage where people want to know the final destination and what the Union will look like when it is finished.

Bertie Ahern (Dublin Central, Fianna Fail)
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Boundaries.

Ruairi Quinn (Dublin South East, Labour)
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Does it automatically have to roll right up to the Urals? Simply because Ukraine is part of the European continent, is it automatically entitled to be a member? Can we say for a generation, if not two, that the enlargement of ten, and possibly 12, member states is sufficient and will have to be digested and integrated without any further territorial enlargement for a time? I am not talking about five or ten years but a substantial period.

In the meantime, we must develop our neighbourly policies regarding the countries of the Balkans which are now surrounded by European Union member states and are, so to speak, within our territorial area. If they are not stabilised, they pose a threat to us, just as a house full of dry rot in the middle of a terrace is a danger to every other house.

That said, we must begin to reassure and talk to people, telling them what the project is and what sovereign powers we have agreed to share in the EU. That is all that we need for the foreseeable future, and we will not transfer any more powers. We will do the things set out and proposed in the various individual documents to which we have referred and in the existing five treaties, re-encapsulating and restating them in the constitutional treaty itself. I invite the Minister for Foreign Affairs, Deputy Dermot Ahern, to reflect upon that.

We have some experience in this country from the National Forum on Europe. There is now talk in some other member states and at EU level — certainly in the European Parliament — of doing something similar. How that would be structured and presented remains to be seen. However, the need for that communication exists and I commend the work that Senator Maurice Hayes has done with the National Forum on Europe. It is a model at which many other countries are looking to see how it might be applied. We have enjoyed very good value for money from it, since it has provided a non-adversarial platform and a framework within which very diverse views can be expressed, reaching out to civic society and political groups and parties that are either not fully represented or not represented at all in this Oireachtas.

I will return to the budget itself and the question of Common Agricultural Policy reform. The points that have been made by the Taoiseach elsewhere and by Deputy Naughten in the House today are pertinent. It is hard to understand how a country with all the diplomatic experience and wisdom that Britain has shown over many years, having agreed to a deal three years ago, could attempt unilaterally to tear it up in the way it did. A reaction was bound to come from people who, like us, have quite an interest in the matter. I hope Britain understands, as Deputy Naughten and others have said, that the CAP is in any case already reforming itself, being on a downward drift.

There are fears in rural Ireland about the implications. One need only read the article in today's edition of The Irish Times about the future of the 3,800 sugar beet growers in this country to get a sense of their fear and concerns. It is simplistic to suggest that we should demolish it and have free trade. We must use our negotiating weight in the World Trade Organisation and ensure that Peter Mandelson, on our behalf, seeks structural reform of the relationship between primary agricultural producers and what we can do.

We must begin to project European values in terms of the World Trade Organisation concessions that we make. For example, the treatment that Brazilian workers on large sugar plantations must endure is unacceptable. If we want to open up our markets in an attempt to equalise income distribution across the globe, we must start to examine mechanisms that will allow us to exchange one concession for a concession domestically. Either the Brazilian Government moves to improve and enhance basic rights for its workers or else we must find some other way of achieving that end.

These are issues that must be explored. I have spoken about sugar but the same could apply to many other commodities. If we open up our markets as the neo-conservatives in the United States would like us to do without any type of quid pro quo or without any safeguards in regard to the income distribution effect of that decision, in five to ten years' time we will have a totally skewed income distribution derived from the wealth generated by those selling into our markets but no redistribution of any significance in what are currently Third World countries. In such circumstances, there will be a massive reaction in Europe to the point where there may well be a protectionist backlash.

This has happened before in 1914. We came into the 20th century with an international currency, modern communications, new technologies such as steam and motor transport and a totally open trading system. Within 14 years that open trading system had largely disappeared and only re-emerged to a significant extent at the end of the last century. Protectionism and the reaction to domestic political forces have not gone away and it is vital that we can understand people's fears in this regard. If people agree to trade away, give away or have taken from them certain protections, such as those enjoyed by many rural farm producers in this country, and the consequential effects are not those that were promised, there could be a serious backlash.

I wish the British Government well during its Presidency. I hope it will take on board some of the comments that have been made and will attempt to prepare the ground if it cannot do a budget deal in the next six months. It should prepare for such a deal for all the reasons the Taoiseach mentioned earlier during Question Time. We must ensure new member states can get access to and draw down funds in their own domestic budgets, limited as such funding may be.

John Gormley (Dublin South East, Green Party)
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I propose to share time with Deputies Ó Snodaigh, Finian McGrath and Connolly.

Séamus Pattison (Carlow-Kilkenny, Labour)
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That is agreed.

John Gormley (Dublin South East, Green Party)
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The conclusions of the Brussels summit were simply a recognition of the reality that the ratification process had to be stalled in light of the French and Dutch rejections of the constitutional treaty. I welcome the thoughtful and measured contribution of Deputy Quinn. He too recognises that we cannot go on as we are. In a statement that was not picked up to any great extent by the media, the Taoiseach remarked before he went to Brussels that the French and Dutch would have to state their position in the same way as he stated his position in Gothenburg after the initial Irish rejection of the Nice treaty. It was in Gothenburg that the Taoiseach announced that Ireland would hold a second referendum on that treaty.

The question is whether we had clarity in Brussels. Did the French and Dutch tell us they would vote again? If we are to believe some of the public pronouncements, the respective leaders were emphatic that they would not do so. The Dutch Prime Minister, Mr. Balkenende, said there would not be a second referendum in the Netherlands. Prior to the referendum defeat, we were told by French leaders that there would be no second vote in France. They were categorical in this contention. The ratification process, with which I did not agree, is therefore stalled and cannot continue.

On 31 March 2003, I put forward an alternative view at the Convention on the Future of Europe. This submission, which received cross-party support, was a proposal for a Europe-wide referendum. It is ironic that in the light of the French and Dutch rejections, I have heard others who originally dismissed the idea now pronouncing it a good idea that we should all vote together on the same day. It is regrettable that this idea was rejected by the presidium of the Convention because it would have solved many of the problems that have arisen.

However, it may not have facilitated the passing of the constitutional treaty. I have spoken to colleagues throughout Europe and there is significant opposition. Some German colleagues told me at the weekend that if a referendum had been held in their country, it would have been rejected. The same view seems to prevail in Italy. There may be different reasons for this opposition in different states but the opposition undoubtedly exists.

One of the reasons the Europe-wide referendum idea was rejected was that many, particularly the French themselves, believed it incomprehensible that France would reject the EU constitution. It was not meant to be like this. The idea was that the French would accept the constitutional treaty and this would facilitate a rolling "Yes" vote in those countries that held referendums. As one French man observed: "If the British say 'No' it is a problem for Britain, but if the French say 'No' it is a problem for Europe."

Part of the reason that the British are now so defensive is the way they have been treated over a period of time. There has been a certain amount of Brit-bashing in this country. Even among Green Party colleagues in other European states I have heard much talk to the effect that the Brits must make up their minds whether they are in or out. What we are seeing now is a reaction from the British. If Europe is a family, we must recognise that we are all in this together, including the British, and that we must take on board their view of Europe.

The French are slightly out of touch with how Europe has developed. The EU has expanded and the vision of the Poles, Hungarians and Czechs does not necessarily correspond to that of the German-French alliance. It is a slightly different vision in terms of economics. Many of the new member states believe themselves to be, for whatever reason, closer to Boston than Berlin, to use a common analogy. This is particularly so when it comes to militarism because they believe they owe the United States a favour.

There are a number of issues to consider but it is most important that we decide how to proceed from here. The Laeken Declaration asked us to bring Europe closer to the people. All the evidence suggests we have not succeeded in doing so and that many people are alienated from the European project. What does it mean when the Taoiseach talks about a period of reflection or engagement? Is it a question of engaging properly with citizens or is it a matter of getting the constitution through by hook or by crook?

There are many who see this debate focusing on the question of the type of Europe its citizens want. Do they want a federal Europe or a confederation? One must accept that not all those French who rejected the constitution were ignoramuses. There was, to use the Taoiseach's phrase, real engagement in France and the constitution was a best seller. I doubt many here would read it. Mr. Dehaene said that nine out of ten people would not read the treaty text but the vast majority of French citizens did so and also read books about the constitution.

We must decide what type of Europe we want. It is not desirable that we should have a Europe of the elites. I am a supporter of EU enlargement and have always said that Turkey should be part of Europe. I do not want Europe to disintegrate. I do not believe in the histrionics of Mr. Prodi, who said that Europe will disappear because France said no. Europe will not disappear. We will continue, but we must be careful that this process of disintegration, as it is now called, is halted. Some of us want such a confederation, but we want Europe to continue.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Gabhaim comhghairdeas le Stádas as an toradh a fuair siad as a bhfeachtas, agus buíochas leis an Taoiseach agus an Rialtas as an stádas sin a bhaint amach don teanga. Is trua nach bhfuil gach duine sásta leis an chéim mhór chun tosaigh a fuair an Ghaeilge, agus measaim go raibh léiriú ar an meon caolaigeanta sin san Irish Times agus The Evening Herald inné.

Agus mé ag labhairt ar mheon caolaigeanta, measaim chomh maith go bhfuil comhghairdeas ag dul dóibh siúd a sheas ag an deireadh seachtaine ar son cothromais i gcoinne an bhaic a chuir méara Warsaw ar mháirseáil aerach agus leispiach. Tá comhghairdeas ag dul do na póilíní a sheas leis an phobal ar son cearta daonna sa tír sin.

The crisis in the ratification process of the proposed EU constitution was a hot topic of the EU summit. I can only say vive la France. The French and Dutch have taken a courageous stance and expressed their democratic choice. We respect that and hope that other parties do the same, unlike the approach taken by Government parties with regard to the Nice treaty.

The French and Dutch votes have fatally wounded the constitution. However, it is not yet buried because it contains a clause which allows member states to proceed if the 80% ratification threshold is reached. For that reason, the EU seeks to introduce a longer period of consultation, but that is not required to kill off and bury this constitution.

While I oppose the constitution, I welcome an opportunity for Irish people to add our weight to the rejections delivered by the French and Dutch and by citizens of other countries. The treaty text is complex and the many reasons which exist for its rejection by Irish, French, Dutch, British, Czechs, Danes and others should be taken into account when EU leaders are forced back to the drawing board. They might, for once, listen. The EU elites and federalists have created this new delay on ratification because they are running scared of the democratic will of the peoples of Europe. One need only look at the arch-federalist and architect of the EU constitution, Mr. Giscard d'Estaing. He lamented that the French voters read the document following its distribution to every household. The reality is that, once people in this country educate themselves on the European project, they will reject it in the same manner as the French and Dutch.

The Government and the people have different desires for the EU. It is our job to prove that a more equal and democratic EU is possible. If the Government is intent on putting a dead duck before the people, we are ready and we will defeat it.

Paudge Connolly (Cavan-Monaghan, Independent)
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It is generally accepted that, after the failure to agree on a budget or plans to ratify the constitution at last week's meeting in Brussels, the EU faces its most serious crisis in decades. The delegation which visited the White House yesterday for US-EU talks had the appearance of a lame duck. It is ironic to hear President Bush express US support for a strong Europe, while commentators simultaneously referred to a diminished global role for Europe in the wake of last week's meeting.

The Council meeting abandoned the attempt to ratify the EU's first constitution by next year without declaring the document dead. This effectively left the EU without a roadmap. It appears to be in suspended animation for the duration of a period of reflection. This period may become permanent if the humiliating defeats of the referenda in France and the Netherlands are repeated. The Luxembourg Prime Minister, Mr. Jean-Claude Juncker, was coldly realistic in saying that the EU could not continue as if nothing had happened. The Prime Minister also remarked that the November 2006 target date for ratification of the constitution by all member states is no longer tenable.

The Council apparently did not attribute the failure of the EU constitution in France and the Netherlands to any imperfections in the document but to the electorate's lack of knowledge or understanding. EU President, Mr. José Manuel Barroso, would be well advised not to underestimate the intelligence of the public or its understanding of and concerns about the EU constitution. Since last week France has engaged in recrimination, with the new Prime Minister suggesting that the accession of ten new states in May 2004 was the real reason for the French rejection of the constitution.

Finian McGrath (Dublin North Central, Independent)
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I am grateful for the opportunity to contribute to this debate on the European Council. I want to use this occasion to challenge the cosy consensus that exists in the Dáil on Europe and its future direction. The Government and the major Opposition parties do not listen to the concerns of many citizens. Even if it is not popular to do so, I represent a different view of Europe. I speak as an Irishman and an internationalist in the tradition of Peadar O'Donnell and Michael O'Riordan. My vision of Europe is one of different nations working together as independent states while respecting the integrity of each. Throughout history, empires have not worked. The attempt to introduce the EU constitution will not work because the voices of citizens were not listened to.

The elites of the EU must be challenged. The result of the French referendum demonstrates that working people will not be bulldozed into a super state with its own constitution, a Union law with primacy over the law of member states, a legal personality and all the symbols of a super-state. The details of the EU constitution in terms of common foreign and security policy are described on page 139 of the constitution. Article III-294 makes it clear that a state is being created that was not sought by the people of Europe.

I ask the Taoiseach and Ministers to look at the evidence of this matter. On 25 February 2005, the German Minister for Europe said that the EU constitution is the birth certificate of the united states of Europe. On 26 June 2004, the Belgian Prime Minister said that the constitution is the capstone of a European federal state. In 1998, the then German Foreign Minister said that creating a single European state, bound by one European constitution, is the decisive task of our time. These comments reinforce my arguments. I urge people to listen to the Opposition voices with regard to the EU constitution.

Séamus Pattison (Carlow-Kilkenny, Labour)
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The Minister for Foreign Affairs will now take questions.

Bernard Durkan (Kildare North, Fine Gael)
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Will the Minister confirm that now is a good time for leadership to be shown by major players on the European scene, such as our UK neighbours, as referred to by Deputies Quinn and Naughten? Would it not be welcome that those countries which hold significant responsibilities and play major roles in the European social, political and economic arena should bring forward proposals that demonstrate leadership? By this means, they might dissuade others of the temptation to break with the European tradition and ideal and the vision that led us this far along the European trail. It must be recognised that the European Union has had hiccoughs before, such as that in France prior the Maastricht treaty, but they ultimately resolved themselves.

Will the Minister use his influence to address the negativity and glee that recently emerged from certain quarters at the possible demise of the European concept? Will he reiterate to all and sundry that this country, with a number of other European countries, including the main ones, has benefited tremendously from membership of the European Union and that the original ideals and goals set by the founding fathers have stood us well and have stood the test of time? The Minister and the Taoiseach have had a positive influence in this area, and the main parties on this side of the House support that. Will the Minister use this influence to pursue those ideals with the objective of achieving similar results to those achieved over the past 50 years?

Dermot Ahern (Louth, Fianna Fail)
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There was a distinct lack of leadership on Friday and Saturday by the main players in the EU and, as the Taoiseach stated, it was a sad occasion. I attended some long sessions, particularly of the Fisheries Council, and it is not often that Ireland returns from a long session without some satisfaction at a fair result, but on this occasion we returned with heavy hearts because of the lack of leadership and statesmanship from some around the table.

We must be positive. As Deputy Durkan stated, there were crises before and time has shown that the EU is robust and able to get over those issues and hiccoughs. It is true that the negativity in some countries, not least in France and the Netherlands, is accompanied by a large element of dissatisfaction with the economic and employment situation there. However, there was also huge engagement, particularly in France, on the enlargement project and discussions on the constitution for Europe. As democrats we must take the fears of those people into consideration. Just over a year ago we agreed that each member state would endeavour to ratify the constitution for Europe and we believe we are duty bound to attempt it and to take stock at that stage.

This country has benefited enormously from the European project. The €200 million in peace money was a relatively small addition specifically for this island. It would have continued to give incredible benefit to the six northern and six Border counties, as it has done over the past decade, but unfortunately it is now up in the air. Yesterday I attended a ceremony whereby rural districts from north Louth in my constituency, with districts in south Armagh and east Meath, got together with the aid of EU INTERREG funding under this peace programme to assist rural people who are falling out of the system. If ever a project brought real benefits to ordinary people on both sides of the Border, that did. It makes no sense that those on our island criticise that type of project, which gives real assistance to people not just in one member state but through recognising that the existence of a border causes difficulties in an area.

I concur with the Deputy and we will do all in our power as a Government, and we expect the support of those political parties supportive of the European project from the start. We stated to the other member states that they should learn from our experience of the "No" vote in the Nice referendum and the National Forum on Europe model. During Friday and Saturday, and on Thursday when we discussed the constitution for Europe, we constantly argued that if we were to have a period of reflection it must be a period of engagement and that where a democratic deficit exists in another member state it should use every opportunity to engage with its population. We accept that in a small country like Ireland it is relatively easy to engage with the public. It is more difficult with a population of 60 million, but it should not divert a large country from engaging in real terms with its electorate.

Ruairi Quinn (Dublin South East, Labour)
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Will the Minister outline the implications for his Department in terms of writing or rewriting the White Paper? I presume the draft in existence before the French and Dutch referenda must be examined in the context of the extended period of engagement and dialogue. While it may not necessarily be in the remit of a conventional or traditional White Paper, some of the mistaken myths that Deputy Finian McGrath put on the record of the House should be confronted. One cannot build a federal super-state with a 1.27% budget or if that so-called super-state is not allowed to borrow money. One cannot claim it will take on all of the manifestations of a super-state or refer to page 18 of the constitution for Europe and state that the law of the Union will override the law of the member state. That was the position when we joined the EEC in 1973, although many people may not have fully realised it. It makes sense that if one agrees to play a game of international football, everybody must agree to the rules in the first instance and then empower a referee to enforce them. That is what is behind the judgment in the Luxembourg decision, as the Minister is aware.

I could ask many questions. What are the implications, if any, for the publication of the White Paper in terms of addressing some of the concerns that exist? Will the next meeting of the Council of Foreign Affairs Ministers be the forum where discussion will take place on the interactive measures, this proactive engagement, or must the Commission bring forward a set of proposals? What is the next move as a consequence of creating this space for reflection?

Dermot Ahern (Louth, Fianna Fail)
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In Deputy Quinn's earlier contribution he asked whether it was anticipated that movement on the financial perspectives would be made during the UK Presidency as opposed to the Austrian Presidency, but we honestly do not know. Tony Blair seemed very content that a decision would not be made during the Luxembourg Presidency. From what he said yesterday, he may well have some plans on this but the general view is that the UK Presidency will have considerable difficulty in acting as an honest broker given that the key issue that must be addressed in the financial perspectives is the UK rebate.

Indeed, Jean-Claude Juncker said on many occasions during the time we were there that irrespective of the Presidency that will be dealing with the existing financial perspectives, there can be virtually no deviation from the parameters we are currently in and that it was not possible to rewrite the financial perspectives given the dynamic heretofore, not least in respect of the CAP. In respect of the CAP, we made the case that a deal is a deal. Even if the issue was about steel workers in another part of the EU, we must accept that if an agreement is made to which all the member states sign up after much pain, as did the United Kingdom in the guise of Prime Minister Tony Blair, in respect of a period up to 2013, and if we try to get the ordinary people on side — in this case the farmers — we cannot turn around and break that agreement. People say there is a democratic deficit in the EU. This would be an example where people could say that after only two years we are going back on a decision. Is it any wonder there might be a perception of cynicism among the electorate in terms of the decisions we make? That is why we stated, on a matter of principle, that as far as we were concerned the CAP arrangement is sacrosanct.

In respect of arrangements by my Department on the preparation for an eventual referendum, as I said in a different forum earlier today, as a Government we were trying, in consultation with the other like-minded parties, to have all our ducks lined up, so to speak, in such a way that we would be able to make a decision about the timing of the referendum. We published our legislation just before the French referendum, wisely in my opinion. The White Paper is ready for publication but we have decided to delay that and publish it in September, obviously taking on board some of the issues that have arisen in the meantime. Ultimately, we expect there would be a debate in this House on the referendum Bill. We will not bring in the Referendum Commission until such time as we are happy in the knowledge that proper engagement has taken place.

In terms of the forum that will be used, conclusions issued after the discussion on the constitution of the Council indicated that there was a consensus on the issue of a period of engagement and that we would re-examine that during the Austrian Presidency. I expect it would be primarily at the GAERC meetings, as they are called, but it was also stated specifically in consultation with the other institutions of the EU, not least the Commission which would have a strong role in this area.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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In terms of the constitution, if the Minister was to be consistent with the stance taken here, would it not be right to ask the French and the Dutch, or even the other ten member states, to put the constitution to a vote again? I do not understand the need for a longer and more intense period of reflection, clarification and discussion in light of the results. The Minister said that if we make an agreement we cannot turn around and break that agreement. The agreement was made that ratification would be complete by November of next year. Already, the European Council has broken that agreement. That is the reason there is a perception of cynicism. I do not understand, and perhaps the Minister will enlighten me, why two years is not long enough to discuss this issue. Rather than delaying the inevitable, will the Minister agree that the proper stance to take would be to accelerate the process to enable the issue be put to a vote at an earlier stage? That would give those people who wish to reject it an opportunity to do so quicker and allow us to get on with the next debate rather than debate a dead duck, so to speak.

What instructions has the Minister or the Taoiseach given to the Referendum Commission on the constitution or has that been put into cold storage also? How does the Minister and his EU colleagues intend to overcome the rejection so far by two countries and perhaps more in the future?

Denis Naughten (Longford-Roscommon, Fine Gael)
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I will be brief because I am aware time is running out. Is Commissioner Fischer Boel's proposal for a 4% cut in the single farm payment now off the table or can it be resurrected by the British later this year? Will the Minister provide clarity on that proposal?

Dermot Ahern (Louth, Fianna Fail)
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Regarding Deputy Ó Snodaigh's question on asking the French and Dutch to vote again, we made the point strongly that it was agreed a year ago that every country would endeavour to ratify the constitution over a period and that by 1 November 2006 we would take stock of the situation. No final date was set by which everyone had to ratify the constitution. We said we would take stock of the situation on the ratification process——

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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They have taken stock.

Dermot Ahern (Louth, Fianna Fail)
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——by 1 November 2006.

On the question of the Referendum Commission, we said we would not propose to engage the Referendum Commission until such time as we are happy in the knowledge that we will proceed with a referendum on the constitution.

On Deputy Naughten's query about proposals made by the Commission, that is a matter for the Commission. It will make proposals on all aspects of financing during the British Presidency and I have no further information in that regard.