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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Enda Kenny (Mayo, Fine Gael)
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Last December, depending on whom one spoke to, the European Union summit was predicted to be a blame game or a waiting game. As politicians, we have become used to summits teetering on the brink of collapse before last minute adjustments. However, for months before the December summit, in fact since the failure at Luxembourg, for many politicians and commentators collapse seemed inevitable. The only uncertainty seemed to be whether Britain or France would be to blame. Anglo-French tensions simmered since the Iraq war. The British Prime Minister, Mr. Blair, was tough in demanding reform. President Chirac's pre-summit warning was ominous when he said, "Britain has a difficult mission".

In the end, through a last-ditch compromise by Mr. Blair and Chancellor Merkel's becoming mediator, a surprise agreement was achieved, even if attempts to finalise the financial perspectives, better known as the budget, were tedious and tension filled. However, it was never going to be easy to thrash out an agreeable deal to pay for enlargement while at the same time mourning the defeat of the constitution.

I commend the role played by my EPP colleague, Chancellor Angela Merkel. While after 30 hours of marathon negotiations, Britain was ready to compromise, in the end, her role as honest broker sealed the deal. It was expected that she would have a defining role in the process. As the newly appointed and very influential leader of one of the strongest countries in Europe and in the world, her intervention was important.

As the Taoiseach outlined, the budget talks revealed several underlying tensions, not least with the British Prime Minister's initial plans regarding the reduction of the British discount in exchange for cuts in EU farm subsidies being correctly bitterly resisted by France and the new member states from eastern Europe. With a view pertaining that a Union that could not manage to agree its budget would not have much of a chance of agreeing on anything else, it was critical that we reached consensus on this matter. Agreeing the medium-term budget for the Union has sent out a positive signal and not before time. It sent out the message that after months of gridlock and angst after the "No" vote in founder-member states, Europe can agree and can take action.

Negotiations on the budget for 2007-13 were launched during Ireland's Presidency of the EU in 2004. The budget, at more than €862 billion, will be limited to 1.045% of EU economic output or Union gross national income over the seven years under headings such as cohesion, with €307 billion; CAP direct payments and market support, with €293 billion; and rural development, with €70 billion. The initially contentious British rebate will be reduced by €10.5 billion in CAP payments while the Government here estimates that Ireland will receive €10 billion in CAP payments over the same seven-year period. There will be rural development funding of €1.9 billion. That is a significant figure and the money should not be wasted. Some visionary planning on how it is to be spent is required.

I repeat my earlier statements that the Government should not agree any premature review of the CAP. Irish farmers have engaged in a serious review of the CAP already and payments have been reduced. The current level of CAP support should continue to 2013 as agreed. Any moves to reduce CAP payments before that time should be strenuously resisted. I am glad the Taoiseach referred to a Commission direction in writing on that matter. If we want to maintain and expand public support for the European Union, such agreements must be honoured.

In 2008 and 2009, a review of spending on all aspects of the EU budget will take place. However, the outcome of that review will not take effect until 2013 unless the European Council, acting unanimously, decides otherwise. However, while we are pleased with our budget compromise that established a financial framework for the Union for the medium term, we should remember that this compromise does not yet represent a major breakthrough in efforts to establish sustainable budget structures in the longer term. In many ways, our compromise maintains the existing spending structures, with their focus, for now, on agricultural spending. However, at the same time, crucially, we are making a start on the reform of the future structures of spending — the accountability factor of which should help bring Europe closer to the people — with greater priority being given, in future, to spending on innovation and promoting growth.

Right now, our budget is relatively small at approximately 1% of gross national income. To restore competitiveness against others on the Continent, we need to concentrate on making the best use of it in the longer term, not just in agriculture but also in innovation, education and research.

I visited the Tyndall Institute in UCC last week. The Taoiseach may also have had occasion to do so. It is fascinating to hear how academics and researchers plot out the future for the next ten to 15 years, be it in the area of silicon development, semiconductors, mass communications, high speed communication effectiveness or whatever. The development of nanotechnology, what it means and what it can mean in practice, is the way of the future from an innovation perspective. The country can be proud of that type of institute.

We must remember that western Europe currently accounts for 30% of global GDP and Asia, excluding Japan, accounts for just 13%. The next 20 years will see a serious correction or rebalance, where these two will be expected to converge at some point. As the House will be aware, India produces 3 million graduates per year. If Europe is to compete at the high end, we must examine investing in innovation, growth opportunities and, crucially, education. This is recognised in every country and across all parties but giving practical effect to it is the challenge.

While the budget was the major work and outcome of the December summit, discussion was undertaken and some progress made in a number of other key areas, such as the threat of terror and the formulating of a comprehensive and proportionate response. The summit also noted progress in developing both medium and long-term strategies to deal with climate change and the search for sustainable sources of energy. In that context, the recent stand-off between Russia and the Ukraine brought the issue of energy security home to everyone. Gas currently accounts for a quarter of our national energy use but, unlike any other of the vast majority of our EU neighbours, which store on average approximately 14% of their annual requirements, Ireland has no strategic gas reserve. Given that energy is increasingly becoming a matter of global geopolitics, I strongly urge the Government to establish a strategic gas reserve as a matter of urgency.

I encourage the Government to work hard in the establishment of a single energy market in the EU. Currently, there are 25 separate energy markets in the Union, whereas the United States has one. It is time Europe looked to creating a single, stable energy market, which would include harmonisation of pipelines. We may have escaped damage in the recent stand-off in eastern Europe but had it continued for political or other reasons, we would certainly have been affected in time with a loss of competition through higher costs when prices would have risen. This would have been inevitable.

At some of the European debates, there should also be a real focus in terms of where we will proceed in energy and what is the European perspective across all of the borders and countries regarding the existing potential for the development of sustainable energy supply in part, at least, through wind energy.

Also highlighted at the summit was enlargement and its effects. Under our Presidency less than two years ago, the European Union experienced the single greatest enlargement in its history when ten new members joined on 1 May 2004. There is no doubt that this accession has been beneficial to the Union but it has brought a number of challenges to member states, including Ireland. As we discuss enlargement and its consequences, Ireland must always bear in mind that, for generations, our people went overseas to seek a better life for themselves and their families. That is why many people in all walks of life and sectors of the economy — to the highest levels of politics — in the United States have Irish roots.

Ireland has benefited significantly from the arrival of workers from the new EU countries but their arrival has also brought concerns, as highlighted by Deputy Rabbitte, about possible displacement of workers, standards of worker protection and workers' rights. These are concerns and challenges that need rational debate, particularly here. Those challenges and people's consequent sense of unease are primarily due to one issue, namely, lack of planning. By this I mean real planning, namely, planning for the future of the country as opposed to that relating to the short term.

Last year Ireland received 82,000 new immigrants, which is the equivalent of adding the entire population of County Kilkenny in one year. We now have the equivalent, as it were, of 27 counties depending on the hospital services, the classrooms, the buses and the policing and general Garda presence that were already incapable, in many ways and instances, of providing for the needs of 26 counties. It is no wonder people express concerns and anxieties about the effect on our society. They see a squeeze on the services, which is not the migrants' fault. It is the fault of the Government, which failed to plan and provide capacity. By refusing to plan for our new and changed society, the Government has left many people competing for services, most critically in the areas of health, education, transport and so on.

On the future of enlargement, its speed and scope, we are now in a period where the Union could focus on this time of deliberation. Negotiations with Croatia have already begun, while no commencement date for talks with Macedonia has been agreed. With the future accession of Turkey — whenever that happens, perhaps in 20 years' time — for the first time ever the EU will have a border with the Middle East. With public questions over the constitution — a constitution that is good for Ireland and Europe — we would do well to take the time to consider our direction and the speed at which we are proceeding in this matter. Part of that thought must be in devising ways to connect people to the idea of Europe, to communicate to people the "why" of the European Union.

It should be noted that the constitution proposal addressed the residual feelings of many of our citizens that the Union is remote and its decision-making not fully accountable. For example, the constitution proposes that member state parliaments would have six weeks prior notice of any legislation coming from Brussels and, therefore, would have a role in either blocking or adhering to the various measures contained therein. In addition, the Commission would undertake an impact study on its proposals before sending them to the 25 national parliaments for their approval. In these ways, the elected national representatives would have a greater say in the possible impact of European legislation. This is an important measure as it would strengthen the role of national parliaments in the EU's legislative process.

The reforms foreseen in the constitution must be implemented. A number could be introduced now, without treaty change or ratification of the constitution, through inter-institutional agreement or by revising rules of procedure, for example, the transparency of law-making in the Council and more rigorous scrutiny by each national parliament of its government's management of EU affairs.

I welcome the European Commission's decision last week to commit €80 million to the international fund necessary to avert a global pandemic of bird flu. If the global community had acted with alacrity last year, we could have saved ourselves costs and lives, with the list of affected countries being considerably smaller. It is now up to the global community, including the EU, to do its bit to see that desperately poor economies such as Vietnam can tackle the virus in its flocks as effectively as a moderately wealth country, such as Thailand, which has done so with first class surveillance and veterinary services. This can never be achieved by poor countries.

Compared to expectations, the December summit was a relative success and I commend Chancellor Merkel's involvement in that. The Austrian Government has taken over the Presidency andI look forward to debating its proposals withChancellor Schüssel in the months ahead.

Pat Rabbitte (Dublin South West, Labour)
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The most important item agreed at the recent summit was the budget or the financial perspectives from 2007-13. Apart from that decision, the overall Presidency could scarcely be described as visionary or exciting. The references in the conclusions to the future of Europe suggest no sense of urgency in tackling the political and institutional issues that arise from the rejection of the proposed treaty on the EU in a number of states.

Apart from the important matter of settling the budget, there is a sense of a Union that is marking time on some of the major issues. The financial perspectives, an inter-institutional agreement between Parliament, Council and the Commission on the main budgetary priorities, sets the framework for Union expenditure over those years. It is a critical component of the EU structure and includes areas such as funding of the Common Agricultural Policy, improving competitiveness, research and development, and cohesion between the regions. I welcome the commitment to observe the earlier agreement in respect of the CAP.

We should not evaluate the budget as an elaborate technical exercise of balancing the books on a European scale. Far more importantly, the financial perspectives for 2007-13 are the outcome of a series of explicit and implicit political choices and trade-offs, made by governments and influenced by the Commission, member states, the Parliament and the incumbent British Presidency. The Barroso Commission seems to be finding its feet and finding a balance between two different views of the way forward. President Barroso and his colleagues must address the practical problem of efficiently managing the interaction of a Commission of 25 members. For Ireland, a far more important issue is where the balance of power in the Commission will settle. It is between Commissioners who favour the defence and enhancement of the European social model and those who favour a return to unbridled market economics. There is no doubt the character and political orientation of the Commission and of the EU has changed. There is no doubt the disaffection of many European citizens is directly related to that change. The priority that used to attach to enhanced social cohesion and protection is no longer always evident.

Let us recall that Jacques Delors offered the European trade union confederation and affiliated national trade unions a deal. The core of that deal was that, in exchange for trade union support for the establishment of the Internal Market, the trade unions would get a strong social dimension, including social dialogue, social policy, health and safety policy, or to summarise, a well-balanced approach taking into account the social impact of the Internal Market legislation. There is now a strong feeling that some supporters of the services directive, for example, are attempting to undermine that balance.

All of us, not least the Government, underestimated the challenges and the scale, by comparison with the United Kingdom, of workers from new member states coming to work in Ireland and greatly benefiting our economy, as referred to by Deputy Kenny. Because our economy has been able to accommodate larger migrant inflows than was predicted, the process has not been accompanied by regulation, monitoring or invigilation of labour standards. The policy of zero-level regulation and minimal enforcement invites difficulty. Displacement is not a figment of the imagination of trade unions and exploitation is the other side of the displacement coin.

These facts of modern Irish life cannot be dismissed as merely anecdotal evidence. There is nothing anecdotal about the cases of Irish Ferries and Gama and several more minor, less well-known but no less serious cases. The Government's attitude is to let the market rip. If the macro figures are okay, it turns a blind eye to abuses and dangers.

There is nothing anecdotal about the Laval case in Sweden, now referred to the European Court of Justice. Commenting on the Laval case, the party of European socialists observed:

Some media in Europe have described this case as an example of protectionist or even xenophobic trade union action. The fact is exactly the opposite. The trade union movement in Sweden is fighting for nondiscrimination: workers in Sweden should have the same conditions regardless of their nationality and there should be fair competition among companies.

I have been making the same point here and I agree with the Minister for Enterprise, Trade and Employment, Deputy Martin, when he told my colleague Deputy Broughan that he viewed:

with great concern the potential social implications of the displacement of workers on established conditions in favour of those willing to do the same jobs on much poorer conditions... We do not want to see people building competitive advantage based on poor wages, casualisation of labour, low health and safety standards or other compliance practices.

The Minister referred to a recent development, not just confined to Ireland, whereby workers from Eastern Europe are being recruited on the basis of a contract for services, that is, on a self employed basis. In such circumstances, Irish legislation protecting employees would not apply.

I agree with the Minister and I regret neither Deputy Martin nor this Government have taken any steps to address the difficulties highlighted. Until now the Government has been nodding assent to the services directive which, if approved as originally drafted, will seriously exacerbate the phenomenon I have highlighted.

In paragraph 21 of the Brussels Conclusions the Council looks forward to receiving an amended proposal on the draft services directive from the Commission. The Parliament is due to have its first reading of the draft directive in mid-February and is scheduled to vote on the Gephardt report to the Parliament on 16 February. Speaking in January at a press conference at the start of the current Austrian Presidency, President Barroso said that very soon after the Parliament's vote the Commission will publish a revised proposal as requested by the European Council last December.

I welcome President Barroso's commitment that the Commission, along with the Parliament and the Council, hope to come up with what he called a balanced solution. From reports of that press conference I understand the President repeated the term "balanced" several times. He said he wanted a proposal that would provide what he called "value-added" but which must also take into account the concerns of certain sectors and of certain member states more than others. I ought to have said that I propose to share time with Deputy Ruairí Quinn.

Like our sister parties across Europe, the Labour Party is especially concerned about the country of origin principle. The so-called country of origin principle is not a principle at all. It is a shortcut to liberalise markets that is advocated by interests who do not believe in common standards or raising standards to a universally accepted minimum. The country of origin principle boils down to the idea that if something is good enough for where I come from, then it is good enough for another country too. If that approach was applied across the board, there would be no common protection laws for consumer goods, no common entitlement to equal pay for women and no European environmental laws. The Labour Party believes in freedom to provide services across European frontiers. However, it must be in accordance with common and agreed future standards rather than tolerating the existing worst standard in whatever member state as an acceptable minimum for all.

Ruairi Quinn (Dublin South East, Labour)
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In support of what my party leader just said, I draw the attention of the House to the following points I wish to make, which come within the context of the agreed budget. I ask the Taoiseach and his colleague, the Minister for Foreign Affairs, whether they could address their minds to them. We have certainty until 2013, which is not far away. I am glad the Taoiseach stated on more that one occasion that it is one matter to review expenditure between now and 2013 but that it is quite another to suggest that it would change mid-stream. The Labour Party would fully support any Irish Government on that position. The action taken by the British Presidency in that regard was foolhardy and brought down upon the Presidency unnecessary pressure from which it had to escape.

There are two elephants in the room regarding our position. The first is Europe's extraordinary fragility regarding independent energy supply, as was witnessed in the Ukraine and Georgia. We are now effectively a gas importer and are more dependent on external gas for our energy supplies than was the case 15 or 20 years ago. The fragility of that supply is highlighted in recent history. I refer here to the Yom Kippur war of 1973 and the oil crisis emanating out of Iran in 1979. The lessons of history are still memory for many of us, as is the havoc wreaked in the Irish economy at the time. I still recall the effect on the building industry. We are now doubly dependent on our construction industry and our exposure is all the more acute.

We must start planning for a proper energy policy at both European and national level. There is no contradiction here. I ask the Taoiseach, in his discussions with the Cabinet, to invite the Minister for Finance to re-examine financial incentives to fast track and improve sustainable energy creation in Ireland. The Taoiseach is aware of the current stalemate. Nothing is happening with regard to wind energy, which is one of the few areas where we could have significant energy capacity. That must be dealt with against the background of the uncertainty I described.

The second matter I wish to raise is the sustainability of rural Ireland. The Common Agricultural Policy is coming to an end in real terms, relative to what it was back in 1973 when we joined the European Union. The face of rural Ireland will be utterly and totally transformed. We already had a insight into what will happen to agriculture with the Agri-Vision report and the Foresight report, which was recently referred to in the newspapers.

Instead of trying to get the best compensation deal for the 3,500 or 3,800 tillage farmers in this country so they would be permanently off the land, we should examine how we can take their expertise and tradition from the 80 year old beet growing industry and see in what way can that land and those skills be used to start to grow the biomass that would be a part, albeit small, of sustainable energy. What will we do with Bord na Móna's landmass? In another 15 years, which is as far in the future as 1991 is in the past — the Taoiseach and I remember quite clearly what we did in 1991 — we will have a landmass the size of the Minister for Foreign Affair's constituency county of Louth in public ownership, drained, cleared and available for the type of prairie production of biomass on a scale that rural Ireland has never before seen. If we do not start considering these issues now, against the background of certainty that the budget deal created for the CIP, future generations will hold us to account and state that we wasted a golden opportunity of high prosperity in Ireland to give us a measure of sustainability and energy independence which we do not have at present.

John Gormley (Dublin South East, Green Party)
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I wish to share time with Deputies Harkin and Ó Snodaigh.

Rory O'Hanlon (Cavan-Monaghan, Ceann Comhairle)
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Is that agreed? Agreed. Each speaker will have five minutes.

John Gormley (Dublin South East, Green Party)
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The major question which still must be addressed — this will be done in Salzburg at the Sound of Europe conference — is where to now with the constitution for Europe. Last week in Berlin Mr. de Villepin addressed the Humboldt University and outlined how France was progressing with the constitution. His statements are interesting in the context of what Deputy Rabbitte stated. Mr. de Villepin clearly stated that questions arise regarding full membership of the EU for Bulgaria and Romania. That will be a major point unless we can sort out the constitution. Mr. Balkenende from the Netherlands clearly stated that it is a non-runner to give the same constitution back to the Dutch people. However, Mr. Sarkozy argues that perhaps part one could be taken and passed through the French Parliament. People are at sixes and sevens on the issue.

To return to what Deputy Rabbitte stated, one thing is clear. Many people in France had real difficulty with the third part of the constitution. In terms of the concept of globalisation, the question we must face as Europeans is whether the European Union is an agent for globalisation or a bulwark against the worst effects of globalisation. That is what the European citizen wants to know. We must take a fresh look at this issue. I support the views such as those held by the NGO More Democracy, which played a great role in the last constitutional debate when it put forward ideas for the citizen's initiative. It argues that we need a new convention and a new constitution. This idea was also put forward by the PolishPresident today.

I ask the Government to listen to those voices examining the problem. Undoubtedly there is a new dynamic within the European Union. Events that nobody foresaw have taken place, even in the security debate. We know the accession states are more NATO-friendly than others. They have a completely different point of view which must be considered. It is possible to get a more simplified text on which European people will agree. Ultimately, the people consider job security and their social protection must be a number one priority.

They also consider the question of sustainability referred to by Deputy Quinn. We require a protocol on sustainability, which was suggested for the constitution but unfortunately it was rejected. We must examine that. I welcome the recommendations from the summit on climate change and sustainable energy. It is a move in the right direction. In particular, I welcome the fact we are now examining reducing the impact of aviation on the climate. It will be the biggest source of greenhouse gases and yet we take cheap flights for granted. There is hope that when the European Union starts to address these issues which concern the citizen, we will then make progress.

Marian Harkin (Sligo-Leitrim, Independent)
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Given the time constraints, I will make a few comments on the budget agreement reached last December. As we know, the European Council reached agreement on the budget for 2007-13. However, the European Parliament is not happy and we expressed this opinion forcibly last week in Strasbourg. Why are we unhappy? Like Oliver Twist, we want more. As the Minister is well aware, we need more. For 2006, the financial perspectives amount to 1.093% of EU GNI. However, the agreement reached in December foresees an average figure of 1.05% of EU GNI. In total, we are speaking about €862 billion. While that figure is enormous, in reality we are facing cutbacks.

Last June, the European Parliament agreed that in order to ensure a better match of political priorities and financial needs, a financial commitment of €974 billion, or 1.18% of EU gross national income, was required. Hence, we face a shortfall of €112 billion and the battle lines are drawn.

The Parliament rejects the Council's conclusion because the reduction in commitments in respect of competitiveness, growth and employment will jeopardise the Lisbon Agenda and because they do not guarantee a budget that will meet the commitments made to all member states, particularly to the new member states. In other words, the proposed agreement will not guarantee a budget that will enhance prosperity, competitiveness, solidarity, cohesion and security in the future. There will be tough negotiations ahead because the Parliament has the power of veto on the budget. However, at least we have a framework and a basis for negotiation and can begin to plan.

Many of the ten new countries will be bitterly disappointed by the cut in cohesion funding. There is also genuine concern throughout Europe that this budget will not deliver on competitiveness and innovation. While everyone is talking about the Lisbon Agenda, to deliver the Lisbon strategy the EU must increase and not cut its investment in research and development. In this context, alarm bells should be ringing here at home. Ireland has just been ranked 11th in the most recent edition of the European innovation scoreboard, with Sweden, Finland, Switzerland, Germany and Denmark cited as the leaders in innovation. This bad news was compounded by the results of another study which showed that within two years, Ireland will plummet from third to 21st place in a European league table measuring information and communications technology skills. Hence, given that the EU is cutting back on funding into research and development and innovations, we must act quickly and decisively at home.

From an Irish perspective, there are positives and negatives in this budget. One of the positives is the allocation of €200 million to the PEACE programme for 2007 to 2013. The EU has invested in excess of €1.25 billion in the PEACE programmes, and while €200 million is a major reduction, nonetheless it represents a genuine commitment. I congratulate the Government on its negotiating ability in convincing its EU partners to continue with this support. However, now that European funding is decreasing, it is essential that both governments allocate mainstream funding to PEACE projects. I also congratulate the Government on securing €800 million for cohesion funding. However, I ask it to spend it in areas of need. From 2000 to 2003, only 14% of all cohesion funding was spent in the BMW region. Cohesion means convergence and bringing all regions to the same level, not spending the money on areas where GDP is almost 50% higher than in others. Unfortunately, there has been a substantial cut in rural development funding and as Ireland faces a cut of almost 35%, this will have major implications for the rural economy here. It is crucial the Government makes up the deficit and creates the dynamic rural development policy necessary to offset the reduction in numbers in the agricultural economy.

Finally, I welcome the proposed review of the budget in 2008 and 2009 and look forward to constructive and positive negotiations between the Council and the European Parliament on the next financial perspectives.

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Fáiltíonn Sinn Féin roimh roinnt de thorthaí na díospóireachta ar bhuiséad na hEorpa. Cuirimid fáilte ach go háirithe roimh chinneadh an chruinniú mullaigh sin €200 milliún a chur ar fáil don chlár oibre síochána III, nó PEACE III. Rinne mo pháirtí, agus mo chomhghleacaí, Bairbre de Brún, MEP, ach go háirithe, a lán oibre le cinntiú go mbeadh a leithéid d'airgead ar fáil. Tugann an cinneadh sin aitheantas don obair luachmhar atáá déanamh ag a lán grúpaí pobail timpeall na tíre, ach go háirithe ar an Teorainn, atá ag obair i dtaca le síocháin a thógáil, ag tabhairt faoin idirdhealú atá ann agus ag cur athmhuintearais náisiúnta chun cinn. Is é an dúshlán atá ann, ar ndóigh, ná a chinntiú go mbeadh an t-airgead seo dírithe i gceart ar na ceantair is mó ganntanais.

Sinn Féin is relieved that the CAP will remain unaltered until 2013, provided the Government is willing to use its veto to ensure it. However, with regard to the question of rural development, the party remains of the opinion that the issue has been and still is conceptualised too narrowly at EU level. Sinn Féin believes the budget discussions would benefit from employing greater and broader understanding of the concept of rural development, to fully encompass issues such as rural regeneration or rejuvenation to replace declining agriculture. Some of the ideas expressed in the House, such as those of Deputy Quinn concerning the Bord na Móna lands, were imaginative. As far as agriculture is concerned, such thinking will be needed in the future.

I wish to express Sinn Féin's disappointment with regard to the overarching focus on the financial perspectives in this debate. An opportunity has been missed, whereby a commitment to emphasise spending on social protection and the environment could have been, but was not, achieved. This reaffirms the party's belief that the social inclusion aspect, along with the environmental consideration of the Lisbon Agenda, amount to little more than window dressing.

The complete lack of transparency surrounding the workings of the Council is of grave concern to Sinn Féin. How are people to know exactly what was prioritised by the Government's representatives during the negotiations? Only this week, a report from the EU's own ombudsman was highly critical of the Council's opaqueness. Is addressing this undemocratic reality a priority of the Government and if so, how will it ensure the Council becomes more transparent? Secrecy facilitates abuse of basic human rights and the secret agreement between this State and the United States concerning security measures for the protection of classified military information demonstrates that point all too well. I call on the Government to demand an emergency meeting of the Council of Ministers to discuss the issue of extraordinary renditions, including the role undertaken by each member state in respect of this illegal practice, as well as to finalise a binding agreement committing member states to co-operate fully with all investigations into this matter and to take every possible measure to stop the practice of extraordinary renditions. In the interests of transparency and accountability, discussions of this meeting should be in the public domain and open for all to see.

Bernard Durkan (Kildare North, Fine Gael)
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I will try to group the questions together and if I get an opportunity, I will return to them towards the end of the debate. I concur with the views expressed by my party leader, as well as by Deputies Rabbitte and Quinn of the Labour Party in respect of some of the developments that have taken place. As for the EU sugar regime, it has been suggested in certain quarters that, contrary to popular opinion, the beneficiaries of the new regime will not necessarily be the poorest producers in Africa and other places. Can the Minister comment? Moreover, if this information is correct, can he give some indication as to what the likely response could or should be?

Previous speakers referred to the European response to the illegal drugs trade, the illegality of drugs importation, the enormous profits that emanate from it and the degree to which such profits can be and are laundered in international locations, as well as everything else that goes with it. Hence, in this respect, the European Union must be clearer in its mission as to how the problem should be dealt with.

A number of other speakers made references to energy. Energy supplies, like those of food, are something on which one cannot depend indefinitely, especially if it is in short supply. On the energy regime that needs to be developed for the future, could the Minister indicate, for instance, to what extent the European Union will be able to develop a policy that will at least create a certain amount of independence in so far as energy supplies and requirements, particularly of alternative energy, are concerned?

I wish to raise two final questions. At what stage will it be possible for the European Union to indicate its proposals on the ratification of the EU constitution? Will there be changes or discussions on changes, or how is it intended to achieve the support necessary for ratification of the constitution, given the results of two electoral tests that have taken place already?

My final question relates to the reference made in the Taoiseach's speech to rural development. As a person who was born in rural Ireland, I have a certain suspicion about that particular phrase because it is a nicely rounded one. It sounds grand and gives the impression of greatness and goodness emanating from a magic pot that will produce funding. What does rural development mean and what will it mean in future? What does the European Union now mean by rural development? Does it mean investment in rural infrastructure or in infrastructure of some nature that will be of benefit to rural economies? One must remember that as our towns and villages get more densely populated there is an area where rural Ireland can make a contribution, and I want to know whether that is likely to be the case.

Dermot Ahern (Louth, Fianna Fail)
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A number of the questions Deputy Durkan raised were not really pertinent to the discussions and were not discussed at the December Council.

Bernard Durkan (Kildare North, Fine Gael)
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They should be.

Dermot Ahern (Louth, Fianna Fail)
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The sugar regime is ultimately a matter for the Minister for Agriculture and Food, Deputy Coughlan, who was party to the discussions in Hong Kong. Obviously some difficult decisions had to be made in that regard and it is fair to say the discussions in Hong Kong faltered in that there was an impression that quite a number of developing countries were to a certain extent benefiting. Our sustained focus on those discussions was to ensure the least developed countries would benefit from free trade and we were reasonably successful in getting that point across.

During my time as Minister for energy I was always conscious that this island is on the edge of Europe, as was raised by a number of Deputies. We are at the extremity of the gas pipelines coming from Russia. If one looks at the map of the gas grid, it is quite significant to see where we are. Thankfully, over the past number of years the Government has put substantial funding into the construction of gas pipelines that link us with the UK. As Minister for energy, I made this point on the mix of the type of supply on many occasions. Given that historically this country has been vehemently anti-nuclear for good and valid reasons related to issues like Sellafield, we must rely increasingly on gas, coal and other fossil fuels and, hopefully, on renewable energy. As a strong supporter of renewable energy, particularly during my time as Minister for energy, I know it is an extremely difficult and complex area. While everyone is in favour of renewable energy, it is difficult to get the critical mass in this sector to have it as a substantial part of the energy mix. I say this as somebody who looks daily out on a wind turbine in Dundalk Institute of Technology, only a mile from where I live. In this cold weather where there is no wind that wind turbine is not moving at all and as a result on the coldest day of the year it is not supplying any energy to the grid. If wind farms are built in substantial numbers one must also provide approximately similar capacity in fossil fuel facilities to ensure supply on those coldest days when demand is highest.

Regarding an all-Ireland energy policy, my successor, the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, took up the baton in putting together an energy policy for the next ten years. I understand that is still being discussed within his Department and the various agencies which feed into it. The intention is to bring forward a long-term policy on energy supply. This and the gas pipeline news of recent weeks brings into greater focus the absolute need for us to exploit our indigenous gas supplies. That is one of the reasons we were strong supporters of ensuring every opportunity is taken, provided all the conditions on safety etc. are adhered to, to use all the gas supply possibilities available to us.

Deputy Durkan raised a number of issues related to the EU constitution. As regards ratification, as he will be aware it was agreed previously that there would be a period of reflection which would culminate at the end of the Austrian Presidency. The Austrian Foreign Minister recently wrote to all the member state governments. Recently I replied giving our view on it, that we should hasten slowly on this matter, that we should look at the period of reflection and perhaps even extend it. We are adamant that we should not touch the text of the EU constitution but that perhaps we should look at ways in which its context should be changed because it was ultimately an extremely fine balance reached after tough negotiations.

Bernard Durkan (Kildare North, Fine Gael)
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The Minister did not answer a couple of questions. What about rural development?

Dermot Ahern (Louth, Fianna Fail)
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I will not go through a long dissertation on rural development but the point of the rural development programme in EU funding is to assist those areas coming out of purely agricultural industry and to bring them into newer areas not so reliant on agriculture. That has been the hallmark of European funding over the past number of years.

Michael Mulcahy (Dublin South Central, Fianna Fail)
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I congratulate the Taoiseach and the Minister for being part of this European Council agreement because if one looked back to the difficulties evident at the Luxembourg Council, reaching agreement at the subsequent Council on the EU budget and the Cohesion Funds for the accession countries appeared almost insurmountable.

My first question relates to the Taoiseach's statement that the agreement provides that from 2013, at the latest, Britain will fully participate in the financing of enlargement costs for countries that acceded to the EU after April 2004, except for CAP market expenditure. The subject of the British rebate has been discussed at length at the Joint Committee on European Affairs. The unanimous view at that committee was that the British rebate was negotiated at a time when Britain was a much poorer country than it is now and that there was no excuse at this stage for a British rebate of any kind. I appreciate agreement had to be reached. Will the Minister clarify what "except for CAP market expenditure" means? Is that the sole extent to which the British rebate will remain intact?

I refer to Cohesion Funds for the accession states. Ireland benefited significantly from the provision of such funds for a number of years and they helped us to become a successful economy. Many of the accession states such as Poland desperately need these supports to raise their standard of living up to ours and to develop their economies. I very much support the European project and I was appalled that had the British rebate been maintained, these member states would have been denied their just entitlements, which had been agreed when they acceded to the Union approximately a year ago. They were promised Cohesion Funds and supports. Will they receive what they were promised in the agreements?

The Iranian nuclear programme was also discussed at the European Council. The seals had not been broken at one of the Iranian nuclear testing sites at the time but every member state is concerned about Iran's position. A theory being put forward is that Iran is seeking security guarantees and economic assistance and it has no interest in developing nuclear weapons. Was the Iranian issue discussed in the broader context of the Middle East or was the discussion confinedto Iran's compliance with the demands of the IAEA?

Dermot Ahern (Louth, Fianna Fail)
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The budgetary correction mechanism, called the UK rebate, remains with the reduced contribution to the financing of the abatement, benefiting Germany, Austria, Sweden and the Netherlands, as agreed at the 1999 Berlin European Council. The rebate remains in full on all expenditure except that relating to the new member states. From 2013 at the latest, the UK shall fully participate in the financing of the enlargement costs of countries that acceded after 30 April 2004, except for CAP market expenditure, which relates to direct payments and market-related expenditure as well as rural development expenditure originating from the EAGGF guarantee section.

To this end, the UK budgetary mechanism shall be adjusted by progressively reducing the total allocated expenditure in line with the modalities in annexe 2 to that document. Between 2007 and 2013, the additional contribution from the UK shall not be higher than €10.5 billion in comparison with the application of the current own resources decision. The key issue in the December discussions was the amount and there was a significant debate on that. Between 2007 and 2013, the UK's contribution will gradually increase towards the cost of enlargement but the CAP-related cost will not be taken into account in this regard.

There was a division between the larger states and net contributors to the budget, which wanted to keep the ceiling as low as possible and the benefiting countries and other member states such as Ireland which felt the accession countries had to obtain a fair share of the funds and all the richer states should make valid contributions. During the discussions, it was generally felt that while the British were saying they wanted to pay for enlargement, ultimately, because of their refusal to discuss the issue of the UK rebate in the months leading up to the meeting, they caused an impasse, which meant that all countries were not fairly contributing to the cost of enlargement. While the accession countries were satisfied with the compromise on the funds, individually, they would probably say they did not receive enough. A total of €170 billion in Cohesion Funds is available over the seven-year period for the accession states and, therefore, substantial resources will be available to them.

Circumstances have changed, unfortunately, for the worse regarding the Iranian issue since the December Council. The IAEA board of governors will meet on 2 February and the situation is evolving on a daily basis. The Iranians are due to meet the Russians on 16 February to discuss the Russian proposal on how to get around the issue. However, this is an extremely difficult and potentially dangerous scenario. The Government and the EU believe we should continue to seek a diplomatic resolution to this problem. There is a long way to go and we will continue to push at EU level to ensure all diplomatic channels are used to get the Iranians to see sense.

On the one hand, they point out they are entitled under the NPT and other international agreements to move on the issue of nuclear energy for peaceful purposes while, on the other hand, a number of UN member states believe they have other intentions in this regard. However, independent examinations of what they have been doing show they have not told the full truth regarding what is going on. They are not being fully transparent with the IAEA inspectors and, as a result, the wider international community feels they should be pressed harder on the commitments they have made on ensuring this activity is for peaceful means only. I assure the Deputy we will keep a close eye on this.

Ruairi Quinn (Dublin South East, Labour)
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The Council conclusions provide for the Former Yugoslav Republic of Macedonia to be considered as a candidate country. Will its name disappear so that the state will emerge as Macedonia and Greece's reservations in this regard will be allayed?

Dermot Ahern (Louth, Fianna Fail)
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The Greek reservations remain. I had discussions with the Greek Foreign Minister regarding how we dealt with this scenario in the Good Friday Agreement regarding Ireland, Northern Ireland and so on. However, decisions were made regarding Macedonia in December, which should be welcome and, hopefully, the discussions will continue. That these negotiations have started or will start does not presuppose the outcome.