Dick Roche (Wicklow, Fianna Fail)

There were four main items on the European Council agenda for 28 and 29 October 2010. The first was the report of the task force chaired by Mr. Van Rompuy, President of the European Council, the second was preparations for the G20 meeting which takes place in Seoul later this month, the third was preparations for the Cancun conference on climate change and the fourth was preparation for a number of forthcoming summits, including those with the United States, Russia and Ukraine.

In March this year the European Council asked its President, Mr. Herman Van Rompuy, to establish a task force of the member states, in co-operation with the Commission and the European Central Bank, to examine options to strengthen the Union's framework for economic governance and to bring forward recommendations before the end of 2010. As Senators know, events caught up with this original proposition and in April, in the face of extreme pressure from the international markets, Greece was forced to ask the EU for support. This led to the creation of an ad hoc rescue package based on bilateral loans from other eurozone member states, in which Ireland played its part. In May, the European stabilisation mechanism, aimed at preserving financial stability, was put in place for a period of three years up to mid-2013. This was achieved through the establishment of the European financial stability facility through which euro area member states agreed to provide pro rata guarantees in respect of funding raised to support member states which find themselves in difficulties caused by exceptional circumstances beyond their control.

The task force produced its final report on 21 October. It is to be commended on the speed with which it carried out its task. The report made recommendations aimed at strengthening fiscal discipline in the Union, introducing new macroeconomic surveillance arrangements and setting the principles for a robust crisis management framework. The package of measures proposed by the task force includes a number of key elements. The report proposes a strengthened Stability and Growth Pact and the introduction of greater financial discipline with an enhanced focus on public debt as well as deficits. While the report found that the current framework remains broadly valid, it felt that it needs to be applied in a better and more consistent way. In particular, there is a need for a greater focus on debt and fiscal sustainability.

On sanctions, which were the subject of particular and detailed consideration, the task force has sought to strike the right balance. It proposes to enlarge the spectrum of sanctions available and to apply them earlier and on a more semi-automatic basis than is currently the case, with the new arrangements, in the first instance, applying to euro area member states only. The task force report also recommends the introduction of a new macroeconomic surveillance framework, including an excessive imbalances procedure which will operate alongside the Stability and Growth Pact. Under this new arrangement, an annual assessment of macroeconomic imbalances and vulnerabilities will be undertaken. In especially serious cases, where prompt corrective action is not taken, euro area member states will ultimately face sanctions.

The report also notes the agreement of the European Council earlier this year that economic policy co-ordination be deepened and strengthened through the institution of a "European Semester", a new timetable designed to enable the EU dimension to be better reflected when countries prepare budget and economic reform programmes. The task force also recommended that national budgetary frameworks should be strengthened to underpin compliance with the Stability and Growth Pact. Last week's European Council endorsed the task force report and called for a fast-track approach to its implementation. The task force has set summer 2011 as a target timeframe for agreement between the Council and the European Parliament.

As Members will be aware, the task force acknowledged that the arrangements put in place earlier this year were a good line of defence for the next three years. It went on, however, to state that, in the medium term, it believed that there is a need to establish a credible, permanent crisis mechanism. The Franco-German declarations at Deauville gave additional emphasis to this point on the eve of the European Council. A permanent framework to replace the arrangements that run out in 2013 must stand on a firm legal foundation. As the Taoiseach said in the Dáil, this is not just a matter for one or two member states to decide.

As a result of the work of the task force, the Union now has an opportunity to reflect on appropriate arrangements for the future, building on the experience gained by the European financial stability facility and the need for the more considered approach required as a permanent mechanism. Recognising this, the European Council has asked President Van Rompuy to undertake consultations with member states, including on the question of limited treaty change required to that effect. It has agreed to revert to this matter in December with a view to taking the final decision, both on the outline of a crisis mechanism and on a limited treaty amendment, in order that any change can be ratified by mid-2013 at the latest. In the light of speculation as to what this might mean for Ireland, it is important to note that what is in mind is a very targeted and limited exercise. When President Van Rompuy has completed his consultations, he will bring forward a detailed proposal setting out what is required. Until he does that, it is pointless to speculate what steps are needed in this country to ratify the new arrangements.

Ahead of the summit, France and Germany, with perhaps one or two supporters, have suggested that the treaties should be amended to provide for the suspension of the voting rights of a member state persistently in breach of its obligations. This proposition was received with very little enthusiasm. The President of the European Council intends, as a subsequent and completely separate exercise, to examine the matter in further consultation with the member states. No timeframe or deadline has been set for this.

Following a presentation by the President of the European Parliament, Jerzy Buzek, there was a discussion on the Union's future budget. The European Council did not have an opportunity to discuss the matter in detail as the Lisbon treaty mechanism for agreeing the budget between the Council and the Parliament is under way. The view among most member states was that it would not be timely to have that kind of detailed discussion on the budget within the Council. The conclusions stressed that it is essential that the European Union budget and the forthcoming multi-annual financial framework reflect the reality that most member states now face, namely, the need to take significant steps to make their deficit and debt levels more sustainable.

As has been reported, at the end of the Council, the Heads of State or Government of 12 member states cosigned a letter to the President of the European Council and the current Belgian Presidency stating that they were not prepared to accept that the EU budget for 2011 could increase by any more than the 2.91% already proposed by the Council earlier this year. Given the fact that Council and Parliament negotiations are continuing, Ireland did not participate in this initiative.

The European Council also discussed a number of issues, including preparations for the forthcoming G20 summit in Seoul later this month, the Cancun conference on climate change and summits with third countries, including the United States, Russia, Ukraine, India and Africa. Given the time pressure, the discussion and preparation for the G20 summit was very truncated. The issues were extensively discussed during the General Affairs Council and Foreign Affairs Council beforehand, and the European Council adopted conclusions on them. The European Union will be represented at Seoul by President Van Rompuy and President Barroso. The European Council discussion was intended to assist them in getting a sense of the issues the Union should defend as a matter of priority in Seoul. While Ireland is not a member of the G20, the EU participation provides us with a useful window on its deliberations.

The European Council conclusions highlighted the need for the G20 to send an ambitious signal concerning the concrete and timely implementation of measures agreed in the framework for strong, sustainable and balanced growth. The conclusions also underlined the continued need to keep markets open, to inject momentum into the Doha trade negotiations and to avoid all forms of economic protectionism.

The European Council finalised the European Union's position for the forthcoming Cancun conference on climate change - we all hoped it would be rather less of a train wreck than what happened in the case of Copenhagen - and confirmed the willingness of the Union to consider a second commitment period, beyond the Kyoto Protocol, provided that other developed countries commit themselves to comparable emissions reductions and that more advanced developing countries contribute adequately, according to their responsibilities and respective capacities. Discussion of this issue was very limited at the European Council as there was broad agreement on the draft conclusions. The coming weeks will see a number of international meetings which will provide an opportunity for the European Union to promote its policy priorities. The October European Council agreed the key political messages for the European Union in advance of these events.

The summit with the US will take place in Lisbon on 20 November. The European Council agreed that this was a critical time for the transatlantic relationship. European Union leaders underlined the importance of presenting clear and coherent messages to the United States and the necessity for the summit to produce concrete outcomes which could be taken forward jointly. Discussions at the summit will focus on three key areas, the global economy, climate change and energy, and security and development. On the global economy, the European Union will push for a key role to be given to the Transatlantic Economic Council in driving forward an agenda focused on jobs, growth and innovation.

The European Council noted that the summit with the Ukraine will be a useful opportunity to engage the new administration on the reform process and to consider the issue of visa liberalisation, on which a number of member states have expressed strong reservations. European Union leaders also agreed that the summit with Russia would focus on progress on the partnership for modernisation initiative which was announced at the last summit in Rostov-on-Don. President Medvedev has made modernisation his central theme and has identified the European Union as Russia's natural partner for providing external support and inspiration to his reformist agenda. I believe this is one of the areas at which the European Union needs to look. It needs to look east as well as west and should see Russia as a partner and near neighbour with whom we must co-operate and develop more fruitful relationships.

The European Council meeting was a significant one. It set out the way forward for our internal economic governance, while also preparing for our engagement with the outside worlds. We look forward to the December European Council and I look forward to questions from Members of the Seanad.