Enda Kenny (Mayo, Fine Gael)

Significant progress was made on both fronts. The European Council agreed a compact for growth and jobs and the summit agreed a number of important steps aimed at addressing the immediate crisis in the euro area, including the imperative need to break the vicious circle between banks and sovereigns. As I said at the time, if these decisions are to have an impact in the markets, we must now show commitment and resolve in implementing them in good faith and in good time. We also looked to the longer term, with President Van Rompuy presenting his report, Towards Genuine Economic and Monetary Union, laying the groundwork for a strong and credible Union and currency into the future.

I have argued for some time that the first step in finding a cure to the problems facing Europe is to apply the right diagnosis. This seems like an obvious and straightforward proposition, but it has not always been applied. Despite the objective fact that Europe, as a whole, does not have the same difficulties that face other parts of the world, it has been treated more harshly in the judgment of the markets. Why should this be? I believe that the markets have been adding in what I would term an "uncertainty" premium, based on doubts about the depth and irreversibility of Europe's currency union.

Leaders have stated many times that they stood ready to take whatever steps are necessary to defend the currency but they have not always been believed. Words have not been sufficiently backed up by deeds and credibility has been damaged as a result. New tools were needed to give greater substance and credibility to our efforts. The fiscal treaty was an important step, building on the six pack of legislation adopted last year. It sent a signal that we are serious about achieving the type of budgetary discipline necessary to secure a currency union.

At its heart, the treaty is about establishing the trust necessary to deliver solidarity, and the steps taken by euro area leaders at the end of June build on this in a very significant way. The statement issued after the meeting contains a number of vital undertakings, most importantly the imperative need to break the vicious circle between banks and sovereigns. This interaction has been at the heart of the euro crisis. I have long argued that it would not be possible for Europe to move beyond crisis and towards recovery for as long as banking and sovereign debt remained entangled. We now have an agreement to separate them and we have a process under way to bring this about. The Commission will shortly present proposals for a single supervisory mechanism and the Council has been asked to consider them urgently by the end of 2012.

The euro group, the forum for finance Ministers, has agreed that technical discussions on future European Stability Mechanism direct recapitalisation of banks will also start in September so that the ESM could be in a position to decide to recapitalise banks directly once an effective single supervisory mechanism is established. That is a very important decision. I also made it very clear in my contacts with partners, both before and at the meeting, that the principle of equal treatment had to apply. I simply could not accept a position whereby Ireland would be at a disadvantage for having taken the steps necessary to secure our banking system, both in the interests of our economy but also in the wider European interest, before new arrangements applied. Where possibilities were being offered to others, Ireland had to stand to benefit also. I insisted on this, and it was agreed; the statement, in undertaking to examine the position in our financial sector in the interests of improving the sustainability of our programme, states clearly that "similar cases will be treated equally".

The Minister for Finance has already moved forward with his colleagues, securing their commitment to return to the matter at their meeting in September, following technical discussions among the troika. I remain hopeful of an early resolution, delivering a significant boost to our chances of recovery. For obvious reasons I cannot go into any detail on what will be a complicated and sensitive negotiation but I can assure the Seanad that the Government will be working to ensure the best possible deal for Ireland and for Irish taxpayers. I note in particular the comment of Mr. Mario Draghi yesterday following his meeting with the Minister for Finance that whatever deal may be done for Spain will also be reflected in the outcome for Ireland. I very much welcome this statement.

This issue has the potential to make a real difference for us. The meeting also agreed to use available instruments more flexibly in support of countries in difficulties that are living up to their reform commitments. This was seen as being of particular importance for Italy, which has a very large economy. It opens up the possibility of the European Financial Stability Facility, EFSF, and, once it comes into being, the ESM, intervening directly in the markets. Since the meeting, the ECB and the EFSF have concluded an agency agreement under which the ECB would act on behalf of the facility in making bond purchases.

The other real breakthrough at the end of June was agreement on a compact for jobs and growth. For a long time the Government has argued that there was an urgent need to match our efforts at consolidation and reform with an equally strong focus on generating growth and creating jobs. The approach to date at European level has been far too passive - with an expectation on the part of some that putting reform policies in place would be sufficient for growth to return. It was never going to work. We now have agreement on a much more active and ambitious approach. There will be an immediate stimulus, with a €120 billion investment package to be mobilised for fast-action growth measures. The European Investment Bank will be an important player in this and it was agreed to increase its paid-in capital by €10 billion to increase its lending capacity by €60 billion. This is intended to unlock approximately €180 billion in additional investment in Europe.

In follow up to this, I had a very positive and productive meeting with the ElB President, Werner Hoyer, when he visited Dublin on 6 July. We agreed that our officials will work closely together to ensure that Ireland benefits to the maximum extent possible. We will be pushing for these discussions to be advanced as rapidly as possible. In the more medium term, the European Council agreed that deepening the Single Market, in particular in the digital area and for network industries, could make a real contribution to growth and job creation. The Commission will be bringing forward its second round of proposals under the Single Market Act in the autumn. These will not only be an important input, they will also help to shape the agenda for the Irish Presidency in the first half of next year.

We also agreed that we need to improve our ability to translate high-level agreements into policy action on the ground, and we will not secure the results we are working for if implementation remains patchy or unfulfilled. The Commission will now make an annual report on this as part of the European semester process. There was a shared focus on the importance of external trade as a drive of growth. I do not need to tell this House how vital this issue is for Ireland as we are a small and open trading economy, and our future prospects depend heavily on our ability to export.

We will now press forward with free trade agreements with a number of key partners. The transatlantic dimension will be a particular focus of our Presidency, as I noted at the Council meeting. The EU-US high-level working group on jobs and growth will bring forward its recommendations later this year. As the nation holding the Presidency, we will be working to ensure that negotiations on a comprehensive transatlantic trade and investment agreement get under way in 2013 and we will host an informal ministerial-level meeting in Dublin dedicated to the key EU-US trading relationships. Although it will take some considerable time to bring the process to fruition, it holds enormous potential in the context of trade across the Atlantic in future years. I have already stated my view that future prospects for Ireland and for Europe are inextricably linked. For this country to recover and grow, we need Europe to recover and grow. When we take the stage when we hold the Presidency next year, we will have a unique opportunity to put our stamp on this vital agenda. During our term in office, from January to June, our absolute priority will be to stimulate sustainable economic growth and job creation. We will manage the European semester process, the new system of economic and budgetary co-ordination within the Union, and we will co-ordinate efforts under Europe 2020, the process through which member states advance national reforms. We will put our shoulders to the wheel to give real momentum to efforts to deepen the Single Market, including through the digital single market, helping to give Europe a real competitive edge. As Senators are aware, the European Union has a market potential of 500 million people and on the fringes of this Union are a further 500 million to 600 million people, including in African countries which have grown at an average of between 5% and 7% in recent years and which will continue to do so for the foreseeable future.

Strengthening the EU's research and development capacities is also essential and we will host a range of conferences in Ireland and events in Dublin on areas such as green innovation, key enabling technologies and medical technology, in which Ireland has scored highly in recent times.

As the House is aware, this will be our seventh time to take the Presidency. Each Presidency has brought its own challenges, but rarely have the stakes been higher. During the six previous Presidencies the Government of the day did a very effective job in managing the issues at European level. While the Union may have been smaller how those Presidencies were managed did a remarkable job for the reputation of our country. Our Presidency next year offers us an important opportunity for us to make a real contribution at European level, helping us to restore and rebuild the excellent reputation we have enjoyed in Europe through most of our four decades of membership. While this may have been damaged in the past, this is our chance to bring it back its shine.

In chairing meetings in Brussels, from the most technical of working groups to the most politically-charged ministerial meetings, we will have a chance to demonstrate to our colleagues in Europe what Ireland can do. I assure the Seanad we will make the most of these opportunities. For the Government, the logistics of preparation for the Presidency are quite daunting and will involve intensive interaction by everybody. Ministers are aware of the preparations that must be made and the details are being worked out as we speak.

We will strive to manage business as efficiently and effectively as possible, and we will draw on the immense range of experience within our system to be an impartial and creative broker for agreement. Fostering good relations with the European Parliament is an essential part of this work. It will be a huge undertaking for the country, particularly at a time of reduced resources, and we will make every euro count. We expect to host approximately 175 official events in Ireland, each with its own complicated set of logistical challenges and demands for translation, transport and press arrangements. Senators are aware there are 23 official languages at European level which requires preparation and the detail must be right.

Plans are already well advanced at political and official level, but I want the Presidency to be a whole of Ireland effort. I want the Oireachtas and the people to be fully engaged. This is a chance for the people to see their Union at work, and to see Ireland offering leadership and direction in a number of areas. I want Irish businesses to make the most of the opportunities it presents, especially our small and medium enterprises. We have been working closely with State agencies since last year to ensure we take advantage of every opportunity to promote Ireland and Irish goods and services abroad. We want all of our visitors, the delegates, the press and the support staff,-to leave the country having had a positive and welcoming experience during the course of the Presidency next year. This is the time to put the best foot forward.

As I stated, Ireland's Presidency comes at an important time for the development of the European Union. We will follow Cyprus and precede Lithuania and Greece. It may be that the multi-financial framework will be decided before the end of the year but it may have to be decided during the Irish Presidency; this is not clear at present. It will be a time when we are not only looking to move beyond crisis and back to recovery, but also when we will lay the groundwork for the future of the European Union of which Ireland has been a central part since we joined.

At the European Council meeting at the end of June, President Van Rompuy set out some of his thoughts on how we can move towards a genuine economic and monetary union. He sees this as moving along four complementary tracks, namely, banking union; greater fiscal and budgetary integration; greater economic co-ordination; and, alongside these, greater democratic legitimacy and accountability. He will flesh out his ideas further between now and October and produce a final report before the end of the year. This is a debate of great significance for the Union and for Ireland and it will be carried forward throughout next year. It will give rise to very important and fundamental questions, for us and for others. It is a debate for which we will need to prepare and position ourselves well, having carefully thought out the issues that need to be dealt with.

The Oireachtas will, of course, have an important part to play. However, I want to see the debate go further and open a discussion that engages people throughout the country. The engagement of our people has been part of the process of Europe in the referenda we have held over the years. The people's decision on the fiscal stability treaty was clear, decisive and strong and in its own way has led to the European perception of Ireland as a country that is serious in working with its people to deal with the serious challenge we face to retrieve our economic independence.

Next year will be the 40th anniversary of our membership of the Union. Despite the events of recent years, Ireland has done well in Europe. We have developed our economy, we have brought opportunities to our businesses, and we have widened our horizons as a people. Our future lies in remaining a fully committed participant in a renewed and robust European Union, with a strong and credible currency at its heart. This is what the Government will continue to work for, before, during and beyond our Presidency. I thank the Cathaoirleach for the opportunity to say these few words.