Ceann Comhairle,
On Thursday 23rd of April, I joined other members of the European Council by video conference to discuss the coronavirus emergency and to chart a path towards economic and social recovery. This was the fourth such meeting, with previous meetings having taken place on the 10th, 17th and 26th of March. I welcome the opportunity to provide an account of these meetings to the Dáil and exchange views and ideas with members.
Sadly, when this emergency started the level of coordination across the EU was poor. Member states did their own thing because very often they were responding to a pandemic that was happening at a different pace in different countries. And of course, public health is a national not European competence.
At its best, the European Union stands for freedom, peace and solidarity, the belief that we can achieve something greater by acting together as a continent.
Europe showed what these values meant in reality during the first phase of the Brexit negotiations and now it must do so again during this pandemic. We must have a coordinated response based on solidarity and demonstrate that the European ideal shines brightest when things are at their darkest.
In our meetings, the European Council has focussed on five strategic areas of work where we believe cooperation is essential:
• limiting the spread of the virus;
• ensuring the supply of medicines, equipment and goods;
• supporting research;
• alleviating the socio-economic consequences for our people; and
• cooperating to bring citizens home from other countries.
At our meeting on 23 April, we welcomed in particular the Joint European Roadmap towards the lifting of COVID-19 containment measures.
This was published by the Commission on 15 April. It sets out a principles-based and science-led approach to re-opening our societies and our economies. This was widely welcomed and aligns with the approach we have taken as a Government to date.
Across Europe, our first responsibility, and our highest responsibility, has been to protect the lives and health of our citizens.
We see this in the Commission’s work on a shared procurement framework for PPE and other medical supplies; EU research funding for the development of effective diagnostics and therapeutics; as well as a co-ordinated approach to working towards a vaccine for SARS-CoV- 2.
I welcome that the European Commission is building a strategic stockpile of medical equipment from which Member States will be able to draw. Batches of FFP2 protective masks were distributed from this stock in recent days to Spain, Italy and Croatia.
There is more to do and we need to consider how to make the EU more resilient and more responsive as we chart our way through and beyond this crisis.
At our first meeting, we agreed to coordinate the repatriation of our citizens stranded across the globe as a result of the pandemic. To date, repatriation efforts have brought over half a million EU citizens home.
These include people repatriated to Ireland on the special flights we chartered from Peru and India, on which citizens of 17 other countries also travelled. We have availed of the reverse from other countries.
We agreed on the 17th of March that we would do whatever it takes to meet the current challenges, to restore confidence, and to support a rapid recovery. So we invited the Eurogroup of EU Finance Ministers to scrutinise economic and financial developments and to adopt a coordinated policy approach.
The President of the European Central Bank, Christine Lagarde has participated in each of these meetings, and she has supported our position that we need to provide monetary flexibilities to protect the European economy, at least in the initial stages of this economic crisis.
This crisis has had deep and sharp economic and social impacts, which we have all seen in this House. We have already seen the stresses and strains across all our countries and some, more than others, have been particularly affected.
At our meeting on the 26th of March we discussed how we can best respond to the crisis collectively. Together we must deal with the immediate issues arising and drive our recovery into the medium and longer-term and ensure that it is sustainable.
Before that meeting, I joined eight of my colleagues in advancing an approach that would include the mutualising of debt – or ‘corona bonds’. The idea was to take a shared approach to managing debt arising solely from this crisis, which could be directed towards health spending, or to the wider spending Governments have all had to undertake in recent months in order to protect their welfare states and re-float their economies.
Such an approach would have required a legal underpinning not currently provided for in the European Treaties. I accept that it would have taken a long time to agree this, and even more time for it to be approved in all Member States and even more if some, including ours, it required a Referendum, but it was still worth exploring. In the absence of unanimous support for that approach, we agreed that alternative solutions for a Recovery Fund should be developed.
I am supportive of the broad suite of measures taken at EU level.
These include a temporary relaxation of State Aid rules, under which Ireland has had two aid packages totalling €400 million approved by the Commission to assist our affected companies.
We need to ensure that member states do not use the State Aid to give an unfair advantage to companies in other member states that they compete with.
We have also invoked the ‘escape clause’ in the Stability and Growth Pact to give Member States additional flexibility to spend and borrow more in response to the crisis, for now.
The European Central Bank has played an important role in ensuring stability in the middle of this extraordinary crisis, including through its €750 billion Pandemic Emergency Purchase Programme. Capital rules for banks have also been eased to ensure that they can continue to lend into the real economy, providing vital liquidity to businesses under pressure.
At our meeting on 23rd of April, we endorsed an economic package, agreed by the Eurogroup, worth up to half a trillion euro, and we asked that it be operational in June.
The Package comprises three elements:
- a €100 billion EU SURE instrument which will provide financial assistance, in the form of loans granted on favourable terms, to cover initiatives such as short-time work schemes and similar measures for the self-employed.
- a €200 billion EIB Covid-19 Guarantee Fund for crisis lending to SMEs, midcaps and corporates, underpinned by €25 billion in Member State guarantees.
- a €240 billion ESM-operated Pandemic Crisis Support Instrument to provide a backstop for Member States to make available sovereign funding of up to 2% of GDP for direct and indirect healthcare expenditures.
It should be noted that these are all loans and guarantees and are not grants and that borrowed money must be paid back.
Taken together, these three measures represent an EU fiscal response of over half a trillion euro. An historic-level deployment of resources to respond to an emergency of unprecedented levels and a much greater and more appropriate response from the European Union than we saw during the financial crisis 10-12 years ago when the EU acted in a way that was too little, too late.
Looking beyond the immediate crisis, we agreed the need to put in place a Recovery Fund to rebuild our economies and businesses, and get our citizens back to work.
We also welcomed the Joint Roadmap for Recovery and have asked the Presidents of the European Commission and Council to bring it forward.
It sets out a framework for collective action towards recovery including a fully functioning Single Market; an unparalleled investment effort; and a commitment to the EU playing its part in supporting global recovery.
As a necessary next step to this work, we welcomed the European Commission’s proposal that it undertake a sector-by-sector analysis of the economic impact of the crisis to identify and target supports necessary for recovery for those particular sectors. We also agreed that climate action and the digital economy should be critical components of this recovery plan. This crisis has dealt a terrible shock to our economies but also creates an opportunity to make sure that the recovery European wide is climate proofed and technology driven.
I believe that the EU budget – the MFF – is the obvious vehicle for this, and so we have asked the Commission to look again at the MFF proposal and to consider how it and the Recovery Fund should be linked. As is well known, there were strongly held different views around the table on how recovery should be financed.
Some believed that there should be transfers to those most affected in the form of grants. Generally speaking North to South. Others expressed the view that loans were the only acceptable option to their citizens and legal order or constitution.
I articulated the view that both could play a part, and that the right balance between loans and grants is what we should aim for. I also argued that I could not accept any approach that deployed the MFF to the detriment of proper funding of the CAP. Farming and agribusiness was already facing great challenges and it has been deeply affected by the crisis.
Successful and well-functioning programmes, such as CAP, Cohesion and Horizon, will help drive our recovery and therefore should be funded properly over the next 7 years. At this time of crisis, we see the strategic importance of a strong agri-food sector providing Europe with food security. CAP is needed now more than ever.
During this emergency we have seen huge stresses on the Single Market as some internal borders closed to people, goods and services, albeit temporarily. As was predictable, countries that closed their borders and introduced export bans had to reverse them very quickly when they realised that the benefits were less than the costs.
I believe a fully functioning Single Market and free trade beyond our borders will be necessary to underpin our recovery.
In her wrap-up Statement, Minister McEntee will discuss the package of measures being taken at an EU level in support of partner countries globally.
As part of the EU’s global effort, over €3.3 billion of EU financial support has been mobilised for the Western Balkans for COVID-19 and post-pandemic recovery. This is our neighborhood and this is the right thing to do.
Later this afternoon, I will participate in a Western Balkans Summit, with EU Leaders and Leaders from the Western Balkans. This will be done by video conference so I apologise for having to leave early.
Finally, Ceann Comhairle, on Saturday we mark Europe Day. I believe this date should serve as a reminder of what we have achieved together. The EU is held together by its values, respect for democracy, the rule of law, individual freedom equality before the law, our unique model which is the social market economy, the 4 freedoms.
It should remind us that so many of the problems and challenges we face do not recognise borders drawn by mankind. Whether it is health emergencies like pandemics, environmental emergencies like climate change, security threats like international terrorism or global economic movements.
The pooling of resources, the creation of safety-nets and the adoption of collective measures, are necessary to drive our recovery, particularly important for small countries like Ireland. Our best hope for the future lies in working together, being at the top table at the European Union and making sure we are at the heart of the common European home that we have helped to build.
I welcome your views and thoughts.