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Statement by the Taoiseach on the meeting of the European Council, Brussels, 22-23 November

The extraordinary meeting of the European Council on Thursday and Friday will be an important one, with significant implications for the Union over the coming years.

There will be only one main item for discussion, the Union's budget for the period 2014-2020, the Multi-annual Financial Framework.

It is my firm view that as Heads of State and Government, we have an obligation to work to show the European people that we can come to agreement in a decisive way on such important matters. For my part I will be at the table to negotiate an outcome that is in Ireland's interests, and in the interests of the Union as a whole. Agreement by the 27, on matter as fundamental as equipping the Union with the resources necessary to face into the next 7 years, is no small task. But is also a matter which will affect the Union's credibility. I am committed to being at the table in a constructive and ambitious mode.

As of now, it remains unclear whether it will be possible to reach agreement this week. There can be little doubt but that the positions that Member States have adopted remain a considerable distance apart.

 

Further delays would not be in our best interests, either nationally or as incoming Presidency, and speaking frankly, I do not see how further delay will change either the substance of what is involved, or improve the political context in which agreement must be reached. The time for action is now.

In recent years Europe has battled an unprecedented economic crisis. We are not out of the woods yet. We have a great deal of work to do if we are to build recovery and return to growth. This must remain our absolute priority.

 

Protracted negotiations about the Union's budget risk seriously distracting us from this vital task. They risk also the goodwill and spirit of cooperation needed for the Union to operate as it should.

 

Ahead of this week's meeting, therefore, I would call on all MS, and the representatives of the key EU institutions concerned, to show the flexibility and compromise necessary if agreement is to be found.

With political goodwill, a deal can and should be found, allowing us to return our full attention to the Stability, Jobs and Growth agenda that will be the priority for us as Presidency in the first half of next year.

 

Ceann Comhairle,

 

As the House will recall, negotiations on the Multi-annual Financial Framework, the MFF, have been underway since the European Commission put forward proposals in June of last year, and they are highly complex.

 

The MFF sets out to agree the resources we provide in common across the entire range of the Union's actions for a seven year period. By assigning our resources, we are effectively prioritising our common actions, making hard choices and difficult decisions on the EU's actions right up to 2020. The amounts of money involved are significant - the original Commission proposal proposed expenditure exceeding one thousand billion euros over the seven years. But the negotiations also concern how we raise this money - how the EU assembles the money that it needs; how we can improve the quality of our spending; and how rebates may be handled for individual Member States.

And this must all be agreed by unanimity. We are a Union of 27, soon to be 28 Member States. Each Member State has its own appreciation of the Union' s wider interest, as well as of their national interest.

I need hardly say that these negotiations are taking place in an extremely difficult economic environment for the Union, for the Eurozone and for most Member States. Governments across the EU are keenly aware of the need for EU investment to promote growth and jobs, and this need was given clear expression in the form of the Compact for Growth and Jobs, adopted by the European Council in June of this year. We see spending on agriculture and agri-business as very much a part of this picture.

 

Governments are also equally aware of the need to ensure that scarce public resources - provided by our hard-pressed taxpayers - are wisely used. This is the political context in which we are operating across Europe.

 

Since the Commission made its proposal in June of 2011, the Polish, Danish and Cypriot Presidencies have taken the work forward, aiming to reduce the areas of disagreement between Member States. Successive Presidencies have worked to develop the so-called "negotiating box" - these are the detailed draft Conclusions which would outline the parameters of the EU' s spending.

President Van Rompuy has now taken ownership of the process, and will attempt to broker a deal at this week' s meeting. It will not be an easy task - as I have said there are deep divisions between the Member States. President Van Rompuy will have my full support over the coming days in his efforts to broker a fair solution which will equip the Union with an MFF that is capable of supporting the Union and its MS in facing the real challenges for the years ahead.

Ceann Comhairle,

The House will recall that, as I have set out before, the Government wants a properly funded and properly functioning EU. The EU's budget must have the right mix of priorities, a fair allocation of resources and - most importantly in our present circumstances - a focus on jobs and growth.

The EU must, in short, have a budget that is fit for purpose.

 

We broadly supported the Commission's original proposal. While there was of course room for improvement in detail, we thought it had the right overall balance. In particular, we thought it had the right starting point for negotiations on the size of the Common Agricultural Policy (CAP).

It will be no surprise to anyone in this House to hear that in the negotiation of the Multi-annual Financial Framework, our over-riding financial priority has been to protect the allocation for the CAP and to maximise Irish access to it. The CAP accounts for about 85% of our total EU receipts: it is a key element in our overall relationship with the EU.

 

The Union's budget needs a CAP allocation that will support a vigorous, consumer-focused agricultural production base in Europe.

Some Member States have called for a greater emphasis to be given to the non-agricultural elements of the MFF, arguing that these promote growth and implicitly suggesting that the CAP does not.

We have however argued that the CAP is a vital tool for economic growth, through its support for agriculture; its support for the agri-food and related industries; and its support for the rural economy. Europe needs to take advantage of growing global food demand - demand that will only increase over the coming decade.

As I have said, the original Commission proposal for CAP funding in the MFF was a good starting point - even though this Heading was the one showing the most restraint. However, the direction of successive proposals has been to reduce its allocation still further: we reject this approach. At the European Council, I will vigorously defend the CAP.

But the importance to Ireland of a robust MFF is of course not limited to the CAP. We have argued strongly for an MFF with adequate resources for other key growth-enhancing measures. Our economies are changing, and the kind of support and stimulus we need from the EU is also evolving. Critical areas of our economies and societies such as research, education, improved connectivity and the important SME sector must be supported by the next MFF. I will continue to argue this strongly.

 

We want the budget to support the Europe 2020 Strategy for Jobs and Growth. It must have adequate funding for investment in economic growth and the creation of employment. All Member States - including those with more developed regions - must be able to access EU programmes and funds. The scourge of youth unemployment is not limited to under-developed regions, as we know too well. The Union's Cohesion policy must address the challenges that face us today: and the most serious of these is unemployment. I have made this point to my fellow Heads of State and Government both at the EC and in my bilateral contacts. This is a challenge that we cannot fail to address in the MFF.

CAP and Cohesion funding make up the bulk of the MFF. Of course, the remaining elements are also valuable and necessary. The Union must have sufficient funds to act outside its borders, most importantly in the area of development and humanitarian aid.

Administration costs are of course necessary, and underpin the important actions of the Union. By international standards the EU budget in this regard is not exceptional. However, I agree with those who argue that the Union's funding must reflect the consolidation efforts underway in the Member States and I have no doubt that there is room for greater efficiencies in the funding - including financial efficiences - in the funding of the Administration heading. We have argued that the Union's administrative expenditure can be cut, just as Member States' have consolidated their budgets

I said earlier that there are, without question, divisions between the Member States on the MFF. Some countries, mostly net contributors, have called for significant cuts to the Union's budget. Newer Member States naturally want a greater emphasis to be placed on Cohesion funding, and for a well-funded EU budget.

For the Commission and the European Parliament - a key issue is reforming the way in which we collect the revenue which provides the EU budget. Various reforms have been put forward, such as relying on a Financial Transaction Tax or a new VAT arrangement. For the most part, we have been unconvinced by these arguments, and we continue to believe that the current assessment based on a GNI key is the fairest, simplest and more transparent way to fund the Union. The system of rebates is another highly contentious and sensitive issue for some of the Member States.

President Van Rompuy has recently put forward draft European Council Conclusions, containing a new negotiating box. These contain his compromise proposals. I regret to say that these go in a direction which we cannot support.

 

The President has proposed further cuts to the overall budget, deeper than those suggested earlier by the Cypriot Presidency. He has proposed a 7 per cent cut on the overall MFF amount compared to the original Commission proposals. And inside this is a cut of 6.5 per cent to the CAP.

It will not be easy for President Van Rompuy to reconcile Member States' very different positions. Indeed, our nearest neighbour has taken a very firm view on restraint in the EU budget, to the extent that there are fears that it will not be possible to get a deal at this week's European Council at all.

If a deal is reached at this week's European Council, it will then be necessary to get the assent of the European Parliament. Ireland has repeatedly stressed the importance of any European Council deal on the MFF being one acceptable to the Parliament. As the House will recall from the recent visit of President Schulz, the European Parliament is fully engaged with the process and is very clear on the outcomes it expects.

We must be realistic: there is a real possibility that this week's Summit will not reach a deal. If so, it will have a great impact on our 2013 Presidency agenda. The Irish Presidency will in any case have responsibility for chairing discussions on many sectoral regulations underpinning the MFF - including on reform of the CAP - and another on Horizon 2020 - and for negotiating their passage through the Parliament. This would be greatly complicated if there was no agreed MFF.

We do not want a failed Summit - this would have severe implications for the Union's reputation.

At the same time, we do not want a deal which isolates any Member State. That would have severe implications for the Union too.

 

This is now an active and delicate process of negotiation underway.

 

Ahead of the meeting proper, President Van Rompuy will have a brief meeting with each Head of State or Government to ensure that he has a full appreciation of the position of each Member State. I will meet him tomorrow morning and will set out our priorities clearly.

Negotiations proper will get underway later in the day with plenary meetings, bilateral sessions and various breakout arrangements through Thursday evening and Friday. There is no scheduled finish time, and I expect Heads of State or Government to continue until we have reached a compromise or until it becomes clear that none is possible on this occasion.

Appointment to Executive Board of the ECB

 

 

While this week's meeting of leaders will be firmly focused on the conclusion of the MFF, one other matter has also been flagged for consideration. That is the filling of a vacancy on the Executive Board of the European Central Bank (ECB). There has been a vacancy on the Executive Board since the beginning of June. In line with the procedure set down in the EU Treaties, the Council made a recommendation for the filling of this vacancy - proposing Mr. Yves Mersch of Luxembourg.

The European Parliament was consulted on this proposal, as provided for in the Treaties, and offered a negative opinion, on the grounds that a better gender balance was required on the Board. During the European Parliament hearings, there was full recognition that Mr. Mersch is a person of recognised standing and professional experience - these being the requirements for this position, as set out clearly in the Treaties.

It had been proposed that the European Council would consider the matter of the filling of this vacancy on ECB's Executive Board through a written procedure earlier this month, however, as there was no consensus among Member States to use that procedure, this decision now comes on to the agenda of this week's meeting of the European Council. I expect that this matter - which will be decided upon by qualified majority - will be finalised this week.

 

Conclusion

Ceann Comhairle,

As I set out at the start, this is an important meeting for the EU and I hope it will result in a positive outcome.

I look forward to playing a full, active and constructive part in the negotiations, and I will report back to the House on my return.