I am pleased to brief the House on the outcome of last week’s European Council meeting in Brussels on 18-19 October.
I am also happy to report that the outcome of the meeting was very positive from an Irish and a European perspective.
At the insistence of a number of Member States, including Ireland, we explicitly reaffirmed the commitment we made in June to break the link between banking and sovereign debt; and to provide for the recapitalisation of banks by the ESM.
This will be done in full respect of the decisions taken in June.
We agreed that legislation on the establishment of a Single Supervisory Mechanism for banks is a priority and that the legislative framework should be in place by January 1st 2013, with work on the operational implementation to take place during 2013.
As a result, we now have a firm timeline in place – the Supervisor will be up and running in 2013 – and we are further down the path towards a functioning and effective banking union. The objective is clear but it must be based on quality and competence.
I said last week when I briefed the House ahead of the meeting that progress on banking union – especially the Single Supervisor – was a pressing urgency not just for Ireland, but for the euro area; and that it was a priority issue for me.
Last week’s decisions are therefore particularly welcome and significant.
It will, of course, be important to keep up the pressure for implementation and delivery. There can be no slippage or drift with over 6000 banks across the Eurozone to be involved.
Maintaining momentum is important to the Union’s credibility and I can assure the House that it will be a key focus of mine in the period ahead.
Completing EMU
Ceann Comhairle,
The main focus of discussions at our meeting last week was on strengthening Economic Union, with a particular focus on advancing towards banking union as an essential element of this work.
At the beginning of the meeting we heard the report of the European Parliament President Martin Schulz.
President Van Rompuy presented his interim report, which was based on the four essential building blocks he identified in June:
an integrated financial framework, or so-called ‘banking union’;
an integrated budgetary framework;
an integrated economic policy framework; and
democratic legitimacy and accountability.
His Report was well received and we agreed that he should continue with informal consultations with Member States and the Union’s institutions before making his final Report in December. This will include a specific and time-bound roadmap on the way ahead and will make concrete proposals.
As part of this work, President Van Rompuy will explore, in particular, the possibility of a ‘fiscal capacity’ for the euro area, which in practice is another term for a possible Eurozone budget, and potential ‘contracts’ between Member States and the EU Institutions, perhaps covering the Country Specific Recommendations.
While these are interesting ideas, we need considerably more detail before we can assess whether they might have a contribution to make. We will continue to engage in these consultations constructively and with an open mind.
On banking union, the European Council agreed that we need to move towards a more integrated framework, but one that is open to the greatest possible extent to all Member States wishing to participate.
A considerable amount of our discussion focussed on how to ensure that outcome, which is a particular concern of those Member States that are not, as yet, part of the euro.
As I have said, we agreed to move forward on the Single Supervisory Mechanism as a matter of priority, with the objective of agreeing on the legislative framework by 1 January 2013. Work on implementation will then take place in the course of 2013. In this, we agreed that protecting the integrity of the Single Market is crucial.
On bank recapitalisation, we agreed that the Eurogroup will draw up the exact operational criteria “in full respect of” the June Euro Summit Statement. We restated the imperative need to break the vicious circle between banks and sovereigns; and we reiterated that when an effective Single Supervisor in established, the ESM could have the possibility of recapitalising banks directly.
As I have said, Ireland was part of a group of Member States that insisted that reference be made to what was agreed in June, to underscore that the commitments entered into at that time stand and will be fully respected in the work that lies ahead.
The specific circumstances of this country, and the need to take the commitment to examine the sustainability of our Programme as agreed in June, was raised by me specifically at the meeting.
Our focus was on working through how the commitments on banking union in particular were to be advanced.
However, as the House knows, I had a very good conversation with Chancellor Merkel on Sunday evening in the wake of comments made by her at her post European Council press conference, about banks in Spain.
I regret that some Members of the House and others chose to jump to the conclusion that these comments referred to Ireland, or that the June commitment in relation to Ireland was no longer valid.
These comments were opportunistic and misguided and I hope that those who made them use the opportunity of this debate to withdraw them.
In my conversation with Chancellor Merkel, she registered a very genuine appreciation of the steps the Irish people are taking to turn our economic situation around, and her full support for our efforts to get back to the markets.
Like us, she believes that a positive outcome for Ireland would be good news also for the euro area and the wider European Union.
Her support is well expressed in the joint statement we issued after our conversation. It makes it clear that the commitments made to Ireland at the end of June stand, and that this vital work will be taken forward by Minister Noonan and his colleagues in the Eurogroup.
The Chancellor was pleased to put on the record her recognition that Ireland is a special case and to state that this would be taken into account in the discussions ahead, within the mandate given to the Eurogroup.
I also had an excellent meeting with President Hollande in Paris on Monday. He too made his support for our case clear both in the meeting and in the subsequent press conference.
He expressed in very clear and welcome terms his appreciation for the special situation which Ireland faces– that we in Ireland moved early and put very large amounts into our banks in the interests of wider stability in Europe’s banks and our common currency – and the need for the Eurogroup (of Finance Ministers) to take this into account as it works out the modalities on how to implement the commitments agreed by all leaders in June.
These statements are a welcome reassurance that in keeping with the June agreement Ireland’s particular situation will be addressed.
As my colleagues in Government and I have said on many occasions, our goal is to secure the best possible deal for the people of Ireland, one that makes our debt more sustainable and our return to the markets more certain.
We have agreement from our partners to work with us on this.
The approach we are taking has yielded results and will, I am confident, lead to a positive outcome. We appreciate that it will take careful and patient work, often behind the scenes and away from the glare of publicity.
The negotiations are complex and sensitive and the stakes for our country are high.
I will not say to this House that we will have a deal on our banking debt by a particular date, nor will I say how such a deal will be structured. The Government has always said getting the right deal is better than getting a rushed deal.
However, the very public acknowledgements by both Chancellor Merkel and President Hollande over recent days of our particular circumstances, and the necessity for those circumstances to be fully taken into account as work is taken forward are I believe very positive developments for Ireland and lend weight to the case we will continue to press.
Compact for Growth and Jobs
Ceann Comhairle,
The House will recall that in June we agreed the Compact for Growth and Jobs.
The Compact provides a very useful framework for actions at national and EU levels, which are directed at returning the Union to sustainable growth and job-creating growth at that.
I argued strongly for the need for an emphasis on the growth on jobs agenda, to match the necessary focus on structural reform and consolidation. We have always spoken up for a balanced approach, and I indicated that this would be a priority issue for our forthcoming Presidency.
In that context, I warmly welcomed the return of leaders at
last week’s meeting to review implementation.
With the Compact, as in other areas, it is imperative that what is agreed at the level of Heads of State or Government is actually implemented and without undue delay. As I have said in this House previously – this is a matter of credibility for the Union. What we agree must be implemented – it is as simple as that. I made this point very clearly to my colleagues in Brussels last week, as did a number of other leaders.
I am glad to report to the House that considerable progress has been made in taking forward the various elements of the Compact, but it was also made clear – including through presentations by President Van Rompuy, the Cypriot Presidency and by President Barroso – that more
needs to be done if it is to realise its full potential, in boosting growth and creating the environment for the creation of sustainable employment across the European Union.
In the run up to this Summit meeting, we sought to strengthen the language on the need to take further steps to see the Single Market – especially in the digital area – deliver the growth potential which I am certain it holds. We must complete work on the first set of measures under the Single Market Act – due to be agreed by the end of the year - while now taking work forward on the second set of measures recently published by the Commission. This work will be an important component in our Presidency workload during the first half of 2013.
Research and innovation – through the new programme, Horizon 2020 – as well as through the new programme for competitiveness of enterprises and SMEs will contribute significantly to converting research and innovation into competitive advantages that can be benefitted from by European business, thus supporting European employment.
One other area that I was very keen to see properly recognised in our conclusions on the Compact for Growth and Jobs was the potential of trade as a real engine of growth. As a trading nation, we know very well the critical importance of trade to our economic well-being.
Indeed our recovery thus far has been export-led, and I intend to do everything possible to see the Union’s trade opportunities pursued vigorously.
I am very satisfied that the European Council called for progress over the coming months in progressing Free Trade Agreements with Japan, Canada and Singapore.
I am delighted that European leaders have committed the EU to working towards the goal of launching negotiations on a comprehensive trans-Atlantic trade and investment agreement during 2013. This will tally very closely with the priority which we will be giving to developing EU-US trade during our term as Presidency next year. These efforts will include the hosting of an informal Ministerial meeting here in Dublin on this theme during the course of the spring.
But in truth, each aspect of the Compact supports Ireland’s vital national interest. We understand and appreciate that recovery in Ireland depends significantly on recovery in Europe. We now need to make a reality of the Compact – yet again we need to implement.
Strategic Partners
On Friday morning last, leaders had a good exchange on the EU’s relations with its strategic partners, most notably on the Union’s relations with China.
This kind of discussion – especially where we are not trying to reach agreement on conclusions or an outcome document – is especially valuable, as colleagues avail of the opportunity to share experiences, with a genuine view to strengthening the Union’s hand in our external engagements.
There was a general sense that we need to do more to ensure that our approach at the bilateral level is consistent with that being pursued at the EU level. That just makes good sense. Our approach in engaging with China across the broad range of issues needs to be an open and constructive one.
For my part, I shared with my colleagues our recent experience in our engagement with China – including high level visits in both directions. We look forward to developing both our bilateral relations with China as well as advancing EU-China relations during the first half of next year, as Presidency.
Foreign Policy Issues
Before concluding our meeting on Friday, we also adopted a comprehensive set of conclusions on a range of foreign policy issues which are currently pressing. The European Council took stock of the deteriorating situation in Syria and endorsed the conclusions reached by EU Foreign Ministers, including the Tánaiste for Ireland, at the 15 October meeting of the Foreign Affairs Council in Luxembourg.
On Iran, we expressed our serious and deepening concerns about that country’s nuclear programme and reaffirmed our commitment to a dual track approach of restrictive measures as well as efforts by the High Representative to engage Iran in meaningful and constructive discussions.
The situation in Mali and the Sahel region were addressed, with the European Council expressing its serious concern at the continuing political, security and humanitarian crisis in that area.
Ceann Comhairle,
Before concluding, I want to note that last week’s European Council also adopted conclusions recognising the award to the European Union of the Nobel Prize for Peace. I warmly welcome that award.
It is a timely reminder to us at a time of real challenge that earlier generations of Europeans came together to build out of the rubble of the devastation caused by the Second World War a new kind of community – a new kind of Union – which would bind the States of Europe together for our common good, building an area of peace and prosperity which our continent has never before seen.
This is a perspective we need to keep in mind as we deal with our difficulties today – Europe together and united – has in the past overcome existential challenges. Similarly, we will see our way through this current crisis, working with our partners in a true spirit of cooperation and solidarity.