Ceann Comhairle, Deputies,
I am pleased to be able to update the House on the meeting of the Spring European Council, which took place in Brussels on Thursday and Friday of last week. As you will be aware, the meeting focussed on developments in Ukraine, but the meeting also had wider agenda with an economic focus including:
· The European Semester;
· The Europe 2020 Strategy;
· Industrial Competitiveness;
· Climate Change and Energy;
· Banking Union;
· Taxation; and
· External Relations
And in addition to Ukraine, we discussed 3 other external relations items: (1) the preparation of the EU-Africa Summit, (2) recent progress in negotiations toward the reunification of Cyprus and (3) an international investigation into alleged war crimes in Sri Lanka. I’ve asked Minister of State Donohoe to cover these issues in his statement. He will also report to you on the industrial competitiveness discussions - part of the ongoing effort of EU leaders to promote economic growth and job creation.
Ceann Comhairle, let me start, however, with Ukraine.
Last week’s annexation of Crimea by the Russian Federation constitutes a dangerous precedent and has no place in the Europe of the 21st century. The European Council last week reiterated the Union’s support for Ukraine’s sovereignty and territorial integrity and strongly condemned the annexation of Crimea and Sevastopol. The EU will not recognise the referendum of 16 March in Crimea, which is in clear violation of the Ukrainian constitution. Last week’s summit asked the Commission to evaluate the legal consequences of the annexation of Crimea and to propose economic, trade and financial restrictions regarding Crimea for rapid implementation.
As Ireland and its partners have made abundantly clear, Russian actions are in breach of its international and bilateral obligations, including the Helsinki process, which in the past 40 years has contributed to overcoming divisions in Europe and building a peaceful continent. Frankly, Russia is only isolating itself by its actions and I would urge it to reconsider its approach as a matter of urgency.
Clearly, any further destabilisation could have serious consequences for European stability and security. Europe and the world need stability based on the fundamental principles of sovereignty and territorial integrity. Russia’s current behaviour is endangering this stability and represents a direct threat not just to Ukraine but to all its neighbours and to the wider international community.
Against the backdrop of these deeply disturbing developments, and in the absence of any steps towards de-escalation by Russia, last week’s European Council took the following additional, concrete measures:
· we extended the visa ban and asset freeze to an additional 12 individuals;
· we cancelled the next EU-Russia summit and agreed not to hold regular bilateral summits;
· we agreed to support suspension of Russia’s accession negotiations to the OECD and IEA;
· we urged timely agreement on an OSCE mission in Ukraine, and agreed that – if there is no agreement in coming days on a credible OSCE mission –to draw up an EU mission;
· we made clear that any further steps by Russia to destabilise the situation in Ukraine would lead to additional and far reaching consequences for relations in a broad range of economic areas – and we called on the Commission and the Member States are to prepare possible targeted sanctions; and
· we decided to advance the signature of the Association Agreements with Georgia and Moldova to June this year
These additional measures follow on from the steps which we took at our meeting on 6 March, namely suspension of work with the Russian Federation on visa matters and on the New Agreement (an enhanced EU/Russia partnership and cooperation agreement). This came in addition to the suspension of preparatory work on the G8 summit. The Foreign Affairs Council subsequently introduced travel restrictions and an asset freeze against those responsible for undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.
The question of the nature and scope of sanctions is always a complex and difficult issue and, as I said in Brussels, inevitably will have negative economic consequences for the EU, including Ireland, as well as for Russia. It is only right, therefore, that we prepare such decisions carefully and we have tasked the Commission accordingly.
As a small country which has traditionally relied on respect for the rule of law as the fundamental guarantor of stability in the international system, Ireland should take a firm position on what has happened in Ukraine. It would be wrong, however, to suggest that this is only an Irish view. The Conclusions of last week’s European Council make explicit that “there is no place for the use of force and coercion to change borders in Europe in the 21st century”. As a country which had the honour to serve as the Chair in Office of the OSCE as recently as 2012, I do not see how Ireland could fail to take a strong view on such matters.
High Representative Ashton has been tasked by us to draw up plans for an EU contribution to facilitate the work of the OSCE Special Monitoring Mission to Ukraine, the terms of which were agreed to by the OSCE last Friday. Ireland is of course open to participation in the OSCE mission.
In parallel with the additional measures against the Russian Federation, the European Council emphasised EU support for Ukraine, including through macro-financial assistance. I also strongly support the economic assistance package of €11 billion announced by Commission President Barroso on 6 March. This is a further demonstration of our support for, and solidarity with, the authorities in Kiev who continue to show commendable restraint in the face of huge provocation.
Together with the other leaders, and in the presence of Ukraine’s Prime Minister Yatseniuk, I signed the political provisions of the Association Agreement with Ukraine on the second day of the European Council. The EU is committed to signing the remainder of the Association Agreement and Deep and Comprehensive Free Trade Area. In the meantime, the EU will soon temporarily remove customs duties on Ukrainian exports to the European market. These steps are proof of the EU and Ukraine's shared wish for closer political association and economic integration.
We welcomed the Ukrainian government’s commitment to ensure that its structures are inclusive and reflect regional diversity and to ensure full protection of the rights of persons belonging to national minorities. We also welcomed the commitment to undertake constitutional reform, to investigate all human rights violations and acts of violence and to fight extremism.
The European Council further encouraged Ukraine to ensure that the Presidential election on 25 May will be free and fair.
Last week’s summit also reconfirmed the EU’s wish to further strengthen its political association and economic integration with Georgia and Moldova. We indicated that we aim to sign the Association Agreements with these countries no later than June.
Overall, I believe that we have sent a clear message to Russia that our words are backed up with firm intent, even though the measures will entail consequences for all of us. Let me stress, however, that while there is a need to demonstrate our resolve to Russia and while the signs at present are not at all positive, we do need to keep channels of communication open. Dialogue remains important, and particularly so when differences are most acute.
Ireland and our EU partners will also make our views known at the United Nations. This is not a dispute between the EU and Russia. What is happening in Ukraine is a direct challenge to the rule of law and has implications for the whole global community.
Ceann Comhairle, Deputies,
Let me turn at this stage to the economic agenda. As I mentioned earlier, Minister of State Donohoe will report later on industrial competitiveness.
The economic agenda also touched on the European Semester and the review of the Europe 2020 Strategy. Last week’s meeting concluded the first phase of the European Semester for 2014 by finalising guidance on this year’s national reform plans. We placed particular emphasis on policies enhancing competitiveness, supporting job creation and fighting unemployment.
As the House is aware, Ireland will be a full participant in this year’s European Semester process following successful completion of our EU/IMF programme. Minister of State Donohoe has arranged to update the Oireachtas Joint Committee on European Affairs on our preparations on Tuesday next, 1 April.
We also took stock last week on progress in implementing the Europe 2020 Strategy. Exchanges were informed by the Commission’s recent Communication, which shows quite clearly that overall performance is mixed and that the crisis has slowed down progress towards key goals.
I believe the modest European economic recovery must be supported by strong re-engagement with Europe’s post-crisis strategy for smart, sustainable and inclusive growth. I
welcome the European Council’s call on Member States to step up efforts to reach the 2020 targets. The Commission plans to launch a full public consultation in April. I hope that we will see strong stakeholder engagement with this consultation including from national parliaments.
Last week’s meeting also considered progress in completing Banking Union, and I was very pleased that the European Council could welcome the agreement reached with European Parliament negotiators on the next pillar of Banking Union - the Single Resolution Mechanism.
As Deputies are aware the Single Resolution Mechanism is an important contributing factor to breaking the link between the sovereign and the banking sector. The new Single Resolution Mechanism will allow decisions to be made in an objective and independent fashion, and will take these decisions in line with the principles of resolution set out in the Bank Recovery and Resolution proposal. This means that shareholders and creditors should bear the costs of resolution before any external funding is granted, and private sector solutions should be found instead of using taxpayers' money.
Aspects of the Single Resolution Mechanism relating to financing are covered by an Intergovernmental Agreement. Significantly, the agreement with the European Parliament reduces the period of mutualisation from 10 to 8 years. The pace of mutualisation has also been accelerated to allow for a 40% mutualisation in year 1 followed by an additional 20% in year 2. In my view this is important for the overall credibility of the project. It signals that we are serious about breaking the link between the sovereign and the banking sector.
The agreement also provides that steps will be taken to develop appropriate methods and modalities to enhance the borrowing capacity of the Single Resolution Fund. The purpose of this is to ensure that adequate funding can be provided by the Fund at all times.
I expect that the regulation on the Single Resolution Mechanism will now be formally adopted before the European Parliament rises for elections.
Taxation was also included on the agenda for last week’s meeting. On this item, I was pleased that the European Council could finally welcome agreement on the Savings Tax Directive. Ireland supported this and I see it as a significant contribution to EU and international efforts to combat tax fraud and evasion.
Climate and Energy
Ceann Comhairle, let me turn now to the related issues of climate change and energy, which were also a focus at last week’s meeting. My colleagues and I held a first policy debate based on the Commission Communication on the framework for climate and energy to 2030. This represents the next phase in the EU’s transition to a competitive, low-carbon economy by 2050.
The issue requires careful consideration. Ambition and flexibility are important features of the package. However, the outcome must also be sustainable on environmental, economic and competitiveness grounds, for the EU and individual Member States.
We support in principle the proposed targets set out in the Commission’s Communication - a 40% reduction in EU-level greenhouse gas emissions and a proposed EU-wide 27% target for renewable energy by 2030.
We need to be ambitious, but we also need to be very clear about the commitments we undertake. We need good and agreed data on which to base decisions.
The European Council agreed on the need for further urgent analysis of the implications for Member States of the proposals for emissions reductions and renewable energy.
I made clear that for Ireland, particular account has to be taken of the role of agriculture. This is already set out clearly in the Commission Communication and - during discussion at last week’s meeting - President Van Rompuy was reassuring on this aspect. This is an important development from Ireland’s perspective. We believe that a coherent and cost-effective approach to the parallel priorities of sustainable food production and climate change is fundamental. A realistic way forward at national, EU and wider international level under the UN Convention requires such an approach.
Leaders also called on the Council and the Commission to elaborate mechanisms for fair effort sharing and to modernise the energy sector, to prevent carbon leakage, and to develop an energy efficiency framework.
We will take stock of progress on these issues at the June European Council meeting, with a view to taking a final decision by October 2014. This will facilitate an agreed EU position at the UN Climate Conference in Paris in 2015.
The European Council also agreed to accelerate efforts to complete the internal energy market this year, including through increased electricity interconnections. Discussions on energy – and energy security in particular – had an added urgency in light of the Ukraine crisis. The Commission has been asked to prepare a detailed analysis of Europe’s energy security – and a comprehensive plan to reduce energy dependence – in time for the June European Council.
The Council also agreed to support the development of other sources of energy supply, including examining ways to facilitate natural gas exports from North America to the EU. We will consider how this may best be reflected in the Transatlantic Trade and Investment Partnership (TTIP).
I will conclude on this point. I hope that I have given Deputies a good overview of discussions last week.