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Taoiseach’s Statement - Developments in the European Union and the Irish Presidency 2013 in Seanad Éireann, 18 July, 2012

I am pleased to come to the Seanad today to reflect a little on recent developments at European level, and to look to what lies ahead, including during Ireland’s Presidency of the European Union next year.

I am also here to listen. The Government is committed to enhancing the role of the Houses of the Oireachtas in the conduct of EU business. I have made it my business to brief the Dáil ahead of each meeting of the European Council and to return to report the outcome afterwards. I know that the Minister of State for European Affairs has appeared regularly in this House, and that your members make a significant contribution to the work of the Joint Committee on European Affairs, which is doing excellent work.

It is absolutely right and necessary that this should be the case. There is no longer any meaningful distinction to be made between domestic policy and European policy – European policy and law is domestic policy and law. Given the situation in which the country finds itself, it is all the more important that our policies and instruments at national and European level pull in the same direction.

It is absolutely clear that the Government’s highest priority – leading this country into recovery and out of our Programme – can only be achieved if the right policies are pursued, both here and across the Union.

Put simply, Irish recovery needs European recovery.

Last week we saw the Troika confirm again that Ireland is delivering on all of its Programme commitments. As they observed, “implementation remains strong in a challenging environment”.

That challenging environment remains a major downside risk to our continuing progress. We are small, and domestic demand was never going to be sufficient to lift us back up to where we want to be.

Our ability to restore growth depends on our capacity to export – that means finding partners willing and able to buy what we produce. We have done what we can to drive this, including through improving our competitiveness. However, as the Troika acknowledged, “weak trading partner growth [is] damaging export demands”.

Ireland needs stability.

Ireland needs an end to the euro drama and crisis.

We need strong leadership and a credible growth agenda at European level – one that is implemented in deed as well as word.

That is what the Government has been working for. That is what will be right at the heart of our Presidency when we take the helm next year.

Restoring stability to the Euro and Growth to Europe

Since taking office last year I have attended 9 meetings of the European Council - including some informal ones - and 6 meetings of the Euro Summit.

While sometimes people looking in from outside might criticise what they see as the slow pace and lack of progress, I see rather a process in which ideas that began on the fringe have come to occupy the centre ground.

Yes, we haven’t always been as quick or decisive as some, including myself, might have liked. But we are charting new territory – the Union had no emergency tools available to it when the crisis began – and people approach the table with very different perspectives. It is not an easy task to reconcile the very different views and interests to hammer out a compromise.

But we should not underestimate the extent and importance of what has been achieved, including at the most recent meeting of the European Council and Euro Summit at the end of June.

I approached that meeting with two clear goals. I set these out in the letter I wrote to all other Heads of State or Government on 7 June. I wanted to see agreement reached on a Growth Pact for Europe; and I wanted to see agreement on a solution to the banking crisis in Europe that broke the link between banking and sovereign debt.

Significant progress was made on both fronts.

The European Council agreed a Compact for Growth and Jobs; and the Euro 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 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.

Euro Area Developments

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 hasn’t 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.

While leaders have stated many times that they stood ready to take whatever steps are necessary to defend the currency, they haven’t always been believed. Words haven’t 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.

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 vitally important undertakings, most importantly the “imperative” need to break the vicious circle between banks and sovereigns.

This interaction has been at the very 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 underway 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 Eurogroup, the forum for Finance Ministers, has agreed that technical discussions on future ESM 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.

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 situation 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 situation in our financial sector in the interests of improving the sustainability of our Programme, states plainly “similar cases will be treated equally”.

The Minister for Finance has already moved things 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. While, for obvious reasons, I cannot go into any detail on what will be a detailed and sensitive negotiation, I can assure the House 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 in Brussels that whatever deal may be done for Spain will also be reflected in the outcome for Ireland. I welcome this statement very much indeed.

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.

It opens up the possibility of the 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 Bank 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.

Frankly, the approach to date at European level has been 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, and it hasn’t.

But 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 EIB 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 about €180 billion in additional investment in Europe.

In follow up to this, I had a very positive and productive meeting with the EIB’s 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 – we will not secure the results we are working for if implementation remains patchy. 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 don’t need to tell this House how vital this issue is for Ireland - we are an 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 trans-Atlantic dimension will be a particular focus. The EU-US High-Level Working Group on Jobs and Growth will bring forward its recommendations later this year. As Presidency, we will be working to ensure that negotiations on a comprehensive transatlantic trade and investment agreement get underway in 2013 and we will host an informal Ministerial-level meeting in Dublin dedicated to the key EU-US trading relationship.

Ireland’s Presidency of the Council, 2013

Cathaoirleach,

I have already stated my view that future prospects for Ireland and for Europe are inextricably linked. For Ireland to recover and grow, we need Europe to recover and grow.

When we take the stage as Presidency next year, we will have a unique opportunity to put our stamp on this vital agenda.

During our term-in-office our absolute priority will be stimulating sustainable economic growth and job creation.

We will manage the European Semester process, the new system of economic and budgetary coordination within the Union, and we will coordinate efforts under Europe 2020, the process in 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.

Strengthening the EU’s research and development capacities is also essential and we will host a range of conferences and events in Dublin in areas such as green innovation, Key Enabling Technologies and medical technology.

As this House will be aware, this will be our seventh time to take the helm. Each Presidency has brought its own challenges, but rarely have the stakes been higher.

Our Presidency in 2013 offers 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.

That reputation has been tarnished in recent years. This is our chance to give it back its shine.

In chairing meetings in Brussels - from the most technical of working groups to the most politically-charged Ministerial – we will have a chance to show partners what Ireland can do.

I can assure this House that we will make the most of it.

We will strive to manage business as efficiently and effectively as possible, and we will draw on the immense wealth of experience within our system to be a creative and impartial broker of agreement. Fostering good relations with the Parliament will be vital to this effort.

It will be a huge undertaking for us, particularly at a time of reduced resources – we will make every single euro count.

We will host about 175 official events in Ireland, each with its own complicated set of logistical challenges and demands for translation, transport and press arrangements.

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 to be fully engaged. I want the people to be fully engaged – this is a chance for them to see the Union at work, and to see Ireland offering leadership and direction.

I want Irish businesses to make the most of the opportunities it presents, especially our SMEs. We have been working closely with State agencies since last year to ensure that we take advantage of every opportunity to promote Ireland and Irish goods and services.

We want all of our visitors - all of the delegates, all of the press, all of the support staff – to leave Ireland having had a positive and welcoming experience.

This is a time to put the best foot forward.

Conclusion

As I have said, Ireland’s Presidency comes at an important time for the Union. It is a time when we are not only looking to move beyond crisis and back to recovery, but also when we are laying the groundwork for the future.

At the European Council meeting at the end of June President Van Rompuy set out some of his thoughts for how we can move towards a genuine economic and monetary union. He sees this as moving along four complementary tracks – banking union; greater fiscal and budgetary integration; greater economic coordination; and, alongside these, greater democratic legitimacy and accountability.

He will flesh his ideas out 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 – it will be carried forward throughout next year. It will give rise to important questions, for us and for others. It is a debate for which we will need to prepare and position ourselves well.

The Oireachtas will, of course, have an important role to play. But I want to see a debate that goes further and that opens a discussion that engages people across the country.

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 opportunity 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 Union, with a strong and credible currency at its heart.

That is what the Government will continue to work for, before, during and beyond our Presidency.