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"Ireland’s Presidency of the Council of the European Union: a “perspective” Lucinda Creighton, T.D. Minister of State for European Affairs of Ireland Polish Institute of International Affairs, 26 October 2012

Ladies and Gentlemen,

Let me, at the outset, thank Mr. Marcin Zaborowski, Director of the Polish Institute of International Affairs, for his very warm words of welcome. Like him, I very much appreciate your presence here today. This indicates your interest in Irish affairs, the challenges ahead and our forthcoming Presidency of the European Union.

Ireland has an excellent if relatively recent, bilateral relationship with Poland. We have a large – perhaps as many as 150.000 strong – Polish community in Ireland. Poland is the 8th most important market for indigenous Irish companies. We exported goods to the value of about €500 millions in the first eight months of this year. I understand that Irish culture is hugely popular in Poland.

So I am very grateful that this prestigious Institute agreed to host today’s public lecture on the forthcoming Irish Presidency. As part of its very wide spectrum of interests, I am pleased that the Institute has a solid tradition of focusing on Irish affairs and an excellent working relationship with our Embassy in Warsaw. The distinguished Irish academic, Professor Brigid Laffan, reviewed the origin of Ireland’s economic crisis here almost exactly a year ago. And in May of this year, my colleague Michael Noonan, Ireland’s Minister for Finance, gave you an overview of the progress being made on Ireland’s journey to economic recovery.

This is my first official visit to Poland, a visit which is taking place at a very important time for Ireland and for the whole of the EU. As I came from the airport this morning on my way to my meeting with Secretary of State at the Ministry of Foreign Affairs, Mr. Piotr Serafin, I was struck by the enormous process of change, construction, investment and development now under way here.

This striking process of modernisation reminded me of the transformation which we witnessed in Dublin and other Irish cities over the last two decades. Without doubt, membership of the EU by both Ireland and Poland has contributed significantly to the modernisation of both countries and their economic development.

Poland’s Presidency of the EU last year had to grapple with an unprecedented economic and financial crisis, one which exposed the weaknesses in the construction of monetary union.  For us in Ireland, this coincided with a banking crisis, a fiscal crisis and one of the most severe recessions in modern history.

So it is natural – indeed necessary – that our bilateral relationship should include consultations on the most pressing items on the EU’s agenda – the economic crisis, economic governance, EMU, the budgetary framework: - the challenges which confront us, and also the opportunities. These are the issues which Minister Serafin and I discussed earlier this afternoon. And we hold similar views on many of them.

Irish Presidency

We also discussed Ireland’s forthcoming Presidency of the EU.  I have to say that Poland’s Presidency last year set a very high standard for those following it.  Poland’s Presidency was its first since it joined the Union in 2004 during when Ireland held the Presidency last. Ireland’s Presidency next year will be our 7th, and will coincide with the 40th anniversary of our accession to the Union in 1973.  But our Presidency in 2013 will be different to previous terms in office. We are dealing with a more complex political and institutional environment and the Union itself has grown to 27 Member States over the past eight years.

Holding the Presidency is always a challenge, and in particular for smaller administrations like Ireland’s but, as with our six previous Presidencies, we are committed to running an effective and well-managed Presidency in 2013. As Presidency, we have always sought to address the greatest challenges of the day and 2013 will be no different.  This is why our overarching priority across all policy formations will be on promoting sustainable economic growth and creating jobs. 

Let me outline some of the many objectives that we intend to prioritise to support Europe’s economic recovery and future growth and to create more and better jobs for citizens across our Union.

Priorities: Jobs and Growth

The agreement at the June European Council on a Compact for Jobs and Growth was a extremely important.  We will be working intensively with our EU partners to make that political commitment concrete in its implementation.

Ireland as a small export-driven economy has reaped the benefits of the European Single Market, but we wish to exploit the untapped potential of eCommerce which can deliver for Europe’s business and consumers, and also generate growth and spur job creation. 

Ireland will seek to address measures outstanding under the current Single Market Act such as the Professional Qualifications Directive while working to make good progress on the Single Market Act II which was launched earlier this month by the European Commission.

Irelandstrongly supports the focus in the Act on making progress in areas such as integrated energy, transport networks and the digital economy.

Ireland will seek to promote the digital economy and the Digital Single Market by working to advance agreement on issues spanning a number of Councils including Intellectual Property Rights, Cyber security, e-Identification, Data Protection, and high-speed broadband rollout.

We believe that the EU can become a global leader in many innovative sectors of the economy such as green growth and medical technologies.  Investment in these areas, particularly in human capital, will contribute to making the EU more competitive globally and to long term sustainable economic growth. 

Ireland will seek to underpin and stimulate research and innovation across the EU for the coming decade by advancing agreement on the Horizon 2020 framework programme which can play an important role in underpinning and indeed boosting the EU’s capabilities in this key area. 

We are also planning several conferences in Ireland during the Presidency aimed at promoting greater coordination within the EU to maximise innovation capabilities and to tackle broader challenges in developing research areas such as the application of Key Enabling Technologies (KETS) and nanotechnology.  Completion of the European Research Area (ERA) and the future development of the European Institute for Innovation and Technology also can also contribute to longer-term growth and will therefore be priorities for us. 

I have already highlighted the importance of the Single Market for European business, particularly for Irish exporters.  But Ireland also exports a great deal to non-EU states.  We firmly believe that the EU needs to look beyond its own borders, including to rapidly growing markets if it is to retain its economic edge over the coming decades. 

During our Presidency, Ireland will prioritise the external trade agenda and will host a meeting of Trade Ministers which will focus on the EU-US trade relationship. 

This meeting may contribute to securing the formal Council mandate for the start of negotiations on a comprehensive EU-US Free Trade Agreement (FTA).  The Presidency will also seek to advance Free Trade Agreement negotiations with Japan, India and other strategic partners. 

The Presidency will also seek to support the SME Sector which is the backbone of the European economy by making progress on programmes like COSME which seek to facilitate access by SMEs to EU funding.  We will also seek to enhance new business and job creation across the EU through the Entrepreneurship Action Plan. 

To support future economic growth and to sustain a globally competitive economy, the EU needs to invest strategically in its infrastructure. The Presidency will prioritise making progress on discussions on the Connecting Europe Facility but also on building agreement on proposals such as the Energy Infrastructure Package, the Draft Directive on reducing high-speed broadband rollout costs and legislation in the rail and aviation sectors to deliver future benefits to European business and consumers.

Ireland will also work to promote greater equality, social cohesion and inclusion in Europe.  Elements of the Europe 2020 Strategy including improving training, skills and access to education will play a critical role in equipping citizens, particularly young people, to find work and in attracting investment into the EU. 

Allow me to turn briefly to the two other overarching Irish Presidency priorities. 

Priorities: Economic Governance

To create the conditions for recovery and growth we need to restore stability to the euro area.

As Presidency, Ireland will work to ensure the effective implementation of a range of governance measures through the EU’s new system of economic and budgetary coordination, the European Semester, to promote macroeconomic stability and confidence in our countries for investors, business and consumers.  We will also work to promote trust in other sectors that are critical to Europe’s economic lifeblood such as the banking sector through the Banking Union proposals. 

Priorities: Budget

Reaching agreement on the EU’s future financing is also critical to shape the policy orientations of the Union between 2014 and 2020.  The Irish Government supports the Cyprus Presidency in its efforts to reach agreement on the Multiannual Financial Framework but stands ready to take on whatever tasks remain at the start of its Presidency including making progress on the approximately 70 pieces of implementing legislation related to the MFF.   I have already spoken about the economic importance of programmes such as Connecting Europe and Horizon 2020 which can underpin longer-term economic growth in Europe.  This is why reaching agreement on the budget and related legislation is so critical. 

Before moving on to discuss our domestic economic recovery in Ireland, allow me to make some final observations on our Presidency. 

Ireland has developed a reputation for running fair and impartial Presidencies since its first EU Presidency in 1975.  We will seek to repeat this in 2013. 

We have always believed that the EU is at its strongest and successful when it moves forward together.  We also believe that the Community method of decision-making serves the Union well.  Ireland will work hard to keep the institutional machinery of the EU moving ahead to deliver tangible results for Europe’s citizens, particularly given that the European Parliament elections will take place less than twelve months after the end of our Presidency.  Finally, we are determined to deliver a cost-effective Presidency.  In the current economic circumstances our citizens and other Member States would expect no less of us.  We believe that a successful Presidency need not be an expensive Presidency. 

Economic recovery

While preparations for the Presidency continue, our primary task as a Government remains our national economic recovery.  The greatest single contribution we can make to the European project right now is to keep ourselves on the path of economic growth and sustainable debt and deficits. 

Our economy experienced a powerful trauma in the wake of a housing boom and bust.  We have set a steady course back to stability and recovery and we are pursuing it with determination and with a strong political mandate from our people and with the support of Europe and the IMF.  We want to emerge as quickly as possible out of that programme of support. 

And that is what we are doing. 

 

We have gone from freefall, to stability, to growth.  We have delivered fully on every target that was agreed.  After three consecutive years of economic contraction, Ireland returned to growth in 2011 at a level of 1.4% and we expect to see modest continuing growth this year, strengthening next year and onwards. 

Over 70% of the consolidation necessary to reduce the deficit to below 3% of GDP has already been implemented.  That’s a budgetary adjustment of 15% of GDP. 

The deficit target for this year is 8.6% of GDP and the latest data show we are on track to achieve that. 

Our exports increased by 5.1% in 2011 and are now above pre-crisis levels with both foreign direct investment and many ‘indigenous’ sectors performing well. 

However that progress is being achieved against a very challenging background.  Unemployment has hit families hard across Ireland.  It has stabilized but at the unacceptable level of nearly 15%.  Net emigration has returned.  Household debt is still high.  Domestic demand is still subdued.  The scale of the bank debt we have taken on is severe and each further cut in public spending we take is more painful than the last.  Debt is expected to peak next year at 120% of GDP before declining.  The economic uncertainty in our major export markets in Europe and the US are strong headwinds for our export-led economy.

What are the implications of those challenges?  Well, simply put, that Ireland is close to being the success story that Europe needs, but that without worldwide growth, some specific enhanced supports are needed – specifically for our banking system.

 

Our banking system was of course central to our downturn and its repair will be central to our recovery.  Here again we have made strong progress.  We have restructured our banks and capitalized the viable pillar banks – a recapitalization amounting to some 20% of GDP.  We are shrinking their balance sheets and stabilizing funding.

However, the course of events in Ireland crystallizes the logic that the Heads of State and Government identified on 29 June when they agreed that ‘it is imperative to break the vicious circle between banks and sovereigns’.  The Irish economy, Irish bank debt and the wider European financial system are deeply interconnected and a way must be found to change the dynamic to a virtuous circle of sustainable progress – that is in everyone’s interests. 

We are on the right path.  It is not an easy one or a short one, but we are making determined progress.  

Concluding remarks

I would like to conclude my remarks today by thanking PISM for the invitation to address you here today and for your attention.  My Government colleagues and I look forward to working closely and constructively with our close partners in the Polish Government during our Presidency to deliver real results for citizens in Poland, Ireland and across the Union.  

ENDS