Recent Developments in Eurozone and European Council – Statements

16th December 2011

I thank the Minister of State for coming to the House and for her regular communications with us. She has been here before and, as a regular tweeter, her tweets have been keeping us informed, even during the European Council. She shows great initiative. I also wish to note the signing of the accession treaty with Croatia. It is a long time coming for the people of Croatia and is highly significant. I wish it had more coverage and debate. I also welcome the initiative on the blue flag for primary schools but I am sure we will hear more about that next year.

Looking at last week’s Council meeting, David Cameron told the British House of Commons he went to Brussels with only one intention, to defend British interests. That made me think about our common interests. Where were Europe’s interests and where were our European objectives, the drive to find solutions to overcome this crisis? Last week’s Council talks and decisions in the national debates that followed have revealed a number of fears that appear to be underpinning the approach of certain member states to EU governance. What are we actually afraid of losing by saving Europe?

The decision announced over the weekend did not represent any big surprise. Most of the measures were talked about or leaked or were consistent with events at European level, notably the so-called “European semester” based on enhanced Articles 121 and 148 of the treaty and many of the steps that have been implemented already, a number below the radar. It is very consistent with the German Government’s demands, expressed as early as May last year in a speech by Chancellor Merkel. The German Administration has kept its view consistently ever since, and the decision at the weekend is just the formalisation of this proposal. Some commentators call this deal a “super-Maastricht”. It is about monitoring countries more closely, enforcing fiscal consolidation more pre-emptively rather than waiting for a country to be in serious trouble before acting, and providing more credible enforcement mechanisms.

The idea of a “monetary Schengen” was actually proposed for the first time in 1995 by Stark, then Secretary of State, to complement the Maastricht treaty for the countries joining the euro. This is a provision of the Lisbon treaty, which took almost a decade to come about. It allows a group of countries to make advances on European integration. This is a provision that has provided the legal basis for the Schengen agreement, signed in 1985 between five of the ten members of the European Economic Community. The Schengen agreement now includes 25 countries and has been included in the European treaty. Another option would be to go for an intergovernmental agreement, a weak form of internal treaty. This would be another way to avoid the full change of the treaty that requires the approval of the 27 member states of the EU.

I welcome the news that the President of the European Council, Mr. Herman Van Rompuy, plans to hold a summit at the end of January, although he says it is to discuss the text of an intergovernmental treaty designed to boost economic growth in the eurozone. I note, however, the Prime Ministers of the Czech Republic and Hungary said as soon as yesterday that they would not join any treaty that includes tax harmonisation, a stance we would endorse. The Prime Ministers of Denmark and Sweden have said they must consult with their national parliaments. We are still in a period of flux when we hoped to be settled. I will wait to see the wording of the compact before I make any decision about the need for referendum. This House will have a role in scrutinising the wording, because this House has a role in scrutiny.

I want to note during this debate that a huge challenge for the EU today is the lack of confidence felt by its citizens, not just the markets. Restored consumer and investor confidence are essential for private and public-sector demand. To promote growth, Europe must break free of the austerity-growth deadlock. Job creation policies, especially for young people, must be the top political priority. Growth will only return if competitiveness and innovation can improve. SMEs and entrepreneurship, as well as social entrepreneurship and social innovation, for me, are the key drivers for a sustainable Europe.

Earlier this week the European Economic and Social Committee, of which I was a member for 12 years, held a conference on entrepreneurship. I was interested that in its findings; it called for the active support of the EU’s 20 million SMEs and for entrepreneurship in general. Its report said fewer than 10% of the 20 million businesses currently exploit the potential of the EU market. I wonder what the figure is for Ireland; we could perhaps exploit the market more. The president of the employer’s group in the European Economic and Social Committee, Mr. Henri Malosse, noted that with an extra 10% growth in the SME sector’s exploitation of this market, growth for the EU would increase by 1%.

I am disappointed there is not greater clarity. I will await the details of the compact but I am encouraged to see the active role Ireland is playing at an EU level. The Seanad has a role to play in scrutiny and in supporting Ireland’s role in the EU.

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