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Speech by MoS Creighton at EU HoMs’ lunch, 14 July 2011

European Union, Minister Lucinda Creighton, Speech, Europe, 2011

Thank you, Duarte, for the kind invitation to this lunch. I saw quite a number of you earlier in the week at the Battle of the Boyne site- I hope you found it interesting.

Role of Ambassadors

These are challenging times for the Union

Events move fast, and the need for clear communication between EU partners, for comprehensive and timely information for decision makers, is greater than ever

The work that you do is a vital part of this: you keep your governments informed of developments in Ireland and let us know the views of your own governments.  You are central to the ongoing discussion that is the European process.       

The government is now in office for 4 months. It’s an opportune moment to look back at some of what we’ve achieved already on the EU front, and to gear up for further tasks. Engaging thoroughly with the EU agenda, and enhancing relations with partners and the EU institutions, have been clear government priorities from day one. The Tánaiste and myself, along with other colleagues in government, have undertaken an intensive round of contacts and visits with opposite numbers in your countries as well as with media and decision-shapers. I was delighted that President Buzek had such a successful visit here on last Monday and Tuesday. I thank you and your authorities for facilitating these meetings, and it’s a pattern I want to continue and extend.  

In his recent speech to the Institute of International and European Affairs the Tánaiste spoke of how we have intensified our engagement right across the European Union.  Of necessity, that re-engagement has concentrated on working on the issues which are of most urgency.   But increasingly we are making every effort not to let the urgent overtake the important and we are increasing our efforts to engage with the wider European agenda – its reform, its external policies, and its enlargement. 

Polish Presidency

This is a great time for Poland as it takes over the reins of the Council Presidency for this semester.  I know that the Polish Government has worked intensively to prepare for this, and I wish it through you, Marcin, every success. 

This is a challenging time for any member state to take up this responsibility, but I am confident that Poland will rise to the occasion.

I look forward to participating in the GAC under Polish chairmanship on Monday. We shall closely follow the Polish Presidency, just as we closely followed the Hungarian Presidency; the rotating Presidency has evolved as Lisbon is implemented, and we can  learn from the previous and current trios in our preparations for our own Presidency in 2013.

Euro crisis

The matter of the day is of course the euro

The euro is a key achievement of the Union.  Preserving its stability is vital to enhancing growth, and vital for the political stability of the Union. 

The solution to this must be found in the wider European framework and with the partners with whom we share the euro.

We are doing our part. 

We have made good progress in implementing the terms of the joint EU IMF programme of assistance that Ireland was obliged to accept last year.

In May, having completed their initial review, the IMF authorities stated that Ireland's economic programme was off to a strong start.  Last month, the European Council issued a similar endorsement saying our reform programme is “well on track”.  Yesterday the European Commission reiterated this message unequivocally.

Today the EU ECB IMF Troika completes its third review.  We are on track in Ireland with the assistance programme.  We are determined to keep it that way. 

Ultimately, what is good for Ireland will be good for the euro.

However, if Ireland struggles to resolve its problems, it will delay a return to stability in the euro area.

The Government sincerely appreciates the support and solidarity which has been and continues to be shown towards Ireland. 

The issue of debt sustainability, as recognised by Eurogroup leaders on 11 March, remains an outstanding issue within the euro area and particularly for those Member States operating within assistance programmes.

In this regard, Minister Noonan pointed out following Monday’s Eurogroup meeting that promising progress was made in relation to making Ireland’s debt more sustainable.

Eurozone Finance Ministers confirmed that they “stand ready” to adopt further measures to improve the Euro area’s capacity to resist contagion risk, including enhancing the flexibility and the scope of the EFSF, lengthening the maturities of the loans and lowering the interest rates, including through a collateral arrangement where appropriate.  The eurogroup working group is now tasked with preparing proposals along these lines.

The Minister for Finance has indicated that he is hopeful that these policy measures, when implemented, will improve significantly the sustainability of the Irish EU/IMF programme.

Irish economy

The last few years in Ireland, which you have experienced with us, have been roller coaster.  We went up very high, and then, we lost height and found ourselves rushing downwards, pretty fast.

We have no one to blame but ourselves.  We became complacent, there was a sense that we deserved infinite good luck and that we had made it all happen by our ability and charm.  We learnt that while we may have deserved economic success because we had worked hard and made huge changes to our work practices, to our education system and to our actual approach to entrepreneurship and innovation, we had to work equally hard to protect this success.  This we didn’t do:  not only did we neglect the normal work of regulation and oversight, but we neglected our friends.  We didn’t understand that there is a very complex web there of relationships and networks.  We didn’t remember that we are a very small country and that we have no means of imposing our wishes.  We need to influence and persuade.  We had stopped doing that until recently!

I am confident that the Irish economy will rebound.  The fundamentals of our economy are strong

It is hard to understand the disappointing decision on the part of Moody’s to downgrade Ireland’s credit rating – a decision completely at odds with the recent views of others. The Commission put it clearly yesterday when it called the rating cut “incomprehensible” and pointed to our strong export growth and regained competitiveness.

I think that it is fair to say that yields attaching to sovereign bonds within the euro area zone at present are a reflection, to a greater or lesser degree, of the general and continuing nervousness which pervades the markets.

Notwithstanding the huge efforts being made in Ireland, Irish bond yields do not reflect our true position, but rather this continuing nervousness about Europe’s ability to credibly take the decisions necessary to stabilise matters. 

As regards Ireland’s return to the bond markets, which has been the subject of media comments over recent days, our Programme of Assistance anticipates very limited debt issuances in the second half of 2012.

This remains the plan, but Minister Noonan and the NTMA have always stated that this situation will be reviewed as we get into the second half of 2012 as there are many events that can take place between now and then.

The NTMA confirmed yesterday morning however that “Ireland has sufficient funding under the EU/IMF Programme of Support to cover all its financing requirements until the end of 2013”.

Ireland will return to positive growth this year and will record a balance of payments surplus. 

Growth is being driven by a very strong and broad-based export performance.  Exports grew by over 6 per cent last year and continue to grow at a rapid rate.  This has been underpinned by a strong improvement in our competitive position.

Consumer prices have fallen, as have wages and other costs.

Another positive for the Irish economy is that, despite the crisis, we remain an attractive destination for foreign direct investment. Last year the number of companies investing in Ireland for the first time rose by 20 per cent.

Almost 1,000 companies have now chosen Ireland as the hub of their European networks, including Google, eBay and Facebook.

Our strategy to attract foreign investment has been the cornerstone of our economic policy for the past fifty years.  It was fundamental for the development of the country and it is key to our national recovery now.

This is why, when our very economic survival is at stake, we are so insistent that we must not and will not undermine that strategy.

European achievements in face of crisis

We all face severe problems, especially those countries like Ireland that are in receipt of assistance programmes.

Many commentators have been vocal in their criticism of a perceived inability of the European Union to devise an effective and comprehensive resolution of the crisis. 

I understand their frustration.  We all want to see a credible programme for Greece that avoids contagion and spill-over risks and to put the atmosphere of panic and crisis behind us. 

We should not, however, underestimate the long-term impact of the measures that have been put in place by the Union over the past year. 

We have adopted a comprehensive package of measures to coordinate economic and fiscal policy and to strengthen our systems of economic governance. Implementation of these measures is now crucial. They represent a major step forward and will help to underpin the stability of the euro in the future.

It is vital that we maintain the impetus of response to the crisis.  The need for decisive action by Europe’s leaders is as great as ever. 

At the same time, we must consider the long-term sustainability and competitiveness of the European economy.

We look forward to discussions of the Commission’s proposals for the Multiannual Financial Framework for 2014-2020 which will have implications for the future of EU policy in many areas.

While we fully accept the need for budgetary prudence in these difficult times, we need a budget that is fit for purpose and allows the Union to deliver

We need to manage the Europe 2020 strategy so that it delivers growth and jobs.  We need to work to realise the full potential of the Single Market. The interdependent questions of energy security and sustainability as well as climate change need to be addressed and will have implications not just for us but for our children and their children.

These are all areas where we cannot successfully act alone and where we have to work together to get results.

In all of this, our relationship with you has been of huge importance.  We have worked with you to communicate with your governments on the extent of the change here and of our wish for a more open, collegial relationship.  We will work hard at it.  I myself am hoping to undertake a series of trips in the autumn to make sure that our position is better known and that any questions which need answering will be dealt with, as fully as possible.

Let me close by noting that a number among you will be leaving Ireland this summer on completion of posting. I want to thank you for your work here during what have been turbulent times, and for contributing to deeper understanding in your capitals of Ireland’s strengths and of its interests. I hope that the time has also been enjoyable and that you and your families and friends will be back. I wish each of you all success and happiness in your new assignment.