Speech by Minister Cowen in Frankfurt

I would like to welcome you here tonight and to say that it is a pleasure for me to be in Frankfurt.

Ireland's relations with Germany are close and friendly. Most of you are involved in trade and investment in Ireland and some of you are also involved in Irish trade and investment in Germany. You play a very important part in fostering the warm relations that exist between us.

Relations between states are a mix of elements. The economic relationship is important no doubt but the broader political and cultural relations are equally significant. We may not realise just how rich and complex Ireland's relationship with Germany is. Let me outline a few elements:

- German scholars played a vital part in saving the first language of Ireland from extinction in the nineteenth century. Universities such as Bonn, Marburg, Berlin; scholars such Kuno Meyer helped us to retain and foster the rich heritage of the Irish language which might otherwise have been lost.

- the first major development project by the new state in the 1920s was the Shannon Hydroelectric Scheme for which Siemens was the main contractor. According to the lore, Siemens lost money on the contract but I am glad to say that did not discourage Siemens. The company still has important interests in Ireland and indeed are still major suppliers to our Electricity Board.

- the first Volkswagen car assembled outside Germany was assembled in Ireland in 1950. It can now be found in the Volkswagen Museum in Wolfsburg - Irish assembly workers made sure the quality of the German product stood the test of time.

- German companies are the third largest source of foreign investment in Ireland. There are now 185 German companies in Ireland, employing over 12,000 people. Germany is our third largest export market, our third largest import supplier and is a major source of tourism.

- I particularly welcome the fact that German companies in Ireland, including those represented here this evening, are located in all parts of the country, and thereby make a valuable contribution to the Government's programme of regional development.

- Increasingly Irish companies are coming to Germany to manufacture and to service their clients - over 70 companies at the last count.

- We have been partners in the European Union for nearly 30 years. For the majority of the population both in Germany and in Ireland the European Union has been a reality all of their working lives.

- As members of the European Union we share common goals and objectives not just in the economic area To take one example - it was of particular interest to Ireland that many of the key decisions on the unification of Germany were taken during an Irish EU Presidency in 1990.

- We are both founder members of the Euro zone - from the beginning of next year we will use the same currency notes. The implications of this development are only just starting to sink in. But when the same currency notes are in use here in Frankfurt and in the midlands of Ireland, this will underline the reality of a common currency which is already evident to those of you in business.

- And a final element - both Ireland and Germany are committed to the development of the European Union and to its ambitious programme of enlargement.

I think it is worthwhile recalling just how much we have in common and the vital interests that we share. I would not like the impression to get abroad that Ireland's commitment to Europe and to the Economic and Monetary Union has somehow begun to diminish.

Let me say straight away that it has not.

The European Union is our Union as much as it is Germany's European Union. Four times in the last three decades the Irish electorate have affirmed their support to the Union in a referendum.

I am confident that they will do so again in supporting ratification of the Treaty of Nice, and the commitment to enlargement.

Support for the European Union reflects: first, the overall economic benefit of membership to Ireland, which is reflected in increased employment, trade and investment.

second, the historic opportunity of enlargement, as Europe for the first time in its history will, through the European Union, come together in a framework built on democracy, human rights and the rule of law; and

third the potential for Irish business to realise the enormous potential of an enlarged Union.

I expect that Ireland will also play a positive and constructive role in the discussions on the future of the Union which will continue after Nice.

Provided the essential balances of the Union remain intact, we remain ready to explore with Partners how best to ensure that the Union is equipped to respond to the challenges of a rapidly changing internal and external environment.

As we agreed at Nice, and as I know is of particular interest here in Germany, this will include looking at the issue of competencies - in other words whether a particular issue should be dealt with at Union, national or regional level. Properly handled, this can contribute to bringing the union closer to its citizens, and to more effective implementation of the Union's long-standing commitment to subsidiarity.

Those familiar with our record will know that whenever we faced a choice, we have always taken the path of closer European cooperation. We did so, despite the difficulties with our nearest market in the UK, when we signed up to EMU, as we had previously done for the Social Chapter.

We did so again by joining the EURO from the beginning.

The Euro is our currency as much as it is Germany's currency.

We have a common interest with Germany in ensuring that the Euro is a success.

We value the mechanisms of the Euro that owe so much to the model of monetary management which built the economic success of Germany. The European Central Bank is modelled on the Bundesbank and the Stability Pact, which ensures that economic co-ordination takes place within the Euro group, was a German concept.

We in Ireland fully accept these mechanisms and if there is debate about aspects of their operation then this is the sign of a healthy Union, one that has the potential to achieve its goal as the leading economic unit in the world.

For historical and geographical reasons Ireland has a close relationship with the US and, of course, with Britain which is not so far a member of the Euro group. This relationship does not in any way devalue our relationship with our partners in the Euro.

Like Germany we have close historical ties with the United States but like Germany we have our own economic and social traditions.

Indeed much of our economic success in the last decade has been based on the close involvement of the social partners in the framing of government policy. This is a model that is quite familiar in Germany.

With greater prosperity, we have also significantly increased provision in the health, education and welfare sectors. My Government is committed to ensuring that the gains of recent years are shared by all sections of our society.

It was in this context Ireland took the initiative at Nice to strengthen provisions in the area of Social Protection in the Treaty. We are pleased that this was agreed, and is now included in the new Treaty.

We have had a great deal of economic success over the last few years. Since 1997 employment in Ireland has grown by 22%. The unemployment rate is now less than half of the EU average. In the period from 1996 to 2000 real annual growth averaged just over 9%.

This success was not created overnight. It was built on the efforts of many people including those German companies which showed faith in the Irish economy.

We now face the challenge of maintaining that achievement. There will be a number of important components in our approach

Our National Plan for the period 2000 - 2006 involves the expenditure of over 50bn Euro on the much needed upgrading of our economy and in particular of its infrastructure. Ninety per cent of the funding of the programme is generated within the Irish economy itself.

Funding from the EU budget, which played such a valuable role in the past, has begun to decline in relative importance and by the end of next year Ireland will no longer benefit from the EU's Cohesion Fund. By 2006 the level of funding of development investment in Ireland from the EU Budget will be down to 0.2% of GDP. In 1995 it stood at 2.1%.

It is perhaps worth noting that the Structural and Cohesion Funds were integral to the establishment of the Single Market and progress towards Economic and Monetary Union. It was realized on all sides that the benefits of an integrated economy could only be realised if accompanied by the necessary measures to promote economic convergence across the Union.

In Ireland's case the Funds worked exactly as intended.

The assistance provided was used as part of an overall development strategy, with a particular focus on improving our infrastructure. The positive results achieved speak for themselves. Indeed the Commission has frequently pointed to Ireland as a model of how these Funds should be used.

We have worked very hard to make our taxation system responsive to the needs of investment and this has been done in close cooperation with the European Commission in Brussels.

By 2003 Irish Corporation Tax will be at 12 ½%. I want to emphasise that this arrangement has been approved by the European Commission. However it is worth recalling that in the case of manufacturing this represents an increase from 10%. Indeed receipts from corporation taxes in Ireland at 14% of our tax revenue, are higher than in other countries which have higher tax rates.

The policies of successive Irish governments since the mid eighties have been designed to ensure that we create a virtuous circle which will produce sustained growth. This has worked.

It is a question of ensuring that if our children want to work abroad then they have a choice. It is a question of carrying the development policies of the Irish government to a logical conclusion.

Equally, reducing our dependence on transfers from Brussels frees up resources for other regions including for the applicant countries.

It is a question of ensuring that we do not build up a dependency on foreign borrowing, which in the 1980s threatened to undermine our fundamental independence quite apart from the threat which it represented to our overall stability.

It is a question of creating a society, which uses its experience of EU membership well. This experience can be shared with partners in a positive sense in the process of bench marking and of peer review of which we shall hear more at the European Council in Stockholm later this month.

An area of particular interest to both Ireland and Germany is the question of animal health. I know there is concern about outbreaks of Foot and Mouth disease. I want to say clearly this evening that there has been no case of Foot and Mouth disease in the State. The Government, with strong public support, has taken an extensive range of measures to keep out the disease, and will continue to do everything necessary to meet this threat.

Germany has played an important role in the regeneration of the Irish economy.

- German firms have been important investors in Ireland since the 1950s

- Germany is the major contributor to the EU Budget which has played such an important part in providing development finance for the Irish economy

- Germany has helped to drive the opening up of the EU Single Market

The Irish/German economic relationship offers great mutual benefits. For example we are due to spend over 20bn Euros on infrastructure between now and 2006. German companies are more than welcome to take a share of this business. Their expertise in the area is respected throughout the world and we can benefit from it.

Ladies and Gentlemen

I would again like to thank you for coming here this evening. I wish you every success in your dealings with Ireland in the future and I want to assure that my government takes a particular interest in relations with Germany. We are ready to respond to your views and concerns whether you want to express them directly or through the Embassy and the investment and trade offices here in Germany.

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