The EU is being guided "solely by the values of the market", said the Fine Gael leader, Mr John Bruton. The society being created by globalisation was putting a fiscal squeeze on welfare services, which were being stripped of funding, he said.

It was creating an incentive for the misuse of the environment and was "placing a time squeeze on caring".

Speaking in a debate on the recent EU summit in Lisbon, Mr Bruton said inequality was growing dramatically within the EU, particularly in Ireland, which was second only to the United States in the level of inequality - the difference in incomes between the top and bottom 20 per cent. The philosophical value of the summit was that "one's work does not count if it is not being valued by the market", he said, criticising recent comments by the Minister for Finance that "the employment rate is too low and is characterised by insufficient participation in the labour market by women and older workers".

He said this "narrow economistic approach" was valuing only labour force participation, and sounded almost like a fascist phraseology, that Arbeit Macht Frei (work makes one free).

The Taoiseach rejected his remarks, and warned him against making comments about fascists. Mr Ahern said the Fine Gael leader's comments were totally out of kilter with what people in local employment services wanted to do.

He said he had argued at Lisbon that the turnaround in Ireland's economic and social fortunes was due in no small part to the system of social partnership. This has "allowed us to develop a shared understanding with the social partners of the challenges to be faced and the strategies to be adopted to tackle them".

He stressed the importance of member-states co-operating in co-ordinating policy development to meet the challenges of ageing, changing employment patterns, changing family structures and social exclusion. Mr Ahern said the problems facing some European states with ageing populations showed that Ireland should act now and the Government had decided that 1 per cent of GNP would be set aside every year for this purpose.

Outlining the themes of the EU summit, the Taoiseach said it aimed to "become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion".

Europe needed to embrace fully the "information society revolution" if it was to achieve the benefits of growth employment and inclusion that the Information society offered.

Outlining the security and defence policy issues, the Minister for Foreign Affairs, Mr Cowen, said the summit looked at developments in reaching the "headline goal", an ability to deploy 50,000 to 60,000 personnel within 60 days and to maintain it in an area for one year.

He stressed it did not imply the creation of a European army, and reiterated that participation was on a voluntary basis.

He added that members-states "will also use existing defence planning procedures, which in the case of Ireland and the other neutral and non-allied EU member-states would include the planning and review process of the Partnership for Peace. Work was also being done on non-military crisis management.

Mr Cowen said the situation in the Federal Republic of Yugoslavia, particularly Serbia, remained a major source of concern, and the EU would keep selective sanctions in place for as long as President Milosevic stayed in power.

The Labour leader, Mr Ruairi Quinn, stressed that Ireland should be more pro-active at building alliances within the EU, particularly among incoming member-states. "We are a country with over 25 years' experience of members of the EU. Our diplomatic skills are respected and admired. We could offer worthwhile advice to the applicant member-states while expanding our own sphere of influence, particularly now that we are no longer dependent financially on the Union.

"Very soon, our membership of the EU will begin to cost us directly. We will be players and payers soon, and we should act accordingly."