October 18, 2008
Most of the media reporting of the meeting of the European Council in Brussels was, understandably, on the financial crisis. The following is a summary of all decisions, which is worth browsing, as it gives a flavour of the priorities and extent of current activities:(para numbers do not necessarily correspond to conclusions)
14 Oil price volatility
15 Irish referendum
16 Climate & environment
17 Security of energy supply
19 Immigration & Asylum Pact
21 Russia, Moldova, Georgia
23 Reflection Group.
1. Faced with financial crisis, determination confirmed to take coordinated and thorough action to restore smooth running of financial system, thus ensuring normal and effective financing of economy and returning to path towards growth and employment.
2. Measures taken by ECB and by relevant national central banks since beginning of financial crisis welcomed. They have coordinated efforts well with central banks of partner countries. Liquidity of financial system will be ensured by all authorities so as to maintain confidence and stability.
3. Concerted action plan of euro area countries of 12 October welcomed, of which it endorses principles, as well as measures adopted by Member States, whether or not they belong to euro area. Member States called upon to ensure that future national measures also respect those principles, and to take account of possible effect of their decisions on other Member States.
4. Commitment reaffirmed that necessary measures will be taken to preserve stability of financial system, to support major financial institutions, to avoid bankruptcies and to protect savers’ deposits. Inter alia, such measures aim, to ensure sufficient liquidity for financial institutions, to facilitate their funding, and to provide them with capital resources so that they can continue to finance economy properly. Measures to support financial institutions in difficulty should go hand in hand with measures to protect taxpayers, to secure accountability on part of executives and shareholders and to protect legitimate interests of other market players.
5. Exceptionally, European rules must continue to be implemented in
way that meets need for speedy and flexible action. Commission’s implementation of rules on competition policy supported, particularly
state aids, while continuing to apply principles of the single market.
6. Informal warning, information-exchange and evaluation mechanism (financial crisis cell) will be established. This mechanism will bring together representatives of Presidencies of Council, Commission, ECB, Eurogroup and governments of Member States. It will be based on existing administrative structures, may be activated at any time by Member State faced with crisis and will ensure that information is provided immediately and in confidence to institutions and all Member States. It will also help to ensure smooth coordination of actions taken or to be taken. Finalisation as soon as possible of procedures for setting up and operation of financial crisis cell, requested.
7. Maintaining confidence in financial and banking system and protecting the interests of depositors and investors also requires rigorous implementation by financial institutions of recommendations on transparency of their commitments and risks.
8. Need to strengthen supervision of European financial sector stressed, particularly cross-border groups, and to implement urgently Ecofin Council’s roadmap, with view to improving coordination of supervision at European level. Setting up of high-level group by the Commission welcomed. National supervisors to meet at least once a month, to exchange information. Speeding up of work to strengthen rules on stability supported, including work on Capital Requirements Directive. Speedy examination of Commission’s forthcoming legislative proposal to strengthen rules on rating agencies and their supervision at European level called for, and also speedy decisions on development of European rules on security of deposits to ensure that savers are protected. Decision taken concerning accounting standards applicable to financial institutions and their interpretation.
More general consideration, in consultation with international partners, on effects that value and mark-to-market accounting would have on financial institutions and on market, including their procyclical effects.
9. Firm call for accountability on part of all those involved in financial system, particularly banking sector. Real performance of company
executives should be reflected in their remuneration, including severance pay (“golden parachutes”), which should be in line with actual contribution to success of company. Care should be taken to ensure that earnings from stock options do not lead to excessive risk-taking or extreme concentration on short-term objectives. Member States to work to put these principles into practice and to report back on decisions taken by end of the year.
10. Determination underlined to take necessary steps to support growth and employment. Commission invited to make appropriate proposals by end of year, in particular to preserve international competitiveness of European industry. Continued structural reform emphasized, and more important than ever, to help restore growth and improve employment in Europe. Support for economic activity involves adequate level of finance. EIB’s decision, to mobilize €30 billion to support European SMEs and its commitment to step up its ability to intervene in infrastructure projects, welcomed. EIB called upon to assume greater share of risk in financing of SMEs.
11. Budget policies must continue to be in line with revised Stability and Growth Pact, which should also be applied in manner which reflects current exceptional circumstances, as provided for in its rules.
12. EU must work with its international partners on genuine, all-encompassing reform of international financial system based on principles of transparency, sound banking, responsibility, integrity and world governance. Aim is to take early decisions on transparency, global standards of regulation, cross-border supervision and crisis management, to avoid conflicts of interest and to create early warning system, so as to engender confidence among savers and investors in every country. Union will quickly take appropriate initiatives in consultation with its main partners and relevant international financial institutions.
13. Solidarity expressed with efforts made by Iceland, an EEA country, and expects Iceland to honour its international commitments.
14. Note taken of Presidency report, in cooperation with Commission, on oil price volatility, calling on Council to press ahead with its discussions and, in immediate future, requests Commission to take necessary action to promote transparency of commercial oil stocks, as well as energy efficiency in conjunction with the EIB in particular.
15 Analysis of results of Irish referendum on Treaty of Lisbon presented by Taoiseach Brian Cowen. Irish government will continue to find way to resolve situation at December 2008 European Council.
16. Determination to honour ambitious commitments on climate and energy policy approved in March 2007 and March 2008 confirmed. Presidency and Commission to organise intensive work over next few weeks in order to enable European Council in December 2008 to decide on appropriate responses to challenge of applying that package in rigorously established cost-effective manner to all sectors of economy and, having regard to each Member State’s specific situation.
17 . Security of energy supply is priority involving responsibility and solidarity of all Member States. To this end, taking account of report submitted by Presidency, decided to step up work in progress, by adopting following guidelines and requesting Commission to submit relevant proposals or initiatives, where necessary, to:
(a) finalise legislative package on internal market in electricity and gas before end of legislative period;
(b) expedite implementation of European Energy Efficiency Action Plan and Strategic Energy Technology Plan;
(c) pursue with determination diversification of energy sources, to which measures in energy/climate package contribute directly;
(d) promote improvement in working of market, in particular through greater transparency on flows and stockpiles and through sharing information on long-term requirements and resources;
(e) develop crisis mechanisms to deal with temporary disruptions to supplies;
(f) strengthen and add to critical infrastructure, particularly trans-European energy transport networks and liquefied natural gas terminals. Particular attention will be paid to interconnections and to connection of most isolated European countries, to interface of European networks with supply infrastructure and to need to diversify both sources and routes. Commission initiative of establishing a plan of action, to speed up interconnections in Baltic region, supported. Schedule of work will be drawn up before end of year;
18. Stock of progress will take place at European Council in March 2009, in light, also, of Commission’s forthcoming strategic energy review, and adopt necessary decisions.
19. European Pact on Immigration and Asylum adopted, which
expresses commitment to conduct fair, effective and consistent policy for dealing with challenges and opportunities which migration represents. Pact will henceforth form basis of common immigration and asylum policy, guided by spirit of solidarity between Member States and cooperation with third countries. This common policy must be founded on proper management of migratory flows, in interests not only of host countries but also of countries of origin and of migrants themselves.
20. Fundamental principles set out in Pact reflected in series of measures which will have to be implemented immediately and will also inform the future work programme to be proposed by Commission in May 2009. Implementation of Pact will be subject of annual debate starting with European Council in June 2010.
21. Notes with satisfaction that Russian troops have withdrawn from
zones adjacent to South Ossetia and Abkhazia as essential additional step in implementation of agreements of 12 August and 8 September, as well as launching in Geneva of international discussions provided for by those agreements.
Commission and Council to continue full in-depth evaluation of EU-Russia relations with view to forthcoming summit, in Nice on 14 November. It will be taken into account in further negotiations for new Partnership Agreement with Russia.
22. EU will continue, in particular through its neighbourhood policy, to support its eastern neighbours in their efforts to achieve economic modernisation and democratisation. Importance of outcome of EU-Ukraine Summit in Paris stressed. Relations between Union and Moldova and Georgia to be strengthened. Council to conduct initial examination of proposals for future “Eastern Partnership” of EU which Commission intends to submit in November.
23. To help Union anticipate and meet challenges more effectively in longer term (horizon 2020 – 2030), independent Reflection Group, established in December 2007, will start work as soon as possible to identify key issues and developments which Union is likely to face and to analyse how these might be addressed. Chairman: Felipe González Márquez, Vice-Chairmen: Vaira ViIe-Freiberga, Jorma Ollila: Members, Lykke Friis, Rem Koolhaas, Richard Lambert, Mario Monti, Rainer Münz, Kalypso Nicolaïdis Nicole Notat, Wolfgang Schuster, Lech WalesaAuthor : Stanley Crossick