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Brussels European Council - Presidency Conclusions on the financial crisis, energy security, climate change, and the Eastern Partnership

The European Council expressed confidence in the ability of the EU to tackle the financial and economic crisis. Reviewing the considerable fiscal stimulus now being injected into the EU economy (over €400 bn), it emphasised that concerted action and coordination were an essential part of Europe's strategy for recovery and emphasised that Europe would do all that was necessary to restore growth. It further emphasised that the single market was central to making the recession in Europe shorter and less severe. Stressing the need to get lending flowing again to businesses and households, it agreed to speed up agreement on pending legislative proposals on the financial sector. In June, the European Council will take first decisions to strengthen EU financial sector regulation and supervision, to be based on Commission proposals following thorough discussion in the Council on the de Larosière report. Based on the EU's own experience and desire to contribute significantly to shaping the future international governance of the financial sector, it defined the Union's position with a view to the G20 Summit in London on 2 April.

The European Council also reverted to the issue of energy security. It specifically agreed on orientations for setting up a crisis mechanism to deal with disruptions of supplies. It took further steps in preparation of the Copenhagen Conference on climate change. Finally, it agreed a Declaration launching the Eastern Partnership.

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The meeting of the European Council was preceded by an exposé by the President of the European Parliament, Mr Hans-Gert Pöttering, followed by an exchange of views.

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I. Economic, financial and social situation

Tackling the global economic and financial crisis is one of the most important challenges the EU has ever faced. By acting together, the EU can put its financial sector on a sound footing, get credit flowing to the real economy and protect its citizens from the worst impacts of the crisis. Measures taken to support recovery can also be shaped to help the EU to build a stronger economy for the future.

Building confidence and promoting financial stability

1. The European Union is committed to restoring confidence and the proper functioning of the financial market, which is an indispensable precondition for the way out of the current financial and economic crisis, building on the outcome of the Berlin Summit of 22 February 2009 and the G20 ministerial meeting of 14 March 2009.

2. The guarantee and early recapitalisation measures taken by Member States within the framework of common principles have prevented a financial meltdown. However, further measures may be necessary for restoring the functioning of credit markets and facilitating the flow of lending to the real economy, including by dealing with impaired banking assets on the basis of full disclosure to supervisory authorities. The European Council calls on the Member States to act in a coordinated manner, in line with the guidelines provided by the Commission communication of 25 February 2009 and in full respect of competition rules. The Council is invited to assess the effectiveness of the measures taken as well as the overall situation regarding the stability and functioning of financial markets and to report back to the June 2009 European Council. With regard to the banking sector, support for parent banks should not imply any restrictions on the activities of subsidiaries in EU host countries.

3. The magnitude and the underlying causes of the ongoing global financial and economic crisis demonstrate the need to reshape macroeconomic global management and the regulatory framework for financial markets. Prudential rules, crisis management arrangements and the supervisory framework must be strengthened at the national, European and global levels. Financial regulations should dampen rather than amplify economic cycles. The European Council urges the FSF, Basel Committee on Banking Supervision and Commission to accelerate their work and to swiftly submit appropriate recommendations. This should be complemented with a strong EU initiative in reviewing international accounting standards.

4. In this connection, the European Council calls on the Council and the European Parliament to rapidly reach agreement on the legislative acts relating to credit rating agencies, the solvency of insurance companies, the capital requirements for banks, and cross-border payments and electronic money, so as allow their adoption before the parliamentary recess.

5. The European Council agreed on the need to improve the regulation and supervision of financial institutions in the EU and that the report from the High Level Group on financial supervision chaired by Jacques de Larosière is the basis for action. The Council is instructed to examine the report, as well as the proposals from the Commission, on strengthening EU financial sector regulation and supervision with a view to first decisions at the June 2009 European Council. More detailed legislative proposals will follow in the autumn. Work should also be taken forward speedily on the forthcoming Commission proposals on hedge funds and private equity, on executive remunerations and on further strengthening capital requirements.

Getting the real economy back on track

6. The European Council expresses its confidence in the medium and long term outlook of the EU economy and its determination to do what is necessary to restore jobs and growth. By continuing to work in a coordinated manner, within the framework of the Single Market and EMU, the EU will overcome the crisis and emerge stronger.

7. Good progress has been made in implementing the European Economic Recovery Plan adopted last December. Although it will take time for the positive effects to work their way through the economy, the size of the fiscal effort (around 3.3% of EU GDP or over €400 billion) will generate new investments, boost demand, create jobs and help the EU move to a low-carbon economy.

8. The European Council reached an agreement¹ on the Community part of the European Economic Recovery Plan, in support to projects in the field of energy and broadband internet as well as CAP Health Check related measures. The European Council calls on the Presidency to accelerate contacts with the European Parliament with a view to the Council and the European Parliament reaching agreement before the parliamentary recess.

9. Overall, some €30 billion are being made available from EU resources. The European Council welcomes the progress reached in particular on advanced payments from the structural and cohesion funds, the agreement on the application on a voluntary basis of reduced VAT rates as well as on the EIB actions to boost SME financing possibilities. It calls for a swift agreement to be reached regarding the revision of the European Globalisation Adjustment Fund.

10. Measures taken by Member States to support the real economy and employment should be implemented in a timely, targeted and temporary manner, while respecting the following guiding principles: promoting openness within the internal market and vis-à-vis third countries; ensuring non discrimination of products and services from other Member States; ensuring consistency with long-term reform objectives. To that end Member States and the Commission should share information and best practices and pool their efforts to generate synergies. In particular, the Commission's communication of 25 February 2009 establishes an important framework for action in support of the automotive sector, including enhanced European coordination of schemes for the renewal of car fleets.

11. Continuing implementation of agreed recovery measures is crucial both at national and Community levels. The Commission and the Council are invited to evaluate and monitor measures undertaken and report back to the June 2009 European Council.

12. The European Council reaffirms its strong commitment to sound public finances and to the Stability and Growth Pact framework. Member States should return to their medium-term budgetary objectives as soon as possible, keeping pace with economic recovery and in conformity with the Stability and Growth Pact, thereby returning to positions consistent with sustainable public finances as soon as possible.

13. Macro-financial stability is an essential element for the resilience of the European economy as a whole. Stressing the solidarity between Member States as a fundamental value of the EU, the European Council invites the Commission and the Council to take the necessary measures in order to be prepared, if needed, to act on a case-by-case basis, on the basis of all available instruments and where appropriate in close cooperation with International Financial Institutions. In particular, the Community stands ready to provide balance of payments support for eligible Member States that need it and, to this end, welcomes the Commission's intention to make a proposal for doubling the ceiling for the Union's support facility for balance-of-payments assistance to 50 bn euro.

Making full use of the renewed Lisbon Strategy for Growth and Jobs

14. In the current crisis, the renewed Lisbon Strategy, including the current Integrated Guidelines, remains the effective framework for fostering sustainable growth and jobs. The crisis underlines the need to pursue and accelerate structural reforms, which will bolster the credibility and impact of stimulus measures. The short-term measures taken by the EU and the Member States will bring maximum benefits if they are in line with the medium- and long-term objectives of the Strategy.

15. The European Council endorses the updated country-specific integrated recommendations for the economic and employment policies of the Member States and calls for their swift implementation. In this context, the European Council looks forward to the proposals on the post-2010 Lisbon Strategy the Commission will present during the second half of this year.

16. Work should be speeded up and concrete measures taken urgently in the following areas: removing barriers while preventing the creation of new ones and achieving a fully operational internal market; further reducing administrative burdens; improving framework conditions for industry in order to maintain a strong industrial base and for businesses with a special focus on SMEs and innovation; encouraging partnership between business, research, education and training; and stepping up and improving the quality of investment in research, knowledge, and education. In particular as regards the reduction of administrative burdens, the Commission is invited to present all proposals in each of the 13 priority areas before the end of its mandate. The strategic framework for European cooperation in education and training is of vital importance.

17. In line with the conclusions of its December 2008 meeting the European Council recalled the fundamental role of telecommunications and broadband development in terms of European investment, job creation and overall economic recovery. Taking account of the risks taken by the investing undertakings, efficient investment and innovation in new and enhanced infrastructure should be promoted. To this end, various cooperative arrangements between investors and access seeking parties to diversify the risk of investment should be permitted, whilst ensuring that the competitive structure of the whole market and the principle of non-discrimination are maintained. In this context, it invites the Commission to develop a European broadband strategy, by the end of 2009, in close cooperation with stakeholders.

18. Recognising that free and fair trade is a key element for global recovery, the European Council calls for a swift conclusion of bilateral trade negotiations and of the WTO Doha Development Agenda.

Tackling the social impact of the crisis

19. The rapid increase of unemployment is a cause of great concern. It is important to prevent and limit job losses and negative social impacts. Stimulating employment, in particular by promoting the acquisition of the new skills required by new jobs, is also a priority. Building on solidarity and allowing social protection systems to fully play their role as automatic stabilisers are key to restoring and strengthening confidence and help pave the way for recovery. Mobility has also proven to significantly contribute to economic growth. Particular attention should be given to the most vulnerable and to new risks of exclusion.

20. The Employment Summit to be held in May 2009 will allow for an exchange of experiences on the extent to which the recovery measures taken have succeeded in supporting employment. It will examine in particular issues such as maintaining employment levels through flexicurity and mobility, upgrading skills and anticipating labour market needs, with a view to identifying concrete orientations. It will also be an opportunity to look at strengthening and restructuring the labour market so as to prepare it for the future. The Summit will be prepared in cooperation with all relevant stakeholders, including the social partners.

Working together at the global level

21. A global crisis requires global responses. Coordinated and timely action is necessary to put the global economy back on track towards recovery. In line with the outcome of the Berlin Summit and the G20 ministerial meeting, the EU is doing its part to support demand and will take what action is necessary. Our efforts need to be adequately reflected at the international level.

22. The European Union will take a leading role at the global level in promoting a swift return to sustainable economic growth; strengthening our ability to manage crises; bringing forward the reform of financial markets; and supporting developing countries in order to avoid putting at risk the progress achieved in recent years, thus undermining their economic and political stability. The G20 Summit in London has a crucial role to play in reshaping the global financial system and rebuilding the confidence of economic actors across the world. To that end, the European Council adopts the joint position set out in Annex 1 and invites the Council and the Commission to ensure appropriate follow-up to the Summit.

23. On these matters, the European Union will seek to promote multilateral consultative mechanisms in which regional groupings could participate.

II. Energy and climate change

Enhancing the Union's energy security

24. Energy security is a key priority which needs to be enhanced by improving energy efficiency, diversifying energy suppliers, sources and supply routes, and promoting the Union's energy interests vis-à-vis third countries. In order to deliver on energy security, the EU collectively, as well as each Member State, must be prepared to combine solidarity with responsibility. In that light, the European Council endorses the broad initiatives set out in the Second Strategic Energy Review (SER) and further refined in the Council (TTE) conclusions of 19 February 2009. In particular, it agrees on the following:

Preparing the Copenhagen Conference on climate change

25. The European Union remains committed to playing a leading role in bringing about a global and comprehensive climate agreement in Copenhagen in December 2009 designed to limit global warming to below 2ºC. To this end, the European Council recalls the EU's commitment to a 30% emission reduction as its contribution to such an agreement provided that other developed countries commit themselves to comparable emission reductions and that advanced developing countries contribute adequately according to their responsibilities and respective capabilities. The Council conclusions of March 2009 set out in more detail the efforts the EU expects from developed and developing countries, including the need for the overall target for developed countries to be distributed in a manner that is fair and ensures the comparability of efforts.

26. The European Council emphasises the importance of building a global carbon market, including a reformed Clean Development Mechanism.

27. Significant domestic and external sources of finance, both private and public, will be required for financing mitigation and adaptation actions, particularly in the most vulnerable developing countries. The European Union will take on its fair share of financing such actions in developing countries. Future discussions on generating financial support should focus on, inter alia, different approaches, including a contributory approach based on an agreed scale , market-based approaches based on auctioning arrangements or a combination of these and other options.

28. The European Council will further discuss these issues at its June meeting. The European Council underlines the need to explore in more detail international financing mechanisms. It will determine well in advance of the Copenhagen Conference 1) the EU positions on main approaches for financing mitigation, adaptation, technology support ands capacity building, 2) the specifics of the EU's contribution and 3) principles of burden sharing among Member States. This will be done on the basis of concrete proposals by the Commission. In this context, the European Union will pay special attention to the needs of the most vulnerable developing countries.

III. European Neighbourhood Policy

Eastern Partnership

29. Promoting stability, good governance and economic development in its Eastern neighbourhood is of strategic importance for the European Union. In line with the Commission communication of 3 December 2008, the European Council welcomes the establishment of an ambitious Eastern Partnership and adopts the Declaration annexed to these conclusions. It calls for all necessary preparations to be made for the Eastern Partnership launching summit with the partner countries on 7 May 2009.

30. The Eastern Partnership will promote stability and prosperity among the EU's Eastern partners covered by the European Neighbourhood Policy. The European Council commits, on the terms set out in the declaration, to a deeper bilateral engagement and to a new multilateral framework involving the EU, Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine, aiming at accelerating reforms, legislative approximation and further economic integration.

31. The European Council further calls on the Commission as well as the current and incoming Presidencies to advance speedily with the practical implementation of the Partnership together with the partners and requests the Commission to submit in due course a report on the first year of implementation of the Eastern Partnership.

Union for the Mediterranean

32. The European Council reiterates its will to strengthen its partnership with its southern Mediterranean partners. It calls for the resumption of the implementation of the projects identified at the Paris Summit. In this connection it is important to accelerate work on the establishment of the Union for the Mediterranean permanent secretariat in Barcelona.

IV. EU - US Relations

33. The European Council was informed by the Presidency of the state of play of preparations of the informal EU-US Summit that will be held on 5 April 2009 in Prague. The European Council reaffirms the strategic importance of transatlantic relations. It agrees that economic issues, energy security and climate change and the strategic approach towards the area between the Mediterranean Sea and the Caspian Sea should in particular be discussed.

V. Treaty of Lisbon

34. The European Council was informed of the state of play on implementing its conclusions of December 2008 on the Treaty of Lisbon. It will revert to this issue at its June 2009 meeting.

35. As a point of information, the Prime Minister of the Czech Republic reported about the state of ratification of the Lisbon Treaty in the Czech Republic. After the judgment of the Czech Constitutional Court on 26 November 2008, the Chamber of Deputies of the Czech Parliament has authorised this ratification on 18 February 2009³ and the Senate will debate this subject in the coming weeks.
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¹ The agreement is set out in document 7848/1/09 REV 1 which will be subject to legal finalisation.

² Southern Gas Corridor, a diverse and adequate LNG supply for Europe, effective interconnection of the Baltic region, the Mediterranean Energy Ring, adequate North-South gas and electricity interconnection within Central and SE Europe and the North Sea and North West Offshore Grid.

³ On this occasion, the Czech Parliament recalled that the implementation of the Treaty of Lisbon, when it enters into force, will have to respect general principles of law, including the principle of non-retroactivity and the principle of subsidiarity.

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