European Council Meeting

25 Jun 2010

Tony Brown

The European Council meeting on 17 June 2010 was its first ‘normal’ meeting following the entry into office of Herman Van Rompuy as President of the European Council.

President of the European Parliament

It has been routine for the European Council meeting to begin with an exchange of views with the President of the European Parliament.   On this occasion the item, involving EP President Buzek, had much greater significance due to the enhanced role of the Parliament under the terms of the Lisbon Treaty.   A number of highly topical issues had reached the Parliament for consideration and, in many cases, co-decision and thus merited detailed discussion by the leaders.   These included arrangements for the establishment of the European External Action Service; the SWIFT system for co-operation in combating the financing of terrorism; and the new arrangements for financial supervision.       

New Faces

This was the first European Council meeting for UK Prime Minister, David Cameron, and a return to the Council for Hungary’s Viktor Orban.   David Cameron summed up his first experience in the House of Commons: “....this was a Council which delivered good outcomes for Britain.      Our Citizens don’t want new structures to talk about things – but a new resolve to actually do things....like getting to grips with our massive budget deficits...developing the Single Market...and building the conditions for strong, sustainable and balanced growth.  That’s what this Council was all about.”

Main Agenda Items 

President Van Rompuy commented after the meeting that, following earlier decisions concerning the stability of the Euro, “all colleagues were committed to use the same resolve to enhance our long-term economic strength.  It is just as vital!”     He went on to say that “we today finalised our new strategy for growth and jobs, the so-called ‘Europe 2020’.  It will set things in motion in the real economy.”   

 
Europe 2020

The Europe 2020 strategy sets targets for jobs and smart, sustainable and inclusive growth.  It aims at boosting competitiveness, productivity, growth potential, social cohesion and economic convergence and will have five headline targets:

 

        increasing the employment rate among 20-64 year-olds to 75%; 

        improving the conditions for research and development, with a renewed commitment to

        increase combined public and private R&D investment to 3% of GDP;

        reducing greenhouse gas emissions by 20% compared to 1990 levels, increasing the share of

        renewables to 20%, and moving towards a 20% increase in energy efficiency, reaffirming    

        the climate-change targets set in 2008;

        reducing school drop-out rates to less than 10% and increasing the share of 30-34 year-olds

        who have completed tertiary or equivalent education to at least 40%;

        promoting social inclusion, in particular by reducing poverty, with the aim of lifting at least

        20 million people out of the risk of poverty and exclusion.

 

Some of these targets are controversial – some saying they go too far, others say the opposite – and it is accepted that the Council agreement is the beginning of a process in which the main emphasis will be on the efforts of the individual Member States in implementing the various elements of the programme.  The previous Lisbon Agenda was criticized for the weakness of the mechanisms for implementation and monitoring and major efforts will be required to ensure effectiveness and accountability.

The Member States will prepare National reform Programmes setting out their plans in the key areas.    The EU common policies, including the Common Agricultural Policy, Cohesion Policy and External Trade Policy, will be needed to support the strategy.   The European Single Market will be taken to a new stage and the ‘Digital Agenda for Europe’ is highlighted, with its target of creating a digital single market by 2015.  

Economic Governance

President Van Rompuy presented an interim report of the Task Force on Governance.   

The European Council approved provisional conclusions on a stricter supervision of the budgets and of competitiveness, strengthening the Stability and Growth Pact, both in prevention and in correction. Everybody now acknowledges that economic decisions in one Member State concern us all.   From 2011, in the context of a ‘European Semester’ Member States will present to the Commission Stability and Convergence Programmes for the upcoming years, in line with national budgetary procedures.   National rules and budgetary frameworks will be assessed by the Commission and Council.   It was decided to be pragmatic in operational matters, with full recognition of the need to avoid creating dividing lines between the 27 EU-members and the 16 members of the Eurozone.   Due account will be taken of the respective circumstances of the two groups and economic governance must be undertaken in accordance in accordance with the roles of the institutions as laid down in the Lisbon Treaty.   

President Van Rompuy commented that “there is no need to create new institutions. It is essentially a matter of working together better. In this context, in accordance with the Treaty, the European Council intends to fulfil its role of setting political directions and priorities for the Union, including in economic strategy and governance.”

The issue of possible treaty changes to facilitate surveillance and improve economic governance must be addressed.   The concept of sanctions for non-compliant Member States could imply treaty change but there is little enthusiasm for pursuing treaty amendment in the aftermath of the Nice and Lisbon treaties.  
 

Financial Services

The European Council agreed that urgent action was required to restore the soundness and stability of the European financial system and the resilience and transparency of the banking sector.   It was agreed that the results of on-going Stress Tests on the largest banks in the EU  will be disclosed later in the summer.   This step was called for by Spanish Prime Minister Zapatero, conscious that despite the negative views of Spain in many quarters the major Spanish banks score well in stress tests.      

The European Council called for the legislative basis for the European Systemic Risk Board and the European Supervisory Authorities to adopted in time to permit them to operate in 2011. It wished to see anticipated proposals on  issues such as Investment Fund Managers, derivative markets, short selling and credit default swaps.

The European Council agreed that Member States should introduce systems of levies and taxes on financial institutions to ensure fair burden-sharing and to set incentives to contain systemic risk.    The Council also called for urgent action on the creation of a level playing field and on the cumulative impact of various regulatory measures.  
 

G-20 Summit at Toronto

The European Council confirmed the policy stance of the European Union in preparation for the G-20 Summit in Toronto.    In particular the Council underlined the need for the EU to lead efforts to set a global approach for introducing systems for levies and taxes on financial institutions with a view to maintaining a world-wide level playing field.   The Council agreed that the introduction of a global financial transaction tax should be explored and developed further in that context.


Additional seats for the European Parliament

The European Council adopted a Decision to pursue the procedures necessary to provide for an addition of 18 seats in the European Parliament covering the period to 2014 in accordance with its Declaration of December 2008.    This is necessary to give additional seats to twelve Member States in line with the numbers provided for in connection with the Lisbon Treaty which could not be implemented at the time of the 2009 European Parliament Elections, because of the situation in Ireland..    This will bring the number of MEPs to 754 until the end of the 2009-2014 term, after which the number will be reduced to 751 (by reducing German representation).  Ireland does not gain from this change.  
       

Millennium Development Goals

The European Council reaffirmed its commitment to achieve development aid targets by 2015 as agreed in 2005 and to support the achievement of the Millennium Development Goals globally by that date.    The European Council looked to the September session in New York  of the UN High Level Plenary Meeting on the Millennium Development Goals as an opportunity to strengthen collective efforts.    

Cancun Conference on Climate Change

The European Council noted the Commission’s continuing activity in respect of Climate Change in preparation for the Cancun Conference of the Parties to the Kyoto Protocol to be held in the Mexican city from 29 November to 10 December 2010.   
 

Iceland’s Application for EU Membership

The European Council decided that accession negotiations should be opened with Iceland, subject to the usual stringent conditions.    The financial and banking crisis in Iceland will be an important issue and the Commission Opinion on Iceland’s application dealt with this in detail.   No decision was made on progressing the application of Macedonia which has been recognised as a candidate but with no date for opening negotiations because of the continuing dispute between Macedonia and Greece concerning the name ‘Macedonia’.   Negotiations on the name issue are continuing under UN auspices, with US diplomat Matthew Nimetz acting as mediator. Media reports suggest that a solution may lie in adding the name of Macedonia’s longest river – Vardar – to the state’s name to differentiate it from the Macedonian province of Greece.


Estonia and the Euro

The European Council welcomed the Commission proposal that Estonia, having met all the convergence criteria, will adopt the Euro on 1 January 2011.

Report of the Reflection Group

The European Council expressed its appreciation of the work of the Reflection Group and commented that its report – ‘Project Europe 2030 – Challenges and Opportunities’ – will provide useful input for future work.      The report, drawn up by a group chaired by the former Spanish Prime Minister, Felipe Gonzalez, appears to have been sidelined with no proposals for concrete follow-up measures.     This is in contrast with the serious attention given by the Commission to the report of the former Commissioner Mario Monti on the reactivation of the Single Market which may prove controversial in Ireland and other Member States because of its suggestions on taxation policy.

  
Declaration on Iran

The European Council adopted a Declaration on Iran underling its deepening concerns about that country’s nuclear programme and welcoming the adoption by the UN Security Council of Resolution 1929 introducing new sanctions against Iran.     The Council invited the Foreign Affairs Council to adopt measures necessary to implement the UN provisions and further to take complementary or accompanying measures focusing on the area of trade, the financial sector, the transport sector and key sectors of the gas and oil industry.   New visa bans and asset freezes should be agreed, especially in respect of the Islamic Revolutionary Guard Corps. 

The European Council post-Lisbon

President Van Rompuy outlined the schedule of European Council meetings for the remainder of the year:

 

         September     External Relations post-Lisbon; External Action Service

         October         Economic Governance

         December      Innovation and Research

 

The European Council, under its new President, is evolving into its Lisbon role of providing the Union with the necessary impetus for its development and defining the Union’s general political directions and priorities.     While the first months of the new dispensation have been dominated by the economic and financial crisis the Lisbon system is clearly taking shape with Herman Van Rompuy rapidly establishing the role of President as set out in the Treaty: chairing the European Council and driving forward its work; ensuring the preparation and continuity of its work; facilitating cohesion and consensus within the Council.   

 

There are some questions concerning the effectiveness of the connection between the European Council, involving the Heads of State or Government, and the General Affairs Council, involving the Foreign and European Affairs Ministers, which is charged with preparation of the extensive, and growing, agenda.   The role of the Commission continues to be central to the overall system.     The enhanced position of the European Parliament, referred to above, is also significant.    The rotating Council Presidency has been subject to major change under Lisbon and the new arrangement is very much a work-in-progress.    The High Representative for Foreign Affairs and Security Policy/ Vice President of the Commission is settling into her complex role.     Bringing all of these elements together efficiently and effectively is an on-going task for all parties.

 

 

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