Europe gears up for global financial overhaul at Brussels Summit

European Union leaders last week stayed on track of the expected policy of agreeing to nod the financial package through but postponed the final agreement on climate change policy to the December Summit.

With the global economic slowdown feeding the gathering clouds of recession over national finances, French President Nicolas Sarkozy goaded the EU leaders not only to endorse the emergency measures for now but also got the mandate to address the long-term reforms for the international financial institutions. France holds the rotating EU Presidency for the second half of 2008 till the end of December.

In addition, the EU leaders endorsed a EU immigration package and put on hold the restart of frozen trade and partnership talks with Russia.

FINANCIAL DEAL

The Council conclusions called for “rigorous implementation by financial institutions of recommendations on the transparency of their commitments and risks,” to maintain “confidence in the financial and banking system and protecting the interests of depositors and investors.”

After the Summit, Sarkozy told journalists that all 27 EU leaders had agreed to back a plan to shore up the banking sector agreed to earlier by non-Eurozone EU member United Kingdom and the 15 Eurozone EU countries that use the Euro. The measures include increasing a guarantee on European bank deposits to be implemented within the next 12 months.

Coming down heavily on the company executives in the financial system, “particularly the banking sector,” the Council emphasised, "The real performance of company executives should be reflected in their remuneration including their severance pay (“golden parachutes”), which should be in line with their actual contribution to the success of the company.”

The Council reiterated the call to save the common citizen, “(The European Council) calls for speedy decisions on the development of European rules on the security of deposits to ensure that savers are protected,” adding that the European Commission’s forthcoming legislative proposal are in the need for a “speedy examination.”

Making an explicit mention of the European car industry to be given EU support to develop cleaner technology, Sarkozy called on EU governments to forge a common economic policy, saying: "If we can find a coordinated response to the financial crisis, why not find a coordinated economic policy?"

Addressing journalists Sarkozy asked: “Does economic policy need the same coordination as the financial crisis? From this presidency’s point of view: yes, yes, yes. Is that unanimous? For the moment: No, no, no.”


His observations were reflected in the final conclusions as the EU leaders asked the European Commission to “make appropriate proposals by the end of the year, in particular to preserve the international competitiveness of European industry,” adding, “continued structural reform is more important than eve, to help restore growth and improve employment in Europe.”

WORLD FINANCIAL REFORMS

British Prime Minister Gordon Brown pushed the Council to shift gears to the second stage of overhauling the global financial institutions and French President as the Chair got bestowed with admiration as Sarkozy was handed an EU mandate to press for a complete overhaul.

"We do not have the right to miss this opportunity for reconstructing our system of finance in the 21st century," Sarkozy said. "We have a mandate now to discuss this with the President of the United States."

Europe's proposed solutions will be discussed with US President George W Bush on Saturday (October 18) and with Group of Eight and Asian leaders in a special summit which Sarkozy said he hoped would take place some time in November.

IMMIGRATION AND ASYLUM BLUES

The Summit formally approved a European Pact on Immigration and Asylum which was earlier adopted by the Justice and Home Affairs Council of Ministers on September 25. The commitment came with the worsening situation in the Mediterranean Sea belt area especially on the shores of Malta, a small EU island member state where there is a regular influx of migrants from North Africa.

Defining the aim of the Pact, the conclusions said, “The Pact will henceforth form the basis, for the Union and its Member States, of a common immigration and asylum policy, guided by a spirit of solidarity between Member States and cooperation with third countries.”

Acknowledging that the burden of asylum-seekers entering the bloc should be shared out among member states, the EU leaders said in an annex to the Pact, “For those (EU) member states which are faced with specific and disproportionate pressures on their national asylum systems, due in particular to their geographical or demographic situation, solidarity shall also aim to promote, on a voluntary and coordinated basis, better reallocation of beneficiaries of international protection from such member states to others.”

"In accordance with those principles, the (European) Commission, in consultation with the Office of the United Nations High Commissioner for Refugees ... will facilitate such voluntary and coordinated reallocation," they added. 


RUSSIAN TIES REMAIN FROZEN

British Premier Brown with the help of Poland, Sweden, Denmark, the Baltic states and the Czech Republic kept the lid on the frozen negotiations with Moscow on a the Partnership and Cooperation Agreement (PCA). The EU had suspended talks in September after Russian military engagement with Georgia in August caused deep unease in some of the EU capitals especially ones that are former Soviet Union states.

"All 27 EU member states welcome the withdrawals, while recognizing that they do not completely finish Russia's commitment under the peace plan of August 12," said British Foreign Minister David Miliband.

The official conclusion document read, “The European Council is asking the Commission and the Council to continue a full in-depth evaluation of EU-Russia relations with a view to the forthcoming summit, scheduled to take place in Nice on 14 November,” adding, “it will be taken into account in the further negotiations for a new Partnership Agreement with Russia.”

According to French sources, Paris along with the tacit support of Rome and Berlin had hoped to announce the resumption of the talks at the Brussels Summit.

LISBON TREATY

The lingering question of Lisbon Treaty again came up for discussions. Speaking to journalists, Sarkozy announced a need for him to make another trip to Dublin adding that in December "I should be able to put on the table a proposal concerning Ireland."

As the Council took note of analysis presented by Irish Taoiseach Brian Cowen over the rejection of the EU's reforming Lisbon Treaty, Cowen told journalists that EU legal experts have now been drafted to help break the deadlock, saying, “The presidency has asked the (European) Council legal services to engage with us to see what can be achieved.”

Asked whether Dublin would eventually hold a second referendum on the ratification of the Treaty, Cowen replied, "you are asking me to anticipate the process that we are now engaged in." Recalling that Irish voters needed two referendums before finally approving the EU's preceding Nice Treaty in 2002, Cowen said, “We had a referendum on the last occasion obviously.”
In its conclusion, the Council, “agreed to return to this matter at its meeting in December 2008 with a view to defining the elements of a solution and a common path to be followed.”

REFLECTION GROUP

Last but not the least, the Council approved the composition of a twelve-member group with Chairman Felip Gonzalez Marquez, former Spanish Prime Minister and two vice-chair, Varika Vike-Freiberga and Jorma Ollila. Other nine members of the group are Lykke Friis, Rem Koolhaas, Richard Lambert, Mario Monti, Rainer Munz, Kalypso Nicolaidis, Nicole Notat, Wolfgang Schuster and Lech Walesa.

Conceived by Sarkozy, the reflection group is assigned the task to look into the EU future in the time zone of 2020-30 and is expected to submit its report in 2010, starting work in early 2009.