Brussels, 17/12/2010 (Agence Europe) - On Thursday evening 16 December, EU heads of state and government approved changes to the Lisbon Treaty to defend the eurozone by creating a permanent rescue fund in 2013. The president of the European Council, Herman Van Rompuy, said that the politicians had added a key factor to this year's work by deciding on a limited change to the Treaty that is required to set up a permanent mechanism to ensure the financial stability of the eurozone. The president of the Commission, Jose Manuel Barroso, commented that the EU is prepared to do all that is necessary to ensure the stability of the eurozone, describing it as a good day for Europe because they did what was needed and passed an extremely important agreement. He said that both Europe and the euro were stable, with a strong currency and EU27 and eurozone member states responding to problems with determination.
Agreement by Twitter. For the first time in the history of the European Council, the agreement was first announced by Van Rompuy on Twitter an hour and a half into the meeting, short-circuiting the usual diplomatic news channels. Under the pseudonym euHvR, Van Rompuy announced agreement on amending the Treaty, explaining that eurozone member states can set up a stability mechanism that can be activated if vital for safeguarding the stability of the eurozone as a whole. The granting of any financial aid under the mechanism will be subject to strict conditions, he said, describing the agreement reached by the EU's leaders.
Mechanism expected for June 2013. Article 136 of the EU Treaty will be changed in 2011. Germany demanded this legal guarantee as it feared punishment by its constitutional court because the current EU Treaty does not authorise the bailing out of bankrupt eurozone countries by other eurozone countries. Amended Article 136 will allow eurozone member states to set up a stability mechanism to be activated if vital to ensure the stability of the eurozone as a whole. By April 2011, the European Council will have confirmed this change, after consulting the European Parliament, the European Commission and the ECB, explained Van Rompuy. The changed article will then need to be endorsed by each member state. The idea is for each country to confirm the change in parliament, avoiding the problem of holding referendums. The United Kingdom, which is not in the eurozone, has said that it backs the change. In principle, a referendum would be required in Ireland, but it has said that it might also be possible for parliament to endorse the change. The president of the European Council said that the Treaty amendment should be in application by January 2013 in order for a permanent mechanism to come into force in June 2013. He added that the change would not change the EU's powers and only covered eurozone countries. He said the role of the private sector in the bailouts would be covered by decisions on a case-by-case basis.
Size of piggy-bank yet to be decided. The EU27 also agreed on how the new long-term financial aid system would work. In 2013, it will replace the current Luxembourg-based emergency action fund that can lend out up to €440 billion as part of a wider €750bn system including the IMF and the EU. No figures have been set for the new fund. Van Rompuy explained that this still needed to be decided upon. The Belgian prime minister, Yves Leterme, explained that the exact amount would be unveiled at the right moment but there was a common desire for the fund to have to the amount of money that would be needed. Van Rompuy said that very little use had been made of the current fund, only 4% of it, in fact, so the problem of increasing the fund's lending capacity was not an issue at the moment. The German Chancellor, Angela Merkel, said that the new emergency mechanism “had to be big enough”.
Meeting of minds over economic challenges. The president of the Council said that the EU27 politicians had discussed economic prospects and economic challenges, confirming the European Council's determination and unity. He said everyone agreed that fiscal responsibility needed to be increased, as did growth stimulation. They praised work undertaken by Greece and Ireland. Van Rompuy added that the European Council called on the other institutions to ensure that all the macroeconomic stability and surveillance decisions taken in October 2010 are implemented by next summer. He added that the EU heads of state had agreed to introduce annual bank stress tests. (B.C./A.By transl fl)