I almost want to quote the maxim attributed to Mr Talleyrand: that which is excessive does not count. I refer to some of the more extravagant comments on the result of the European Council: the political Europe is born, Europe has saved the world from the financial crisis, Europe shows the way to resolve the problem of climate change, Mr Sarkozy should be made the President of the Union for life... let us not take things too far. Europe has done what it could and what it had to do, to the advantage of all. But we know that enthusiasm is a fleeting thing: the chorus of laments and accusations will take the first opportunity of an encore. Let us instead try to understand what is sometimes just an undercurrent in the Conclusions of the Summit on two essential dossiers: the financial crisis and the Energy/Climate plan (with a few comments on some of the others).
A. Financial crisis. The European Council took on board what had already, in practice, had been decided upon by the Eurogroup and between the Member States which make up the "Group of eight", and already approved by the Ecofin Council earlier in the week (again, with the active involvement of the European institutions and bodies such as the European Commission and the European Central Bank). Mr Pöttering rightly reminded the Summit that the European Parliament will be co-legislator for the texts which will make the new management of the financial markets a reality: without the EP, nothing can be done beyond emergency measures.
On a somewhat delicate and controversial subject, that of the creation of a European supervisory body of the banks and other financial institutions, Mr Pöttering anticipated that the EP will recommend that this supervision is entrusted to a college of national supervisors. Previously, the Parliament had taken position in favour of a supervisory body for financial stability at EU-scale, to be chaired by the president of the ECB and housed within the Bank's premises. The European Council stated that initially, the national supervisors would meet at least once a month. The road to European supervision thus seems to be partially open, even though it is an open secret that misgivings persist on the part of the national control bodies and in financial circles, and that these are shared by a number of finance ministers. The president of the European Parliament explicitly referred to the figure of "44 establishments" to be monitored as a priority, referring to the comment of Mr Barroso that there are around 8000 banking organisations in the EU, but that two thirds of their assets are in the hands of 44 cross-border organisations, most of which are active in at least six Member States. This clarifies and simplifies the job of European supervision.
The main decision of the Summit in this area is, unsurprisingly, the creation of the financial crisis cell (paragraph 6 of the Conclusions), which will soon be operational and will be the hub of the management of any future crises, coordinated at European level.
The European way. The orientations stated in the Conclusions should, in my opinion, be accompanied by an effort at clarification/explanation, aimed at those who essentially believe that the authorities are saving the banks and the world of finance at the cost of the taxpayer, including the citizens. This impression is highly understandable, but bears no relation to the truth. The deposit guarantee, an essential part of the strategy agreed upon, aims to save the often modest savings of those who have struggled over years, even over tens of years, to put aside a bit of money which would literally have vanished into thin air. The very existence of the public guarantee reassures savers and prevents a run on the banks, which means that it will not, in most cases, involve any pay-out of public money. The EU has not copied the initial American model aiming to purchase from banks shares which are no longer worth anything (on which the same banks had speculated, despite this fact, whilst imposing higher interest rates). The European way provides for the public purchase of shares from struggling banks, so that the States will then own them. We may be sceptical and wonder why the banks would work any better once nationalised. There are two elements to the answer: a) getting rid of unacceptable abuses, scandalous paycheques, "golden parachutes" set at levels which are almost impossible to imagine and paid even when their management actions were disastrous. In other words, a cleansing of expenditure and management savings; b) past experience. In the two countries (South Korea and Sweden) which have carried out the large-scale experiment of public rescue, by taking ownership of struggling banks at low cost, the operation was broadly positive, because the banks, once cleansed, were then sold off again afterwards, at considerable profit.
B. Climate/Energy plan. The European Council confirmed the objective of reaching an agreement by the end of the year. This is an important observation to make, because the day before, there were at least two "vetoes", tabled by Italy and Poland, which feared the impact the environmental rules would have on their industries. Confused or concerned countries received a few mollifying sentences on the fact that account would be taken of the specific situation of each country and defining a satisfactory and rigorously established cost-effectiveness ratio. They support both aspects of the plan at the same level: a) neither scaling down ambitions nor delaying the timetable; b) not forgetting that the production of goods by the manufacturing industry represents the basis of the European economy. We don't have to repeat the 2000 to debate on this subject! It is, therefore, vital, if we are effectively to reconcile the environmental element with the economic one and if the commitments are to be accepted by everybody at global level. Beyond a few notable phrases by the Italian Prime Minister, the Foreign Minister, Franco Frattini, commented: "the objective is to reach a unanimous agreement in principle in December; without imposing the solution of anybody in particular, we will reach a satisfactory compromise". A compromise instead of a veto: this is not the same thing.
Something a major player in the world of industry said struck me: "in any event, we will continue to produce, that is our job. The question is whether we can continue to do so in Europe or whether we will have to go elsewhere, where the commitments and rules are less binding". Which effectively means that the EU, by refusing to give up its objectives and ambitions, will be obliged, in the absence of international rules, to protect itself from goods which do not respect similar rules and standards, if we hope to save both the planet we are to bequeath to our children and the economy of Europe. A step towards this conclusion already exists at international level in a number of sectors, notably wood. But it should be borne in mind that a number of studies and the experience of certain countries have shown that environmental standards themselves can have a positive economic effect on the countries which apply them.
Nothing new on two essential dossiers. There would be much to say about other aspects of the Conclusions of the summit, regarding: a) the draft "new Bretton Woods" (see this section in bulletin's 9753 and 9756). This is confirmed, but in fairly mealy-mouthed language, because the opinions and preferences of the other world players will also have to be taken into account (the next job will be to turn the G8 not into a G14, but into a G16); b) the adoption of the European pact on immigration and asylum (see this section in bulletin 9752, but I will be returning to this topic); c) energy security, on the basis of an excellent document by the Presidency (amply summed up in our bulletin 9762). Furthermore, all aspects of the debates on the European Council have been commented on in yesterday's edition of our bulletin, and the text of the Conclusions was reproduced at the same time in our EUROPE/Documents series (2506).
The Summit did not really have anything new to bring to the dossier on the ratification of the Lisbon Treaty, nor to the one on relations with Russia (it is quite reasonable, on this subject, to express surprise at the faux pas made by Russian diplomacy in the meeting held by the UN in Geneva on 15 October). The almost total silence of the Summit on both of these dossiers is a good reason to devote a few specific commentaries to them next week. (F.R.)
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@@@ Ipse Dixit: José Manuel Barroso on the absolute need for a stable presidency of the EU after the European Council of 15 and 16 October: " It is vital for a Europe of 27 for there to be leadership of the governments themselves as well (...), to lead the Member States we need a very strong presidency. Ok! I do not know whether we are in a position to propose to President Sarkozy that he take on the presidency of the European Council, I do not believe he would wish it, after his experience of recent months, but in any case, I would certainly vote for him". And as for the French President, he would vote for Mr Barroso for the Presidency of the Commission. (A.B.)
@@@Media: "There have never been so many journalists following these issues. Over the last two days, I have been pleasantly surprised by the major presence and the freshness of the questions of the journalists". Jérôme Vignon, director of DG Employment, Social Affairs on Equal Opportunities, after the seventh European Round Table on poverty and social exclusion, which was held in Marseille on 15 and 16 October. A possible explanation for this sudden attraction: the European Commission invited some 40 journalists- of the 50 who were present- and paid for their travel to and stay in Marseille. (L.B.S.)