Outcome of the European Council, Brussels, 13-14 December 2012

I am pleased to brief the House on the outcome of last week’s European Council meeting in Brussels on 13 and 14 December. This was of course the final Council meeting before our Presidency begins in less than two weeks.

The meeting focused upon economic policy, but also covered common security and defence, enlargement and foreign affairs. I am happy to report that progress was made on all issues, and in particular on Economic and Monetary Union and in delivering the commitments agreed by the Council last June.

Discussion with the President of the European Parliament

The meeting began on Thursday evening with the usual engagement with the President of the European Parliament, Martin Schulz.

He made a call on leaders to improve democratic accountability within EU decision making, making the reasonable point that many would struggle to explain the full range of measures deployed in response to the Eurozone crisis to an ordinary person in the street.

As we in Ireland know very well, this is a vitally important question. Issues debated at EU meetings – including at the European Council – are certainly complex, but we need to factor in the legitimacy that can only come through public engagement and understanding.

Improving the perception of the EU and the Eurozone will be an important aspect of our Presidency and 2013 – including through the discussion that will take place at the informal meeting of Ministers for European Affairs that will be held in Dublin in January.

As the House is aware, next year is also the European Union Year of the Citizen. We will engage closely with the European institutions in making this a meaningful exercise. None of us can take our electorates for granted.

Banking Union

I said last week when I briefed the House that progress on banking union – and especially the Single Supervisor – was of pressing urgency not just for Ireland, but for the euro area as a whole.

The breakthrough agreement by EU Finance Ministers – including Minister Noonan – in the small hours of Thursday morning was therefore particularly welcome. They agreed and set out an ambitious timetable for the next elements of banking union and a framework for the Single Supervisory Mechanism.

That agreement provides for a differentiated approach to supervision depending on the size and significance of the banks concerned. It provides for equal treatment for euro-area and non-euro area Member States to allow banking union to be attractive to all 27 Member States and to protect the single market. Smaller institutions will not automatically come under the direct supervision of the European Central Bank, but the ECB will remain responsible and will be able to step in to supervise these institutions.

The European Council built upon this by setting a deadline for the operational framework for the SSM, to be agreed as soon as possible in the first semester of 2013.

This process will include giving a definition to what is meant by “legacy assets”. It was also made completely clear that this process will ultimately allow the European Stability Mechanism to recapitalise banks directly. The specifics remain to be considered, but this is clearly an important development of our consistent position over the course of this year.

The deal on a single supervisor means that we can now move on with the next elements of banking union, which include the harmonisation of national recovery and deposit guarantee schemes.

For these measures the European Council confirmed an ambitious timetable; with Council to agree in March and co-legislators to agree by the end of June. Ensuring these deadlines are met will be a key task for our Presidency.

It was agreed that after a Single Supervisor Mechanism is in place, the next logical step is the creation of a Single Resolution Mechanism. On this, the Commission have been asked to submit a proposal next year with the aim of it being adopted before the European Parliament elections in 2014. The mechanism is to be based on contributions by the financial sector and feature effective backstop arrangements.

Taxpayers will not carry the cost. It will have the necessary powers to ensure resolution for any bank in participating Member States.

In keeping with our clear and consistent position, the European Council also agreed that the immediate priority is to complete and implement the measures that have already been agreed, including the “six-pack”, Stability Treaty and “two-pack”, alongside adopting the SSM and other related banking legislation. In particular, it called for the Council and the Parliament to ensure that the “two-pack” is rapidly adopted.

Completing EMU

Last week’s European Council meeting also made important progress on mapping out the way ahead on Economic and Monetary Union.

I set out the background to the discussion of this issue in my pre-Council statement last week, in particular highlighting President Van Rompuy’s Report, the “Blueprint” by the European Commission, and the draft European Council conclusions, which at that stage included a sequence of structured steps for the strengthening of EMU.

The outcome of last week’s meeting mainly focuses on the short to medium term and ties in directly to Irish interests and concerns.

In his report to the meeting, President Van Rompuy set out an ambitious programme for developing EMU which extended beyond the European Parliament elections in 2014. It fuelled an important and interesting discussion on what is one of the most pressing issues facing the Union.

Deepening Economic and Monetary Union is necessary if we are to underpin the euro as a stable and credible currency, which the Government strongly supports as a vital national and European interest.

However, as I highlighted to the House last week, it was clear to me that there were elements in President Van Rompuy’s report that required greater explanation and elaboration. Those issues were at the heart of what we discussed last week, where my assessment was widely shared, and it was agreed that further work is required in the period ahead before we are in position to take concrete decisions on the way forward.

This was especially true of the possible creation of agreements of a contractual nature with Member States and of solidarity mechanisms for the Eurozone.

Following our discussion, therefore, President Van Rompuy will now consider and consult further, and will present a time-bound road map on the following four issues to the June 2013 European Council:
coordination of major economic reforms in the Member States;

• the social dimension of EMU;
• the feasibility and modalities of contracts for competitiveness and growth between governments and EU institutions; and
• solidarity mechanisms to enhance the efforts made by States that enter into these arrangements.

On the first of these – coordination of economic reforms – the Commission is to bring forward a proposal in the context of the European Semester, building on Article 11 of the Treaty on Stability, Coordination and Governance.

Clearly, new steps towards strengthening economic governance need to be accompanied by stronger legitimacy and accountability. I will be pressing to ensure the involvement of European and national Parliaments.

We also agreed that to improve Governance within the euro area, building on the provisions of the Stability Treaty, the Heads of State or Government of the euro area will adopt rules of procedure for Euro Summit meetings in March of next year.

Annual Growth Survey
To shape our ongoing work in the immediate period ahead, the European Council welcomed the Annual Growth Survey recently published by the Commission which launches the 2013 European Semester process. Ensuring that this is handled efficiently and effectively will be a key priority for our Presidency.

The Growth Survey will now be considered in the various relevant Council formations, with a view to the Council providing its views to the March 2013 meeting of the European Council, which will agree on the guidance to be given to Member States on the preparation of their Stability and Convergence and National Reform Programmes.

We also asked the Commission to include an assessment of labour and product market performance in its next Annual Growth Survey with a view to promoting jobs and growth.

Single Market

The European Council also gave close consideration to completion of the Single Market, which is a key priority for the Irish Presidency. Last week’s Conclusions call on the Council and Parliament to conclude the remaining Single Market Act I files as a matter of urgency, in particular those on Professional Qualifications, Public Procurement, Posting of Workers and E-signatures. It also called on the Commission to present all key Single Market Act II proposals by spring 2013, and for the Council and Parliament to assign them the highest priority.

As Presidency, Ireland will prioritise these Single Market and Digital Single Market actions: the untapped potential of the EU’s Single Market has an important contribution to make to delivering the jobs and growth agenda. We will work hard to advance this agenda.

Youth Employment

The European Council also called for consideration of the Commission’s recent Youth Employment Package, including early adoption of the recommendation on Youth Guarantee Schemes. This is also a priority objective for the Irish Presidency. It matters to the young people of Europe and in particular to young Irish unemployed. We will be aiming to make significant progress with a view to adopting the recommendation at the Employment, Social Policy, Health and Consumer Affairs Council on 28 February. Youth unemployment will also be the main focus of the informal meeting of EPSCO Ministers taking place in Dublin earlier that month.

Enlargement

On enlargement, the European Council made good progress, and welcomed and endorsed the conclusions as agreed at the General Affairs Council last week. These will shape the enlargement agenda over the six months of Ireland’s Presidency, and it is likely that we will have to consider such issues as granting candidate status to Albania and opening negotiations with Serbia, and possibly Macedonia.

We welcome the reference in the conclusions to regaining the momentum in the accession negotiations with Turkey, where we would hope to progress over the next six months.
We also intend to advance the accession negotiations with Iceland and Montenegro; and will oversee consideration of the final monitoring report on Croatia’s preparations for accession. In this regard, we look forward to welcoming Croatia as the 28th member of the Union on 1st July.

Common Security and Defence Policy

The European Council adopted conclusions on the Common Security and Defence Policy, which includes CSDP Missions, capabilities and preparations for a discussion on Defence issues at the European Council in December 2013.

The European Council tasked the High Representative and relevant EU bodies to develop further proposals and actions aimed at strengthening CSDP and improving the availability of civilian and military capabilities, and to report on these initiatives by September 2013.

The issues to be covered in this report will include increasing the effectiveness, visibility and impact of CSDP, enhancing the development of defence capabilities and strengthening Europe’s defence industry.

Foreign Policy Issues – Syria

We also briefly discussed the deteriorating situation in Syria and the ways in which the EU can try to end the current violence and hasten the emergence of a negotiated solution.

The Council reiterated its view that only a political solution can end the current nightmare of the Syrian people; it also restated that Assad has no place in a new, democratic, Syria where human rights and the rights of all minorities should be promoted and protected.

The Council also considered the outcome of the most recent meeting of the Friends of Syria which took place in Marrakesh on 12 December, where Ireland was represented by Minister of State Costello. The Marrakesh meeting allowed many participants to meet with the leadership of the new Syrian Opposition Coalition and Minister Costello extended an invitation to the Chairperson of the Coalition to meet with the Tánaiste in order to further develop our contacts with the new body and explore how Ireland and the EU can best be of support.

The issue of recognition of the Syrian Opposition Coalition was also addressed at the Council. Ireland remains firmly of the view – in line with the clear majority of EU partners – that it would be premature at this stage to go beyond the limited recognition accorded to the Syrian Opposition Council at the 10 December Foreign Affairs Council. Our view is that it has some work still to do in terms of building up structures and satisfying us that it is fully representative, inclusive and democratic.

This view was ultimately reflected in the conclusions agreed by the European Council last Friday.

Last week’s Council outcome was a good and positive one, both from an Irish and European perspective. It represents progress on a number of key issues that will guide our work as Presidency in the first half of next year.

I look forward to keeping the House updated on the vitally important task that lies ahead.