Last week's European Council was about combining short term action to stabilise the markets and medium term action to stimulate growth, together with a longer-term vision on the way forward to strengthen our Economic and Monetary Union.
It was a sometimes difficult but in the end fruitful meeting. It was another step on the long road to overcome the financial and economic crisis and to correct the structural flaws of the euro-area framework. The steps we took last week were important on a number of fronts.
First, we put together and decided on a “Compact for Growth and Jobs”.
It will mobilise €120bn for immediate investment, which will boost the financing of the economy and help create jobs.
A 10 billion euro increase of the capital of the European Investment Bank will increase the Bank's overall lending capacity by 60 billion euro.
The other 60 billion euro comes, first, from the structural funds which will be devoted to growth enhancing measures in the current period (55 billion) and, second, from the pilot phase of Project Bonds that will be launched this summer and will go to key initiatives such as energy, transport and broadband infrastructure (almost 5 billion).
The "Compact for Growth" is not just about injecting money: it contains a number of elements. Work to be done by the Member States individually, who have already undertaken a number of commitments in that respect. And work to be done together as a Union; including deepening the single market, negotiating good trade agreements, working together on tax matters, and strengthening the European research area.
Several Member States will launch a request for enhanced cooperation regarding a Financial Transaction Tax with a view of its adoption by December 2012.
As I have said before, the European Council has not suddenly discovered the virtues of economic growth. Re-launching growth and creating jobs has been a constant concern, from the very first meeting under my presidency in February 2010 right up until now. I am happy this European Council has been able to give it a real push.
The growth and jobs agenda requires a structural approach, but also short term actions for financial stability. A return of confidence for consumers and investors will itself lead to more demand and growth.
Second main point: as Eurozone leaders, we re-affirmed our strong commitment to do what is necessary to ensure the financial stability of the euro area,
In particular, we affirmed that it is imperative to break the vicious circle between banks and sovereigns, and we reached a number of important agreements to this effect among the Eurozone 17.
We urged the rapid conclusion of the Memorandum of Understanding attached to the financial support to Spain for recapitalisation of its banking sector. We agreed that the financial assistance to Spain will be provided by the EFSF until the ESM becomes available, and that it will then be transferred to the ESM, without gaining seniority status.
The Commission will shortly present proposals for a single supervisory mechanism for the financial sector, on the basis of Article 127(6) -- so involving the European Central Bank. We ask the Council and the Parliament to consider these proposals as a matter of urgency, before the end of the year. When an effective single supervisory mechanism is established, involving the ECB, the ESM could, for banks in the euro area and following a regular decision, have the possibility to recapitalize banks directly, under certain conditions and in certain circumstances. The perspective is clearly to avoid that this recapitalisation impacts upon public debt. This single supervisory mechanism was a key proposal in our recent report "Toward a genuine Economic and Monetary Union". It is a breakthrough.
It also shows a clear link between the longer term measures we are proposing and the short term actions we are taking.
The Eurogroup will examine the situation of the Irish financial sector, with the view of further improving the sustainability of Ireland's well-performing adjustment programme.
To ensure the financial stability of the euro area, we agreed to the possible use of existing EFSF/ESM instruments in a flexible and efficient manner, in order to stabilise markets for Member States which are complying with our common rules, recommendation and time-tables.
The short term measures in both areas respect the fundamental approach of the Eurozone policies ever since the start of the crisis: responsibility and solidarity. We need both. We tasked the Eurogroup to implement these decisions.
Third important point: further deepening our Economic & Monetary Union.
At their informal dinner of 23 May, the Heads of State or Government asked me to prepare, in close cooperation with the Presidents of the Commission, the Euro Group and the European Central Bank, a report on the future of the Economic and Monetary Union.
The financial and debt crisis has exposed structural weaknesses in the EMU's original design, which must be addressed. The stakes are high.
My report was not a final blueprint or master plan, but offered a perspective on how to strengthen the EMU. It provided the main building blocks and a working method. It proposed an architecture based on more integrated frameworks for the financial sector, for budgetary matters, and for economic policy. It underlined the importance of strengthening at the same time the democratic legitimacy and accountability of decision-making within the EMU.
The European Council has asked me to continue this work, again in close cooperation with the Presidents of the Commission, the Eurogroup and the European Central Bank, and associating the governments in the process. I will also ensure that your Parliament's views are taken into account, and I look forward to working with you on this.
In my view, we first need to exhaust all possibilities under the current treaties; then explore which avenues could require treaty-change. The report of October will focus on the first type of proposals.
Some solutions will be tailor-made to the Members of the Eurozone and those who are expected one day to join the Euro. But the actions will matter for all Member States.
Honourable Members, this European Council also discussed other matters.
We had our first discussion during a European Council on the Multiannual Financial Framework for the years 2014-2020, a discussion to which your own President made a significant contribution. Under the Treaty, this is a matter for the Council of ministers and your Parliament. However, we all know from past experience that this is one of the areas in which the European Council will inevitably be called on to fulfil its role, under Article 15 of the Treaty, of "defining the general political directions and priorities".
In having a discussion on the principles and priorities without specific figures, it was my intention to focus attention not on national advantages and disadvantages but on the strategic priorities for the Union as a whole. The European Council agreed that the MFF needs to be at the service of a strategy: jobs and growth throughout the Union. Hopefully we will finalise the work before the end of the year at the level of the Council. Your Parliament, which voted an important resolution on the MFF, will be involved in this process.
The European Council found -- finally -- a solution to the question of the European patent. The last outstanding point, the seat of the Unified Patent Court, was solved. After decades of unsuccessful attempts, this is a truly historic agreement. I call on your Parliament to finalise the agreement with the Council. I thank the Danish Prime Minister for the close cooperation we had in this respect, which led to our joint appeal to the sense of compromise of our colleagues.
We endorsed the decision to open accession negotiations with Montenegro -- a signal to the Western Balkans as a whole that they have a European future if reform processes are maintained.
Honourable members, this concludes my report on a European Council meeting that achieved some significant results and took us a few more steps down our journey to economic recovery.
We dealt with short, medium and long term problems.We found a balance between responsibility and solidarity. We worked on growth and jobs on the one hand and on financial stability on the other hand. We need reforms in our Member States and collective action at the level of the EU and Eurozone.
All this has to go hand in hand. It takes time. It demands courage. It will be implemented step by step. The agreements of Thursday and Friday are important steps in the right direction.