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José Manuel Durão Barroso

President of the European Commission

Statement on the preparations for the European Council meeting of 23-24 June 2011

European Parliament

Brussels, 22 June 2011

Mr President,

Minister Győri,

Honourable Members,

This week's European Council has a very substantive agenda. Minister Győri, on behalf of the Hungarian Presidency of the Council, I want to thank you for the commitment shown during all these months.

Let me focus on some points.

I have written a letter to the Members of the European Council highlighting the positions of the Commission on what I believe are the most important agenda points, which I would like to share with you.

At the end, I will also make some comments regarding Greece.

This European Council will take very important steps towards ensuring that the EU's economic policy-making is both more coherent and more effective.

Firstly, we have the economic governance package. I would like to thank very sincerely this Parliament for the extreme hard work and commitment it has shown in maintaining a high level of ambition on this issue. Later this afternoon, Commissioner Rehn, on behalf of the Commission, will express our detailed positions on these extremely important matters. Let me tell you that now I expect the Parliament and the Member States to come to an agreement, because the adoption of the governance package is fundamental to our comprehensive response to the crisis.

Agreement on this package is vital. It will be extremely difficult to explain to our citizens that when we are trying to respond to challenges of the current magnitude, we are not able to agree on the fundamental pillars of the response to this crisis. I believe the agreement on this package will strengthen our economic surveillance mechanisms at EU level. It will make the EU far better placed to prevent the development of unsustainable public debt and deficits, as well as the emergence of harmful macroeconomic imbalances. And though prevention is better than cure, we will also be better placed to take action to correct these situations if they do emerge.

Secondly, I expect Heads of State and Government to endorse the Country-Specific Recommendations that the Commission presented on the 7th June. This is, as you know, the first time we make this kind of collective exercise at European level.

The recommendations are based on an extensive analysis by the Commission of Member States’ plans for sustainable growth and job creation married to sound public finances.

They are focused, measurable and tailored to each country’s most pressing challenges. Of course, discussions between the Commission and Member States on the Recommendations have been sometimes very intense. But I am pleased that the overall result has maintained the high level of ambition.

We cannot reap the benefits of the Single Market on one hand, but ignore reckless economic policy-making on the other hand. There is no point in signing off on a brand new economic governance package if the very same week Member States question the methodology and independent Commission recommendations in the country specific exercise. This new way of policy-making is also a strong appeal for collective responsibility, because the European Union economic space is so much more than the sum of our different economies.

Thirdly, the European Council is due to endorse the Treaty change necessary to allow for the establishment of the European Stability Mechanism in 2013, with its capacity to assist euro area Member States in financial difficulties – on the basis of strict conditionality.

The ESM, combined with the increase of the effective lending capacity of the EFSF, are a clear demonstration of our commitment to safeguarding the stability of the euro area, on the basis of sound and sustainable public finances.

Distinguished Members of the Parliament,

You will remember that in January, when the Commission presented the Annual Growth Survey, we prioritised the need to reinforce the effective lending capacity of the EFSF. At that moment we were very much criticised, but now unanimously the governments of Europe decided to increase the effective lending capacity. I wonder if it would not have been impossible to approve it some months before.

The economic governance package, country-specific recommendations and the stability mechanisms: this is how Europe should seriously draw the lessons from the crisis and act upon them. The Commission will do its utmost to maintain this level of steadfast resolve in all matters to be discussed.

To respond to the economic crisis, every sector needs to contribute, none more so than the financial sector. I have promised that the Commission will come with a formal legislative proposal on a financial tax.

The proposal will have three aims: firstly, to avoid fragmentation in the internal market for financial services, because there is an increasing number of uncoordinated national tax measures being put in place. Secondly, this financial tax also aims to create appropriate disincentives for overly risky or purely speculative transactions. Thirdly, to ensure that financial institutions make a fair and substantive contribution to the sharing of the costs of the recent crisis as well as to address concerns about excessive profits. The very high bonuses that are still being paid to bankers – bankers that sometimes have been given huge amounts of taxpayer money - suggest that there are excessive profits in the banking sector and that the banking sector should also contribute to the common public good.

The second major issue for the European Council is migration.

The issue of migration has come to the fore in recent months, in particular under the pressure of recent events in the Southern Mediterranean.

I spoke to the Parliament in May about the Commission's migration package, which sets recent and future policy initiatives in a framework that allows the EU and its Member States to manage asylum, migration and mobility of third-country nationals in a secure environment.

Migration, let's face it, is a very emotive issue. But let me state clearly that the Commission will not accept any attempts to undermine the Schengen principles. In fact, I think that we will see exactly the opposite, through a reinforcement of the European approach to migration and to free movement.

The Commission has proposed to strengthen the governance of the Schengen area, and thereby reinforce Member States' confidence and trust in the effective management of our external borders.

This will be done both through strengthening the FRONTEX border agency, and through an evaluation mechanism, whereby national border agencies will work jointly on assessing threats. We are also exploring the feasibility of a safeguard system, which would allow the adoption of decisions at the European level to confront possible difficult situations where our common external borders are subject to exceptional pressure or where Member States are failing to comply with their obligations to control their borders. Decisions on the best ways to handle such situations should be taken at EU level, avoiding unilateral actions from Member States. These decisions could foresee, as a last resort mechanism and if the critical situation justifies it, the temporary reintroduction of internal border controls, within a Community framework.

This does not mean rolling back the abolition of internal borders. This is a way of strengthening the European dimension of the system so that individual Member States do not feel pressured into acting unilaterally. I will be looking for a clear backing of this approach from the European Council, so that the detailed Commission proposals can be finalised and have an opportunity to succeed.

This migration package is completed by proposals for a common, efficient and protective asylum system, which guarantees asylum seekers equal treatment across the European Union. I am confident that the European Parliament and Council will endorse the proposals set out in the Commission's reviewed proposals on minimum standards for the reception of asylum seekers and on refugee status. I will call on the European Council to lend its support to the completion of the entirety of the asylum package, as swiftly as possible within the agreed deadline.

The European Council will also discuss the situation in our neighbourhood, in particular, the implementation of the "Partnership for Democracy and Shared Prosperity with the Southern Mediterranean". This partnership is extremely important to our Arab partners, who are looking to the European Union to support the democratic transitions in the South Mediterranean. We must not let them down.

Another point on the upcoming European Council agenda is the Commission’s recommendation that Croatia becomes the 28th Member State of the European Union, hopefully by 1 July 2013. There is still substantial work to be done, but I hope that at the end of the month we can sign off on the remaining chapters in the Accession Conference.

Finally a word about Greece. I hope Member States will also have the opportunity to discuss at the highest level this situation, which is important not only for a Member State of our Union, but I believe for the stability of the euro area and for the stability for the European Union as a whole.

The issue of Greece raises very important matters, not only in terms of financial stability, but in terms of social commitment and also in terms of political determination of the European Union. Last night's vote in the Greek parliament allows the government to build consensus in support of the reform package agreed with the European Union and the IMF of fiscal measures, privatisations and reforms that are necessary in Greece's journey back to growth. Because, lets be absolutely clear: there is no alternative to this plan. So let's act upon it.

I know that many people in Greece are living through a period of great hardship and uncertainty. My message to the Greek people is that if the government acts, Europe will deliver. If Greece can demonstrate that it is genuinely committed to the reform package agreed with the European Union and the IMF, we will accompany Greece on its journey back to growth. Because fiscal consolidation is entirely necessary, but the goal is growth. We should never forget that one euro spent with interest rates to pay the debt is one euro that cannot go to the people of Greece. So it is critically important to reduce debt and to control the deficit so that we can restore the confidence in the Greek economy to promote growth. At the same time it is extremely important that the Greek people understand that in face of such difficult circumstances, a national consensus is necessary. A national consensus and not short-sighted partisan politics. We need a national consensus on Greece so that Greece can win the confidence of the partners and the markets in terms of the very important reforms that are needed.

On Monday night I met with Prime Minister Papandreou and we discussed also a more strategic use of our European structural funds. Greece has the potential to access a significant amount of EU funds under cohesion policy. I believe we should increase their rate of absorption and accelerate those funds, aiming for a significant impact on improving competitiveness and employment.

This would be done within the existing funds. It would be a comprehensive programme of technical assistance focused on growth and jobs, but with an emergency character, because Greece is living an emergency situation. I will discuss this issue with the European Council, what we can do together with Greece. We can, the Commission bilaterally with the government, put this in place. But I believe it is necessary to have all those that can contribute, namely in terms of technical assistance, coming from different Member States. The government of Greece is ready to engage with us in this approach. I believe we should be ready to react in a very positive way, on the basis of strict conditionality regarding the necessary reforms for that country.

The implementation of Greece's reform plan calls for exceptional efforts from the Greek people. The Commission is now proposing an exceptional response, as a sign to the Greek people that there is hope, we know that they are making sacrifices, but at the end of this way there is hope and solutions are within their reach. They are making some important cuts, but those cuts are necessary for growth. Growth is the answer and we will work with the Greek authorities and the Greek people to achieve that objective.

I thank you for your attention.

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