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Europaudvalget 2010-11 (1. samling)
Det Europæiske Råd 16-17/12-10 Bilag 6
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EUROPEAN COUNCIL

Brussels, 17 December 2010

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CO EUR 21

CONCL 5

COVER NOTE

from :

General Secretariat of the Council

to :

Delegations

Subject :

EUROPEAN COUNCIL

16-17 DECEMBER 2010

CONCLUSIONS

Delegations will find attached the conclusions of the European Council (16-17 December 2010).

________________________

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Conclusions – 16-17 December 2010

Throughout the crisis, we have taken decisive action to preserve financial stability and promote the

return to a sustainable growth. We will continue to do so and the EU and the euro area will

emerge stronger from the crisis.

Growth prospects are strengthening and the fundamentals of the European economy are sound. The

temporary stability tools put in place earlier this year have proved their utility, but the crisis has

demonstrated that there can be no complacency. This is why we agreed today on the text of a

limited amendment to the Treaty on the establishment of a future permanent mechanism to

safeguard the financial stability of the euro area as a whole. This amendment should enter into

force on 1 January 2013. We also reiterated our commitment to reach agreement on the legislative

proposals on economic governance by end June 2011 with the aim of strengthening the economic

pillar of the Economic and Monetary Union and to continue to implement the Europe 2020 strategy.

ECONOMIC POLICY

The European Council welcomed the report presented by its President following up on its

conclusions of 28 and 29 October 2010. It agreed that the Treaty should be amended in order

for a permanent mechanism to be established by the Member States of the euro area to

safeguard the financial stability of the euro area as whole (European Stability Mechanism).

This mechanism will replace the European Financial Stability Facility (EFSF) and the

European Financial Stabilisation Mechanism (EFSM), which will remain in force until June

2013. As this mechanism is designed to safeguard the financial stability of the euro area as

whole, the European Council agreed that Article 122(2) TFEU will no longer be needed for

such purposes. Heads of State or Government therefore agreed that it should not be used for

such purposes.

The European Council agreed on the text of the draft decision amending the TFEU set out in

annex I. It decided to immediately launch the simplified revision procedure provided for in

Article 48(6) TEU. The consultation of the institutions concerned should be concluded on

time to allow the formal adoption of the decision in March 2011, completion of national

approval procedures by the end of 2012, and entry into force on 1 January 2013.

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Conclusions – 16-17 December 2010

The European Council also called for Finance Ministers of the euro area and the Commission

to finalise work on the intergovernmental arrangement setting up the future mechanism by

March 2011, integrating the general features set out in the Eurogroup statement of 28

November 2010, which the European Council endorsed (annex II). The mechanism will be

activated by mutual agreement of the euro area Member States in case of risk to the stability

of the euro area as a whole.

Member States whose currency is not the euro will, if they so wish, be involved in this work.

They may decide to participate in operations conducted by the mechanism on an ad hoc basis.

The European Council called for the acceleration of the work on the six legislative proposals

on economic governance, building on the recommendations of the Task Force endorsed last

October and keeping a high level of ambition, so that they can be adopted by June 2011. It

welcomed the Council's report on the treatment of systemic pension reform under the Stability

and Growth Pact and called for the report to be reflected in the specifications on the

implementation of the reformed SGP.

Recalling its conclusions of October 2010, the European Council looked forward to the

Commission's intention to make proposals for the new multiannual financial framework by

June 2011 and invited the institutions to cooperate in order to facilitate its timely adoption.

The new Europe 2020 strategy for jobs and growth will continue to guide the Union and the

Member States in responding to the crisis and promoting the delivery of structural reforms.

The European Council welcomed the progress achieved since the launch of the strategy, as

shown in the report presented by the Presidency.

The European Council welcomed the Statement by the Heads of State or Government of the

euro area and the EU institutions (annex III).

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Conclusions – 16-17 December 2010

II.

OTHER ISSUES

The European Council welcomed the first progress report presented by the High

Representative on the European Union's relations with its strategic partners. On this basis, the

European Council invited the High Representative, in close cooperation with the Commission

and the Foreign Affairs Council, to take this work forward in line with its conclusions of

September 2010, setting out common European interests and identifying all possible leverages

to achieve them. The European Council will take stock of progress once a year and, where

necessary, set orientations. The launch of the EEAS and its coordinating role provide a

valuable opportunity to step up this work.

10.

The European Council endorsed the Council's conclusions of 14 December 2010 on

enlargement and agreed to give Montenegro the status of candidate country.

11.

The European Council condemned the violence perpetrated since the second round of the

presidential election in Côte d’Ivoire, in particular the recourse to violence against civilians

on 16 December. It called firmly on all the parties to act with restraint. It recalled the

availability expressed by the International Criminal Court to prosecute the persons responsible

for such acts. It called on all Ivorian leaders, both civilian and military who have not yet done

so, to place themselves under the authority of the democratically elected President,

Mr°Alassan Ouattara. It confirmed the determination of the EU to take targeted restrictive

measures against those who would continue to obstruct the respect of the sovereign will

expressed by the Ivorian people.

12.

The European Council welcomed the successful outcome of the COP-16 in Cancun as an

important step forward in global efforts to reach the agreed objective of staying below 2°C

increase in global temperatures, and noted with satisfaction the successful implementation of

the strategy it agreed in March.

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Conclusions – 16-17 December 2010

ANNEX I

DRAFT EUROPEAN COUNCIL DECISION

of …

amending Article 136 of the Treaty on the Functioning of the European Union with regard to

a stability mechanism for Member States whose currency is the euro

THE EUROPEAN COUNCIL,

Having regard to the Treaty on European Union, and in particular Article 48(6) thereof,

Having regard to the proposal for revising Article 136 of the Treaty on the Functioning of the

European Union submitted to the European Council by the Belgian Government on 16 December

2010,

[Having regard to the opinion of the European Parliament,

]

[Having regard to the opinion of the European Commission,

]

[After obtaining the opinion of the European Central Bank,

]

Opinion of … (not yet published in the Official Journal).

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ANNEX I

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Conclusions – 16-17 December 2010

Whereas:

(1)

Article 48(6) of the Treaty on European Union (TEU) allows the European Council, acting by

unanimity after consulting the European Parliament, the Commission and, in certain cases, the

European Central Bank, to adopt a decision amending all or part of the provisions of Part

Three of the Treaty on the Functioning of the European Union (TFEU). Such a decision may

not increase the competences conferred on the Union in the Treaties and its entry into force is

conditional upon its subsequent approval by the Member States in accordance with their

respective constitutional requirements.

(2)

At the meeting of the European Council of 28 and 29 October 2010, the Heads of State or

Government agreed on the need for Member States to establish a permanent crisis mechanism

to safeguard the financial stability of the euro area as a whole and invited the President of the

European Council to undertake consultations with the members of the European Council on a

limited treaty change required to that effect.

(3)

On 16 December 2010, the Belgian Government submitted, in accordance with Article 48(6),

first subparagraph, of the TEU, a proposal for revising Article 136 of the TFEU by adding a

paragraph under which the Member States whose currency is the euro may establish a

stability mechanism to be activated if indispensable to safeguard the stability of the euro area

as a whole and stating that the granting of any required financial assistance under the

mechanism will be made subject to strict conditionality. At the same time, the European

Council adopted conclusions about the future stability mechanism (paragraphs 1 to 4).

(4)

The stability mechanism will provide the necessary tool for dealing with such cases of risk to

the financial stability of the euro area as a whole as have been experienced in 2010, and hence

help preserve the economic and financial stability of the Union itself. At its meeting of 16 and

17 December 2010, the European Council agreed that, as this mechanism is designed to

safeguard the financial stability of the euro area as whole, Article 122(2) of the TFEU will no

longer be needed for such purposes. The Heads of State or Government therefore agreed that

it should not be used for such purposes.

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ANNEX I

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Conclusions – 16-17 December 2010

(5)

On 16 December 2010, the European Council decided to consult, in accordance with Article

48(6), second subparagraph, of the TEU, the European Parliament and the Commission, on

the proposal. It also decided to consult the European Central Bank. [On […dates…], the

European Parliament, the Commission and the European Central Bank, respectively, adopted

opinions on the proposal.]

(6)

The amendment concerns a provision contained in Part Three of the TFEU and it does not

increase the competences conferred on the Union in the Treaties,

HAS ADOPTED THIS DECISION:

Article 1

The following paragraph shall be added to Article 136 of the Treaty on the Functioning of the

European Union:

"3.

The Member States whose currency is the euro may establish a stability mechanism to be

activated if indispensable to safeguard the stability of the euro area as a whole. The granting of any

required financial assistance under the mechanism will be made subject to strict conditionality."

Article 2

Member States shall notify the Secretary-General of the Council without delay of the completion of

the procedures for the approval of this Decision in accordance with their respective constitutional

requirements.

This Decision shall enter into force on 1 January 2013, provided that all the notifications referred to

in the first paragraph have been received, or, failing that, on the first day of the month following

receipt of the last of the notifications referred to in the first paragraph.

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ANNEX I

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Conclusions – 16-17 December 2010

Article 3

This Decision shall be published in the

Official Journal of the European Union.

Done at,

For the European Council

The President

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ANNEX I

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Conclusions – 16-17 December 2010

ANNEX II

GENERAL FEATURES OF THE FUTURE MECHANISM

EUROGROUP STATEMENT OF 28 NOVEMBER 2010

"The recent events have demonstrated that financial distress in one Member State can rapidly

threaten macro-financial stability of the EU as a whole through various contagion channels. This is

particularly true for the euro area where the economies, and the financial sectors in particular, are

closely intertwined.

Throughout the current crisis, euro area Member States have demonstrated their determination to

take decisive and coordinated action to safeguard financial stability in the euro area as a whole, if

needed and return growth to a sustainable path.

In particular, the European Financial Stability Facility (EFSF) has been set up to provide for swift

and effective liquidity assistance, together with the European Financial Stabilisation Mechanism

(EFSM) and the International Monetary Fund, and on the basis of stringent programmes of

economic and fiscal policy adjustments to be implemented by the affected Member State and

ensuring debt sustainability.

On 28 - 29 October the European Council agreed on the need to set up a permanent crisis

mechanism to safeguard the financial stability of the euro area as a whole. Eurogroup Ministers

agreed that this European Stability Mechanism (ESM) will be based on the European Financial

Stability Facility capable of providing financial assistance packages to euro area Member States

under strict conditionality functioning according to the rules of the current EFSF.

The ESM will complement the new framework of reinforced economic governance, aiming at an

effective and rigorous economic surveillance, which will focus on prevention and will substantially

reduce the probability of a crisis arising in the future.

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ANNEX II

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Conclusions – 16-17 December 2010

Rules will be adapted to provide for a case by case participation of private sector creditors, fully

consistent with IMF policies. In all cases, in order to protect taxpayers' money, and to send a clear

signal to private creditors that their claims are subordinated to those of the official sector, an ESM

loan will enjoy preferred creditor status, junior only to the IMF loan.

Assistance provided to a euro area Member State will be based on a stringent programme of

economic and fiscal adjustment and on a rigorous debt sustainability analysis conducted by the

European Commission and the IMF, in liaison with the ECB.

On this basis, the Eurogroup Ministers will take a unanimous decision on providing assistance.

For countries considered solvent, on the basis of the debt sustainability analysis conducted by the

Commission and the IMF, in liaison with the ECB, the private sector creditors would be encouraged

to maintain their exposure according to international rules and fully in line with the IMF practices.

In the unexpected event that a country would appear to be insolvent , the Member State has to

negotiate a comprehensive restructuring plan with its private sector creditors, in line with IMF

practices with a view to restoring debt sustainability. If debt sustainability can be reached through

these measures, the ESM may provide liquidity assistance.

In order to facilitate this process, standardized and identical collective action clauses (CACs) will

be included, in such a way as to preserve market liquidity, in the terms and conditions of all new

euro area government bonds starting in June 2013. Those CACs would be consistent with those

common under UK and US law after the G10 report on CACs, including aggregation clauses

allowing all debt securities issued by a Member State to be considered together in negotiations. This

would enable the creditors to pass a qualified majority decision agreeing a legally binding change to

the terms of payment (standstill, extension of the maturity, interest-rate cut and/or haircut) in the

event that the debtor is unable to pay.

Member States will strive to lengthen the maturities of their new bond emissions in the medium-

term to avoid refinancing peaks.

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ANNEX II

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Conclusions – 16-17 December 2010

The overall effectiveness of this framework will be evaluated in 2016 by the Commission, in liaison

with the ECB.

We restate that any private sector involvement based on these terms and conditions would not be

effective before mid-2013.

President of the European Council Herman Van Rompuy has indicated that his proposal on limited

treaty change to the European Council at its next meeting will reflect today's decision."

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ANNEX II

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Conclusions – 16-17 December 2010

ANNEX III

STATEMENT BY THE HEADS OF STATE OR GOVERNMENT OF THE EURO AREA

AND THE EU INSTITUTIONS

The Heads of State or Government of the euro area and the EU institutions

have made it clear,

as set out below, that they stand ready to do whatever is required to ensure the stability of the euro

area as a whole. The euro is and will remain a central part of European integration. In particular, the

Heads called for determined action in the following areas:

Fully implementing existing programmes:

we welcome the impressive progress made

in implementing the Greek programme and the agreed adjustment programme for

Ireland, including the adoption of the 2011 budget.

Keeping up fiscal responsibility:

we are all committed to strictly implementing the

budgetary policy recommendations, fully respecting the fiscal targets for 2010 and 2011

and to correcting excessive deficits within the agreed deadlines.

Stepping up growth enhancing structural reforms:

we are determined to accelerate

structural reforms to enhance growth.

Strengthening the Stability and Growth Pact and implementing a new macro-

surveillance framework

from summer 2011.

Ensuring the availability of adequate financial support through the EFSF pending

the entry into force of the permanent mechanism:

we note that only a very limited

amount has been committed from the EFSF to support the Irish programme.

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ANNEX III

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Conclusions – 16-17 December 2010

Further strengthening of the financial system

both as regards the regulatory and

supervisory frameworks and conducting new stress tests in the banking sector.

Expressing full support to ECB action:

we support the ECB in its independent

responsibility to ensure price stability, solidly anchor inflation expectations and thereby

contribute to financial stability of the euro area. We are committed to ensuring the

financial independence of the central banks of the Eurosystem.

Elements of this strategy will be further developed in the coming months as a comprehensive

response to any challenges, as part of our new economic governance.

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ANNEX III