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ISBN 978-92-824-2804-7doi:10.2860/64741

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Printed in BelgiumPRINTED ON ECOLOGICAL PAPER

General Secretariat of the Council

The European Council in 2010

Luxembourg: Publications Office of the European Union

2011 — 46 pp. — 21.0 x 29.7 cm

ISBN 978-92-824-2804-7doi:10.2860/64741

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The European Council in 2010

by the president of the European Council

Around the table 5

Preserving the stability of the eurozone 6

Creating jobs and growth 9

Setting the Union’s course in the world 11

Working together 14

Looking ahead 19

Conclusions of the European Counciland statements by heads of state or government 21

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The European Council, October 2010

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It is now over a year since I took office as the first permanent president of the European

Council. Our institution brings the Union’s highest executive leaders around the

table: the 27 heads of state or government of the member states, the president of the

Commission, and the president of the European Council. This strategic body does not exercise legislative functions.

Together we establish political priorities, we set the Union’s strategic course and we take responsibility in crisis situations.

The European Council in 2010 covers our activities in 2010. It has been an eventful year. The stability of the eurozone, the

state of our economies and the role of the European Union in the world required our utmost attention.

On 1 December 2009, when the Lisbon Treaty entered into force, the European Council formally became a fully fledged

institution. It also acquired a permanent president, elected for a term of two and a half years, renewable once. The new

set-up was decided to give more coherence and continuity to the Union’s work. The first year has proven that this idea

was worthwhile.

In our meetings, only the leaders and the High Representative for Foreign Affairs and Security Policy take part in the

work. This allows an open and lively debate. With about thirty people around an oval table, one can see eye-to-eye

(or just about). An exchange of views with the president of the European Parliament often precedes the meeting. The

president of the European Central Bank is sometimes invited. Over time, we get to know each other very well. In

the course of 2010, we welcomed six new colleagues, and said goodbye to former ones, after government changes in

the United Kingdom, Hungary, Finland, the Czech Republic, Slovakia and the Netherlands. These get-togethers are

essential for building relationships amongst Europe’s heads of state or government. Only trust between persons can

establish a shared sense of direction.

In 2010, we had six European Council meetings between 11 February and 16-17 December, one informal and five

formal. There were also two meetings of the heads of state or government of the eurozone, which I chaired, one in the

timeframe of the March European Council, the other as a separate meeting in May. I will always remember the first

meeting I chaired, not in the usual Council premises but in the Solvay Library: snow outside, bold deal-making inside.

The annual number of meetings may vary, with a Treaty-required minimum of four; in 2009 there were six and in

2008 seven. Because of their relatively low frequency and high political intensity, meetings attract a lot of public

attention. They make the Union of 27 very visible. For the same reasons, careful preparations are necessary.

This involves many people and institutions in Brussels and the 27 capitals. The role of the General Affairs Council is

important in bringing together results achieved by the various ministers' meetings.

The president’s task is to prepare, chair and lead the meetings of the European Council, to seek consensus among

the members, and to make sure that the decisions we take are subsequently put into practice. Together with the

Commission president, the European Council president acts as the Union’s representative, at his level, in relations with

third countries.

Even if the institution does not exercise legislative functions, the political authority of the European Council's

conclusions and statements by heads of state or government is well recognised.

Just like a ‘summit’, which is only reached at the end of a long journey, a European Council meeting may suddenly open

new vistas. It is both the end of a process and the start of new beginnings.

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from the International Monetary Fund). Together with

the courageous austerity measures taken by the Greek

government itself, this stabilised the situation for Greece.

Decisive dinner

By the first week of May events had accelerated. It was

clear that we needed to go beyond an ad hoc decision

for one country and towards a systemic mechanism.

The problem of one country became a problem for

the eurozone as a whole, and even a threat to the

global recovery. That’s why the special summit of the

sixteen heads of state or government of the eurozone

– scheduled on 7 May to adopt the Greek package

and look forward – unexpectedly became one of those

decisive dinners which seem to be the secret of the

Union's success. After midnight, the leaders of the

sixteen eurozone countries agreed to use ‘all means

available’ to safeguard the stability of the euro. These

were not empty words. Within 48 hours, following

the request of the heads of state or government, the

European Commission made a proposal, the ministers

of finance agreed upon an ad-hoc crisis mechanism:

a system of conditional loans of 750 billion euro, which

is now in place and will last until mid-2013. Several

member states announced immediate extra budgetary

measures and economic reforms. The European Central

Bank took the unprecedented step of buying bonds on

secondary markets to prevent disruption in the market.

This joint effort showed that the Union’s capacity to act

is beyond doubt.

In the spring crisis, as I said in a speech on 25 May, ‘we

built a lifeboat at sea’. In a stormy situation, that was

no mean feat. However, it was clear to all of us that we

needed to draw the right lessons for the future: both to

The year 2010 was dominated by the public debt crises

in the eurozone. The issue was on the agenda for all

our meetings. Even if only sixteen member states share

the single currency (in the meantime seventeen, since

Estonia joined on 1 January 2011), all 27 members are

fully convinced that the stability of the eurozone is in

the core interest of the Union as a whole. The decisions

we have taken, notably in May, October and December,

constitute the biggest reform of the Economic and

Monetary Union since the euro was created.

The public debt crises within the eurozone were an

unexpected turn in the greater and global financial and

economic roller-coaster which began in August 2007

and reached an international height with the collapse

of Lehman Brothers. Although the risk of an economic

depression across the whole of Europe proved to

be short-lived – thanks to strong and coordinated

interventions, most member states were back on the

path to growth within a year –, another threat came to

light with the Greek government's financing problems,

late in 2009.

At the February 2010 meeting of the European Council

we agreed on the principle of taking action if needed to

safeguard the stability of the eurozone as a whole and to

help Greece. In March, we agreed on the key features

of that possible support. It was only in late April – in

view of our allegedly lengthy decision-making process,

it may be worthwhile to recall this sequence –,

that our Greek colleague for the first time asked for

support. Then things moved quickly. On 2 May a

deal was reached among finance ministers which was

endorsed by the heads of state or government of the

eurozone on 7 May. It provided a 110 billion euro loan

safety package (80 billion from the EU and 30 billion

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The legislative follow-up to these recommendations

will proceed in accordance with regular procedures,

involving the Commission, the Council of ministers and

the European Parliament, but at a faster pace so as to

have the new surveillance in place by summer 2011.

It is our common duty.

The third important decision flowing from the task

force’s work concerns our capacity to deal with a crisis.

In October, the European Council decided to establish

a permanent crisis mechanism to safeguard the financial

stability of the eurozone as a whole. The mechanism

decided in May is temporary. In the last meeting of the

year, we agreed on the text of the limited Treaty change

required to achieve the goal. It will provide a firm legal

anchor for the permanent mechanism.

The European Council also endorsed the mechanism's

general features, as agreed by the finance ministers.

Moreover, in December 2010, the sixteen heads of

state or government of the eurozone and the European

Union institutions reaffirmed their determination to do

whatever is required to ensure the stability of the euro

area as a whole.

In difficult times, the invisible and often underestimated

forces which hold our Union together come to

light, as the sovereign debt crisis confirmed once

more. The members of the European Council have

defended their collective decisions vigorously in their

national parliaments. We acted upon the principles of

responsibility and solidarity enshrined in the Lisbon

Treaty, to the benefit of our citizens. The strong political

bonds between the members of the Union have been

confirmed.

prevent such a crisis where possible and to enhance our

capacity to deal with a crisis. That twin goal has been the

European Council’s priority in the second half of 2010.

We have done what needed to be done.

Already in our March meeting, the European Council

established a task force on economic governance to

draw the lessons of the crisis and to present proposals

before the end of the year. As European Council

president I was asked to chair it, working closely with

the Commission and with representatives from the

member states, the European Central Bank and the

president of the Eurogroup. The contribution of the

Commission was key. In May, as urgency was added to

necessity, we stepped up the task force’s work. Thus the

European Council was able to be consulted on progress

in June and September. It is in my view very positive

that already in our 28-29 October meeting the European

Council endorsed the task force's full report. This is a

huge leap forward.

Common duty

Two sets of decisions stand out in terms of crisis

prevention. Firstly, a stronger stability and growth

pact: this will substantially increase fiscal responsibility.

Sanctions will kick in earlier and progressively, on more

grounds (taking into account public debt alongside the

annual deficit), and be decided more easily, thanks to

the so-called reverse majority vote (in which a proposal

of the Commission is adopted unless rejected by a

qualified majority of member states). Secondly, a new

form of macro-economic surveillance: this will allow us

to better monitor the economies of our countries, their

competitiveness, the risks of housing bubbles and other

vulnerabilities. We will act and correct if necessary.

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Dalia Grybauskaitė, Angela Merkel, Iveta Radičová, Mari Kiviniemi, Catherine Ashton

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– the employment rate for women and men;

– the investment level in research and development;

– the efforts to reduce the risk of global warming;

– education levels, both in terms of fewer school

drop-outs and more university diplomas;

– the number of people lifted out of poverty and

exclusion.

Real-life commitment

Each government will present its own proposals to reach

its national contribution to those five overall targets.

Each will also identify obstacles to growth and the

means to remove them. A close involvement of regional

and local authorities as well as of business and labour

organisations and civil society will increase the sense of

ownership and responsibility. This will help us move

from paper targets to real-life commitment. The Social

Summit on the day of the March and October European

Council meetings proved in 2010 to be an important

forum for dialogue on such matters.

To further improve the resilience of our economies,

drawing on the lessons from the financial crisis, the

European Council gave a strong impetus to the

ambitious reform of the supervision and regulation

of the financial system. This involved the creation of a

European Systemic Risk Board and three new European

Supervisory Authorities, which took up their duties

on 1 January 2011. In June 2010, we agreed that

member states should introduce systems of levies and

Many short-term problems arise because not enough

attention is paid to long-term structural reform.

Other major economies race ahead in terms of

competitiveness, research and labour skills. Jobs and

growth in Europe are at stake. That is why the European

Council devoted its March and June meetings to

preparing ‘Europe 2020’, an ambitious ten-year strategy

for jobs and growth.

In workplaces all over the continent, people feel both

the thrill and the pressure of international competition:

this is the challenge of globalisation. In cities and villages

from Finland to Italy, homes for the elderly replace

kindergartens: the challenge of demography. In the

south of the continent, the Sahara is about to leap into

Spain, in the north tundras are thawing and in the centre

alpine glaciers melting: the challenge of climate change.

Any economic strategy needs to deal with this triple

challenge. As a most comprehensive response, the

‘Europe 2020’ strategy involves structural reforms in the

member states and enhanced coordination of economic

policies and macro-economic surveillance. The overall

aim is to achieve durable growth and employment,

while ensuring sustainable public finances. The policies

to be implemented are largely in the realm of national

responsibilities. Yet it is very important to have a

common strategy and a consistent approach, not least to

increase peer pressure and strengthen political resolve.

The European Council in June adopted this European

strategy. We decided to set five realistic and quantifiable

headline targets for the European Union as a whole, to

be achieved by 2020:

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taxes on financial institutions so that they make a fair

contribution to the costs of containing systemic risk

in the financial sector. In the same meeting, we also

decided that the stress tests of major European banks,

ongoing at the time, should be made public in order to

enhance transparency.

The destinies of the world’s main economies are

more intertwined than ever before. A number

of issues that have an impact upon the European

economy will continue to require attention at a global

level. These include risks to financial sustainability,

high unemployment, volatile commodity prices

and macroeconomic imbalances. To address these

challenges, the European Council carefully prepared the

EU position for the G-20 summits of Toronto ( June)

and Seoul (November).

Green growth

Tackling climate change - an issue of major public

concern - is another important element of the Union’s

sustainable growth strategy. In the run-up to the

United Nations Conference in Cancún in December,

the European Council defined an ambitious and

constructive position, which contributed to its

successful outcome. We also encouraged regional

initiatives to tackle climate change and promote green

growth. In parallel, important work remains to be done

at home, in creating green jobs and green growth.

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on the United States, Russia and China, on the basis of

work conducted so far by our High Representative.

By involving all players at the highest level, the European

Council can encourage the necessary synergies between

national diplomacy and our common external service,

thus gradually building a European diplomatic culture.

More important at this stage than the ritual 'speaking

with one voice', it is imperative to deliver common key

messages.

In the September discussion, all colleagues also agreed

that we have to strive for reciprocity and find mutual

interests in dealings with global partners. The EU

has a certain number of cards which we can only play

together, for instance in granting increased market access

or a more attractive visa regime.

Heads of state or government have an important role

to play in external relations: together defining strategic

interests, deciding priorities and giving strategic

guidance, both in ʻthe common foreign and security

policy and [in] other areas of the external action of the

Union’, as the EU Treaty puts it.

We are not starting from scratch. The European Union

is a major trading power and the largest donor of

development aid in the world, it plays a stabilising role

in its neighbourhood and has in past years launched

a number of civil and military crisis management

missions. However, we could do more collectively to

translate financial and economic clout into political

influence. That's why the September European Council

was dedicated to foreign policy and in particular to

our global strategic partnerships. In December, we

continued this strategic reflection, with a special focus

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Throughout the year, some events with considerable

impact required our attention. The June European

Council reached an agreement amongst the 27 for

sanctions aimed at ensuring that Iran's nuclear programme

remains a strictly civilian one. It is in Europe’s core

strategic interest to remove the concerns over the

nature of this programme. The sanctions we agreed

have strengthened the influence of the UN Security

Council resolution. This was not easy. The result

has been remarkable. Our decision convinced other

major economies to follow suit, thus strengthening the

incentives for Iran to come back to the negotiating table.

In the September meeting, a month after the devastating

floods which had struck the country, we decided to give

Pakistan maximum support. With increased market

access, the Union could offer ‘more aid and more trade’.

In September, the European Council discussed the

relationships with the Union’s eastern and southern

neighbours. The European Council will in the near

future take up the Union's relations with the Western

Balkans, a region which I visited twice in 2010; we

have confirmed the Western Balkans' European

perspective, for instance by giving Montenegro the

status of candidate country in our December meeting.

In the course of the year, I had four meetings with

the Ukrainian president, including the November

summit. As regards the few neighbours we have on the

north-west side of the continent, Iceland has knocked

at our door, and the June European Council took the

important decision to open accession negotiations.

With the new political and diplomatic means provided

by the Lisbon Treaty, the European Council has

shown in 2010 its readiness to act in the field of foreign

relations.

The bilateral summits between the Union and key

partners have benefitted from the European Council’s

stronger involvement. Thanks to better preparation at

this level, and to an agreement between the president of

the Commission and myself on how best to represent

the Union in various international meetings, the

Commission president and I can truly speak (and listen)

on behalf of the 27.

Mutual benefits

It is only the beginning of a process, yet the bilateral

summits in the autumn started to show a difference.

On 6 October we established a strategic partnership

with South Korea, shortly after an important trade

deal was concluded with the country. At the EU-US

summit of 20 November, we reconfirmed with president

Obama the significance of the transatlantic relationship

and opened new avenues for cooperation on growth,

jobs and security. A breakthrough, in the meeting

with president Medvedev on 7 December, was the

agreement with Russia on its WTO accession; this will

also help our neighbour with its modernisation plans,

which are in the EU's strategic interest. In the summit

with Ukraine, we were able to welcome a step toward

visa liberalisation and progress towards an association

agreement. The summit with India on 10 December

showed good prospects for an ambitious and balanced

free trade agreement. Even a meeting with allegedly

fewer achievements, the EU-China summit in early

October, proved interesting because of our resolve to

ensure reciprocity and mutual benefits.

I also took part in the NATO summit of

19-20 November in Lisbon, where the importance of

EU-NATO relations was underlined, and in the OSCE

summit of early December in Astana.

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Summits with third countries

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The main elements of relations between our institution

and the others are determined by the Treaty. The fact,

for instance, that the president of the Commission is

a member of the European Council creates a vital link

between our two institutions, between the impetus from

the capitals and the ideas and expertise from within the

Brussels institutions. The Treaty also provides that the

president of the European Parliament may be invited

to be heard by the European Council and that the

president of the European Council shall present a report

to the Parliament after each meeting of the European

Council. This resulted in a number of lively debates

in the course of 2010. For their part, depending on

national practices, individual members of the European

Council also report back to their parliaments. All this

The Lisbon Treaty has provided the European Union

with a renewed institutional setting. The Commission

continues to plays its central role as initiator of

legislative proposals and guardian of the Treaties. The

Parliament has become the Council's equal partner in

the legislative process, playing its due role as the citizens'

representative. The European Council, which previously

gave its strategic guidelines from the sidelines of the

formal institutional framework, has had to define its new

place under the Lisbon sun. The challenge on

1 December 2009 was to translate provisions which for

two years had only existed on paper into a living reality.

That takes time. Embodying new functions, developing

new habits, filling in some grey areas requires careful

attention. No treaty text, however detailed, can define all

paths in advance.

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First semester of 2010, Spain chairs the Council of ministers of the EU

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and the second six months with Belgian Prime Minister

Yves Leterme. In a spirit of cooperation, respect and a

sense of shared responsibility between the institutions

and between the member states and the institutions,

the Lisbon Treaty can be what it is meant to be: an

instrument to strengthen the European Union's capacity

to safeguard the security and prosperity of our citizens.

The momentous decisions we have been able to take

in 2010 regarding the monetary union show that this is

possible.

Nevertheless, it has been said in certain Brussels circles

that the new role of the European Council has increased

the influence of national governments at the expense

of the EU institutions, thereby allegedly weakening

the effectiveness and the democratic legitimacy of

provides for the vital democratic legitimacy of our

actions. Our gathering is like a weaving of institutional

threads, tying national and European politics together

into a common fabric.

Good personal relations between the main actors

are always essential for success. That is why, from the

first day of my mandate, I endeavoured to establish

informal and structural contacts with the Commission

and its president José Manuel Barroso, with High

Representative Catherine Ashton and with the

European Parliament and its president Jerzy Buzek.

It has also been a pleasure to work with the two rotating

Council Presidencies of 2010 - the first six months with

Spanish Prime Minister José Luis Rodríguez Zapatero,

who helped to ensure a fine transition to the new system,

Second semester of 2010, Belgium chairs the Council of ministers of the EU

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the Union's decisions. This is strange, for a number

of reasons. The European Council includes 27

democratically legitimate heads of state or government.

It is now an integrated part of the formal framework,

with all its checks and balances.

The so-called Community method is and will be the

central way of adopting European policy and legislation.

Yet this method, in all its variations, can only apply in

areas where the Union has the competence to act and

cannot be applied in fields of national competence.

However, European coordination is sometimes

indispensable in those areas. The economic and

financial crisis has shown this clearly.

Génie européen

That is why often the choice is not between the

Community method and the intergovernmental

method, but between a coordinated European position

and nothing at all. The European Council, as the body

bringing together the strengths of the member states and

the qualities of our common institutions, is well placed

to contribute to this coordinated European position,

working closely with all the Union’s institutions and

bearing in mind that the member states are not outside

of it but form its constituent parts.

In the European Union, we are often caught between

'the one' and 'the many', between 'the whole' and 'the

parts'. This tension is part of our identity. The génie européen is to invent ever new ways to deal with this

tension. That's what politics is about. Speaking at the

College of Europe in Bruges last November, chancellor

Angela Merkel characterised this way of working

together as the 'Union method'. In the true spirit of the

Lisbon Treaty, all the Union's energies and competences

must be mobilised. It is the only way to deal with the

challenges which we face, in 2011 and beyond.

The president of the European Council with the president

of the European Commission

The president of the European Council in the European Parliament

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Members of the European Council in their national parliament

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The European Council, December 2010

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emerged economies will be accompanied by a shift in

global responsibilities as well. Europe can only be strong

if we are united. In the fi eld of foreign aff airs, where

geography and history play an important role, it will

require trust – and therefore time – to move forward

with 27 states. But in geopolitics as in life, patience can

be a virtue. Th erefore the priority for the years ahead is

to establish a shared sense of direction.

Beyond our long-term economic agenda and a general

strategic course, one cannot predict individual events.

Th at's why in 2011 the European Union will surely have

to show, in matt ers internal as well as external, that the

Lisbon framework has enhanced one essential political

quality: our capacity to cope with the unexpected. Th e

European Council is ready to do so.

HERMAN VAN ROMPUY

In 2011, the European Council will start by taking up

the prospects for economic growth. We will have a

debate, on 4 February, on the twin themes of innovation

and energy. Th ese themes touch upon the great societal

challenges of our time: att ractive jobs, healthy aging, a

green and low-carbon economy, secure energy supply.

In the March meeting, we will for the fi rst time assess

the progress each country has made with the EU2020

strategy for growth and jobs. Following the new macro-

economic surveillance decided in 2010, we will also give

strategic guidance on economic policies. I am looking

forward to working with the prime ministers of Hungary

and Poland, the countries chairing the Council of

ministers in the fi rst and second half of 2011.

As regards international relations, we will continue the

strategic dialogues with our global partners, building

upon recent experience and with the External Action

Service now fully playing its role. An important question

this year will be whether the global shift in power toward

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Statement by the heads of state or government of the European Union, 11 February 2010 23

Statement by the heads of state or government of the euro area, 25 March 2010 24

European Council, 25-26 March 2010 25

Statement by the heads of state or government of the euro area, 7 May 2010 29

European Council, 17 June 2010 30

European Council, 16 September 2010 35

European Council, 28-29 October 2010 40

European Council, 16-17 December 2010 42

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Commission’s proposal and the additional measures Greece has

announced.

The Commission will closely monitor the implementation of the

recommendations in liaison with the ECB and will propose needed

additional measures, drawing on the expertise of the IMF. A first

assessment will be done in March.

Euro area Member states will take determined and coordinated

action, if needed, to safeguard financial stability in the euro area as

a whole. The Greek government has not requested any financial

support.

All euro area members must conduct sound national policies in

line with the agreed rules. They have a shared responsibility for the

economic and financial stability in the area.

In this context, we fully support the efforts of the Greek government

and their commitment to do whatever is necessary, including

adopting additional measures to ensure that the ambitious targets

set in the stability programme for 2010 and the following years

are met. We call on the Greek government to implement all these

measures in a rigorous and determined manner to effectively reduce

the budgetary deficit by 4% in 2010.

We invite the Ecofin Council to adopt at its meeting of the 16th

of February the recommendations to Greece based on the

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The objective of this mechanism will not be to provide financing

at average euro area interest rates, but to set incentives to return

to market financing as soon as possible by risk adequate pricing.

Interest rates will be non-concessional, i.e. not contain any subsidy

element. Decisions under this mechanism will be taken in full

consistency with the Treaty framework and national laws. We

reaffirm our commitment to implement policies aimed at restoring

strong, sustainable and stable growth in order to foster job creation

and social cohesion.

Furthermore, we commit to promote a strong coordination of

economic policies in Europe. We consider that the European

Council must improve the economic governance of the European

Union and we propose to increase its role in economic coordination

and the definition of the European Union growth strategy.

The current situation demonstrates the need to strengthen and

complement the existing framework to ensure fiscal sustainability

in the euro zone and enhance its capacity to act in times of crises.

For the future, surveillance of economic and budgetary risks and

the instruments for their prevention, including the Excessive Deficit

Procedure, must be strengthened. Moreover, we need a robust

framework for crisis resolution respecting the principle of member

states’ own budgetary responsibility.

We ask the President of the European Council to establish, in

cooperation with the Commission, a task force with representatives

of Member States, the rotating presidency and the ECB, to present

to the Council, before the end of this year, the measures needed to

reach this aim, exploring all options to reinforce the legal framework.

We reaffirm that all euro area members must conduct sound

national policies in line with the agreed rules and should be aware

of their shared responsibility for the economic and financial stability

in the area.

We fully support the efforts of the Greek government and welcome

the additional measures announced on 3 March which are sufficient

to safeguard the 2010 budgetary targets. We recognize that the

Greek authorities have taken ambitious and decisive action which

should allow Greece to regain the full confidence of the markets.

The consolidation measures taken by Greece are an important

contribution to enhancing fiscal sustainability and market

confidence. The Greek government has not requested any financial

support. Consequently, today no decision has been taken to activate

the below mentioned mechanism.

In this context, Euro area member states reaffirm their willingness

to take determined and coordinated action, if needed, to safeguard

financial stability in the euro area as a whole, as decided the

11th of February.

As part of a package involving substantial International Monetary

Fund financing and a majority of European financing, Euro area

member states, are ready to contribute to coordinated bilateral loans.

This mechanism, complementing International Monetary Fund

financing, has to be considered ultima ratio, meaning in particular

that market financing is insufficient. Any disbursement on the

bilateral loans would be decided by the euro area member states

by unanimity subject to strong conditionality and based on an

assessment by the European Commission and the European

Central Bank. We expect Euro-Member states to participate on

the basis of their respective ECB capital key.

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− improving the conditions for research and development,

in particular with the aim of bringing combined public

and private investment levels in this sector to 3% of GDP;

the Commission will elaborate an indicator reflecting

R&D and innovation intensity;

− reducing greenhouse gas emissions by 20% compared

to 1990 levels; increasing the share of renewables in final

energy consumption to 20%; and moving towards a 20%

increase in energy efficiency;

the EU is committed to take a decision to move to

a 30% reduction by 2020 compared to 1990 levels

as its conditional offer with a view to a global and

comprehensive agreement for the period beyond

2012, provided that other developed countries commit

themselves to comparable emission reductions and that

developing countries contribute adequately according

to their responsibilities and respective capabilities;

− improving education levels, in particular by aiming to

reduce school drop-out rates and by increasing the share

of the population having completed tertiary or equivalent

education; taking into account the Commission’s

proposal, the European Council will set the numerical

rates of these targets in June 2010;

− promoting social inclusion, in particular through

the reduction of poverty. Further work is needed on

appropriate indicators. The European Council will revert

to this issue at its June 2010 meeting.

These targets cover the main areas where efforts are rapidly

needed. They are interrelated and mutually reinforcing. They

will help measure progress achieved in implementing the

strategy.

While some of these targets are reflected in EU legislation,

the others are not of a regulatory nature and do not imply

burden-sharing; they represent a common aim to be

pursued through a mix of national and EU level action.

c) In the light of the headline targets, Member States will

set their national targets, taking account of their relative

starting positions and national circumstances. They will do

so according to their national decision-making procedures,

in a dialogue with the Commission in order to check

consistency with the EU headline targets. The results of

this dialogue will be examined by the Council by June 2010.

I. EUROPE 2020: A NEW EUROPEAN

STRATEGY FOR JOBS AND GROWTH

1. Over the last two years, we have faced the world’s worst

economic crisis since the 1930s. This crisis has reversed

much of the progress achieved since 2000. We are now

facing excessive levels of debt, sluggish structural growth,

and high unemployment. The economic situation is

improving, but the recovery is still fragile.

2. Restoring macroeconomic stability and returning public

finances on a sustainable path are prerequisites for growth

and jobs. As agreed in December 2009, the exit from the

exceptional support measures adopted to combat the crisis,

once recovery is fully secured, will be important in that

respect.

3. Structural reforms are essential for a strong and sustainable

recovery and for preserving the sustainability of our social

models. Jobs and social welfare are at stake. If we do not

act, Europe will lose ground. The European Council’s

responsibility is to show the way ahead.

4. The EU needs a new strategy, based on an enhanced

coordination of economic policies, in order to deliver

more growth and jobs. Following the Commission’s

communication “Europe 2020: a strategy for smart,

sustainable and inclusive growth” and the discussions

held in the Council, the European Council agreed on

the following elements of this new strategy, which will be

formally adopted in June.

5. Our efforts need to be better focused in order to boost

Europe’s competitiveness, productivity, growth potential

and economic convergence:

a) The new strategy will focus on the key areas where action

is needed: knowledge and innovation, a more sustainable

economy, high employment and social inclusion.

b) The European Council agreed on the following headline

targets, which constitute shared objectives guiding the

action of the Member States and of the Union:

− aiming to bring to 75% the employment rate for women

and men aged 20-64, including through the greater

participation of youth, older workers and low skilled

workers and the better integration of legal migrants;

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The European Council discussed the European Union’s new strategy for jobs and growth. It agreed on its main elements, including the key targets which will guide its implementation and arrangements for its improved monitoring. Heads of State or government also held an exchange of views on competitiveness, a critical aspect of Europe’s growth prospects, and discussed the state of preparation for the next G20 Summit. On climate change, the European Council agreed that it

is now necessary to bring a new dynamic to the negotiation and mapped out the next steps.

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d) Coordination at the level of the eurozone will be

strengthened in order to address the challenges the euro

area is facing. The Commission will present by June 2010

proposals in that respect, making use of the new instruments

for economic coordination offered by Article 136 of the

Treaty (TFEU).

e) The EU needs to focus on the pressing challenges of

competitiveness and balance of payments developments.

The European Council will revert to this issue in June 2010.

f ) The timing of the reporting and assessment of the National

Reform Programmes and Stability and Convergence

Programmes should be better aligned, in order to enhance

the overall consistency of policy advice to Member States.

These instruments will however be kept clearly separate.

The integrity of the Stability and Growth Pact will be fully

preserved, as will the specific responsibility of the ECOFIN

Council in overseeing its implementation.

g) A close dialogue between Member States and the

Commission will help increase the quality of surveillance

and promote the exchange of best practices. This could

include bringing together experts from the Commission

and the Member States to review the situation.

h) Ensuring the quality, reliability and timeliness of statistical

data provided by national statistical offices will be central in

ensuring credible and effective monitoring. Rapid decision

is required on the Commission’s proposals in this field.

i) Close cooperation will be maintained with the European

Parliament and other EU institutions. National parliaments,

social partners, regions and other stakeholders will be

involved, so as to increase ownership of the strategy.

7. The European Council asks the President of the European

Council to establish, in cooperation with the Commission,

a task force with representatives of the Member States, the

rotating presidency and the ECB, to present to the Council,

before the end of this year, the measures needed to reach

the objective of an improved crisis resolution framework

and better budgetary discipline, exploring all options to

reinforce the legal framework.

8. Rapid progress is required on the strengthening of financial

regulation and supervision both within the EU and in

international fora such as the G20, while ensuring a level-

playing field at the global level. Progress is particularly

needed on issues such as capital requirements;

systemic institutions; financing instruments for crisis

management; increasing transparency on derivative markets

and considering specific measures in relation to sovereign

credit default swaps; and implementation of internationally

agreed principles for bonuses in the financial services sector.

The Commission will shortly present a report on possible

innovative sources of financing such as a global levy on

financial transactions.

d) The new strategy will address the main bottlenecks

constraining growth at national and at EU level, including

those related to the working of the internal market and

infrastructure.

e) The Member States will draw up National Reform

Programmes setting out in detail the actions they will

undertake to implement the new strategy, with a particular

emphasis on efforts to meet the national targets as well as

on measures to lift the bottlenecks that constrain growth

at the national level.

f ) The Commission will further develop and submit to the

Council the actions it proposesto take at the EU level,

notably through the flagship initiatives.

g) All common policies, including the common agricultural

policy and cohesion policy, will need to support the strategy.

A sustainable, productive and competitive agricultural

sector will make an important contribution to the new

strategy, considering the growth and employment potential

of rural areas while ensuring fair competition. The European

Council stresses the importance of promoting economic,

social and territorial cohesion as well as developing

infrastructure in order to contribute to the success of the

new strategy.

h) The strategy will include a strong external dimension, to

ensure that EU instruments and policies are deployed to

promote our interests and positions on the global scene

through participation in open and fair markets worldwide.

6. Efficient monitoring mechanisms are key for the successful

implementation of the strategy:

a) Building on the monitoring by the Commission and the

work done in the Council, the European Council will, once

a year, make an overall assessment of progress achieved both

at EU and at national level in implementing the strategy.

The development of productivity is an essential indicator of

progress. Macroeconomic, structural and competitiveness

developments will be considered simultaneously, together

with the assessment of overall financial stability, based on

input from the European Systemic Risk Board.

b) The European Council will regularly hold debates dedicated

to economic developments and the main priorities of the

strategy. In October 2010, it will discuss research and

development, in particular looking at how to boost Europe’s

innovation potential in the light of current challenges. In

early 2011 it will discuss energy policy, including how it

can best support the shift towards an efficient low-carbon

economy and greater security of supply.

c) Overall economic policy coordination will be

strengthened by making better use of the instruments

provided by Article 121 of the Treaty (TFEU).

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as the overall balance of the global effort to tackle climate

change.

c) The European Council remains firmly committed to the

UNFCCC process. It supports ongoing efforts to make

it more effective. Given the short time available before

Cancun, this process could usefully be complemented and

supported by discussions in other settings and on specific

issues.

d) The EU will strengthen its outreach to third countries. It

will do so by addressing climate change at all regional and

bilateral meetings, including at summit level, as well as other

fora such as the G20. The Presidency and the Commission

will engage in active consultations with other partners and

rapidly report back to the Council.

e) Opportunities for cooperation, including with industrialised

partners, need to be exploited in areas such as green

technologies and norms and verification techniques.

Common interests with emerging countries on issues which

could create leverage in the climate change debate should

be rapidly identified.

14. There is an urgent need to reverse continuing trends of

biodiversity loss and ecosystem degradation. The European

Council is committed to the long term biodiversity

2050 vision and the 2020 target set out in the Council’s

conclusions of 15 March 2010.

15. The President of the European Council announced that he

would convene a special meeting of the European Council

in September 2010, in the presence of the Ministers of

Foreign Affairs, in order to discuss how the Union can better

engage with its strategic partners on global issues.

—The European Council appointed Mr Vítor Constâncio as Vice-

President of the ECB.

It also endorsed the Internal Security Strategy.

—

ANNEX

NEW EUROPEAN STRATEGY FOR JOBS

AND GROWTH NEXT STEPS

a) Taking account of the EU headline targets, the Commission

will rapidly present, in accordance with the Treaty, its

proposals for more focused integrated guidelines, including

the employment guidelines and the broad economic policy

guidelines. The guidelines will be discussed by the Council

so that, after the consultation of the European Parliament

9. This requires that the EU make rapid progress on all these

issues internally. In particular, work on the new European

supervisory framework needs to be concluded in time for

the European Systemic Risk Board and the three European

Supervisory Authorities to begin work in early 2011.

10. The Council and the Commission will report back on

these issues to the June 2010 European Council, ahead of

the Toronto Summit.

II. CLIMATE CHANGE: REFOCUSING OUR

EFFORTS AFTER COPENHAGEN

11. A global and comprehensive legal agreement remains the

only effective way to reach the agreed objective of staying

below 2°C increase in global temperatures compared to

preindustrial levels. On the basis of the conclusions reached

by the Council on 15 and 16 March 2010, and taking note

of the Commission’s communication of 9 March 2010, it is

now necessary to bring a new dynamic to the international

negotiation process.

12. A stepwise approach should be followed, building on the

Copenhagen Accord, which should be swiftly implemented:

a) As a first step, the next meetings in Bonn should set the

roadmap for taking the negotiations forward. The focus

should be on integrating the political guidance of the

Copenhagen Accord into the various negotiating texts.

b) The COP-16 in Cancun should at least provide concrete

decisions anchoring the Copenhagen Accord to the

UN negotiating process and addressing remaining gaps,

including as regards adaptation, forestry, technology and

monitoring, reporting and verification.

13. The EU is prepared to play its part in this process:

a) The EU and its Member States will implement their

commitment to provide EUR 2.4 billion annually over

the 2010-2012 period for fast-start financing, alongside

contributions by other key players and in the framework of

the implementation of the Copenhagen Accord. The swift

implementation of this commitment will be crucial. To that

end, the EU will initiate consultations on practical ways to

implement fast start funding in specific areas. The EU and

its Member States will present a preliminary state of play

of their commitments at the May/June 2010 UNFCCC

session and submit coordinated reports on implementation

in Cancun and thereafter on an annual basis.

b) The EU and other developed countries have committed

to jointly mobilise USD 100 billion per year by 2020 to

help developing countries fight climate change. Financial

contributions in the longer term need to be seen in the

context of meaningful and transparent actions to be taken

by developing countries to mitigate climate change as well

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d) In this first year of the new strategy, the Member States

will present their National Reform Programmes in the

Autumn 2010, setting out in detail the actions they will

undertake to implement the strategy. These should be

fully supported by mobilising all relevant EU instruments,

including innovative financing instruments in cooperation

with the EIB Group, as incentives for reform.

e) The Commission will present by October 2010 the actions

required at EU level to implement the new strategy, notably

through the flagship initiatives.

f ) The Council will better align the timing of processes with a

view to enhancing the overall consistency of policy advice

to Member States.

and other institutions on the employment guidelines, they

can be endorsed by the June 2010 European Council.

b) The main bottlenecks constraining growth at EU level are

being identified by the Commission and will be discussed

by the Council; the same will be done by the Member States

at their level, in close cooperation with the Commission.

The June 2010 European Council will take stock of this

work, so that it can be taken into account in the drawing

up of the National Reform Programmes.

c) The national targets, as set out in paragraph 5c) of these

conclusions, should be submitted in time to be taken

into account in the drawing up of the National Reform

Programmes.

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— Second, we fully support the ECB in its action to ensure

the stability of the euro area.

— Third, taking into account the exceptional circumstances,

the Commission will propose a European stabilization

mechanism to preserve financial stability in Europe. It will be

submitted for decision to an extraordinary ECOFIN meeting

that the Spanish presidency will convene this Sunday May 9th.

3. Strengthening economic governance

We have decided to strengthen the governance of the euro area.

In the context of the Task Force headed by the President of the

European Council, we are prepared to :

— broaden and strengthen economic surveillance and policy

coordination in the euro area, including by paying close

attention to debt levels and competitiveness developments;

— reinforce the rules and procedures for surveillance of euro

area Member States, including through a strengthening of

the Stability and Growth Pact and more effective sanctions;

— create a robust framework for crisis management,

respecting the principle of Member States' own budgetary

responsibility.

The President of the European Council decided to accelerate the

work of the Task Force. The Commission will present its proposals

next week on May 12.

4. Regulation of the financial markets and the fight against speculation

Finally, we agreed that the current market turmoil highlights the

need to make rapid progress on financial markets regulation and

supervision. Increasing transparency and supervision in derivatives

markets and dealing with the role of rating agencies are among the

key priorities for the EU. We also agreed on intensifying the work

on crisis management and resolution in the financial sector and on

a fair and substantial contribution of the financial sector to the costs

of crises. The work on assessing whether more steps are necessary

in view of recent speculation against sovereign debtors should be

sped up. The President of the European Council therefore intends

to discuss these issues at the June European Council, on the basis,

where needed, of Commission proposals.

1. Implementation of the support package for Greece

In February and in March, we committed to take determined and

coordinated action to safeguard financial stability in the euro area

as a whole.

Following the request by the Greek government on April 23 and

the agreement reached by the Eurogroup on May 2, we will provide

Greece with 80 billion euros in a joint package with the IMF of

110 billion euros. Greece will receive a first disbursement in the

coming days, before May 19.

The programme adopted by the Greek government is ambitious

and realistic. It addresses the grave fiscal imbalances, will make the

economy more competitive, and will create the basis for stronger

and more sustainable growth and job creation.

The Greek Prime Minister has reiterated the total commitment

of the Greek government to the full implementation of these vital

reforms.

The decisions we are taking reflect the principles of responsibility

and solidarity, enshrined in the Lisbon Treaty, which are at the core

of the monetary union.

2. Response to the current crisis

In the current crisis, we reaffirm our commitment to ensure the

stability, unity and integrity of the euro area. All the institutions

of the euro area (Council, Commission, ECB) as well as all euro

area Member States agree to use the full range of means available

to ensure the stability of the euro area.

Today, we agreed on the following :

— First, consolidation of public finances is a priority for all of

us and we will take all measures needed to meet our fiscal

targets this year and in the years ahead in line with excessive

deficit procedures. Each one of us is ready, depending on

the situation of his country, to take the necessary measures

to accelerate consolidation and to ensure the sustainability of

public finances. The situation will be reviewed by the Ecofin

Council on the basis of a Commission assessment by the end

of June at the latest. We have asked the Commission and the

Council to strictly enforce the recommendations addressed

to Member States under the Stability and Growth Pact.

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account. Several Member States have recently strengthened

and frontloaded budgetary consolidation. All Member

States are ready, if necessary, to take additional measures

to accelerate fiscal consolidation. Priority should be given

to growth-friendly budgetary consolidation strategies

mainly focused on expenditure restraint. Increasing the

growth potential should be seen as paramount to ease fiscal

adjustment in the long run.

3. The European Council confirms the five EU headline

targets (annex I) which will constitute shared objectives

guiding the action of Member States and the Union as

regards promoting employment; improving the conditions

for innovation, research and development; meeting our

climate change and energy objectives; improving education

levels and promoting social inclusion in particular through

the reduction of poverty. It agrees on the quantification of

the education and social inclusion/poverty indicators, as

agreed by the Council. It gives its political endorsement to

the Integrated Guidelines for economic and employment

policies, which will be formally adopted following the

European Parliament’s opinion on the latter. The guidelines

will continue to be the basis for any country-specific

I. A NEW EUROPEAN STRATEGY FOR JOBS

AND GROWTH

Finalising and implementing the Europe 2020 Strategy1. The European Council today has finalised the European

Union’s new strategy for jobs and smart, sustainable and

inclusive growth. The strategy will help Europe recover

from the crisis and come out stronger, both internally and

at the international level, by boosting competitiveness,

productivity, growth potential, social cohesion and

economic convergence.

The new strategy responds to the challenge of reorienting

policies away from crisis management towards the

introduction of medium- to longer-term reforms that

promote growth and employment and ensure the

sustainability of public finances, inter alia through the reform

of pension systems.

2. Member States are determined to ensure fiscal sustainability

and achieve budgetary targets without delay. They

will continue to adopt a differentiated speed in fiscal

consolidation taking both fiscal and non-fiscal risks into

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The EU has met the worldwide financial crisis with united resolve and has done what was necessary to safeguard the stability of the Economic and Monetary Union. In particular, in May agreement was reached on a support package for Greece as well as on a European financial stabilisation mechanism and facility, which was finalised in June. We have been laying the foundations for much stronger economic governance. We remain committed to taking all necessary action to put our economies back on the path of sustainable and job-creating growth.

To that end, today:

− we adopt “Europe 2020”, our new strategy for jobs and smart, sustainable and inclusive growth. It constitutes a coherent framework for the Union to mobilise all of its instruments and policies and for the Member States to take enhanced coordinated action. It will promote the delivery of structural reforms. The emphasis must now be on implementation, and we will guide and monitor this process. We will discuss further, over the coming months, how specific policies can be mobilised to unlock the EU’s growth potential, starting with innovation and energy policies;

− we reaffirm our collective determination to ensure fiscal sustainability, including by accelerating plans for fiscal consolidation where warranted;

− we confirm our commitment to ensuring financial stability by addressing the gaps inregulation and supervision of financial markets, both at the level of the EU and at the G20. We agree to rapidly advance on key legislative measures so that the new supervisory bodies can start work from the beginning of next year and set an ambitious position for the EU to take at the Toronto Summit;

− we fully agree on the urgent need to reinforce the coordination of our economic policies. We agree on first orientations as regards the Stability and Growth Pact and budgetary surveillance as well as broader macroeconomic surveillance. We look forward to the final report of the Task Force in October.

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Enhancing economic governance9. The crisis has revealed clear weaknesses in our economic

governance, in particular as regards budgetary and broader

macroeconomic surveillance. Reinforcing economic policy

coordination therefore constitutes a crucial and urgent

priority.

10. The European Council welcomes the progress report of

the President of the Task Force on economic governance

and agrees on a first set of orientations.

11. The present rules on budgetary discipline must be fully

implemented. As regards their strengthening, the European

Council agrees on the following orientations :

a) strengthening both the preventive and corrective arms of

the Stability and Growth Pact, with sanctions attached to

the consolidation path towards the medium term objective;

these will be reviewed so as to have a coherent and

progressive system, ensuring a level playing field across

Member States. Due account will be taken of the particular

situation of Member States which are members of the euro

area and Member States’ respective obligations under the

Treaties will be fully respected;

b) Giving, in budgetary surveillance, a much more prominent

role to levels and evolutions of debt and overall sustainability,

as originally foreseen in the Stability and Growth Pact;

c) from 2011 onwards, in the context of a “European semester”,

presenting to the Commission in the spring Stability and

Convergence Programmes for the upcoming years, taking

account of national budgetary procedures;

d) ensuring that all Member States have national budgetary

rules and medium term budgetary frameworks in line

with the Stability and Growth Pact; their effects should be

assessed by the Commission and the Council;

e) ensuring the quality of statistical data, essential for a sound

budgetary policy and budgetary surveillance; statistical

offices should be fully independent for data provision.

12. As regards macro-economic surveillance, it agrees on the

following orientations:

a) developing a scoreboard to better assess competitiveness

developments and imbalances and allow for an early

detection of unsustainable or dangerous trends;

b) developing an effective surveillance framework, reflecting

the particular situation of euro area Member States.

13. The European Council invites the Task Force and the

Commission to rapidly develop further and make

operational these orientations. It looks forward to the

final report of the Task Force, covering the full scope of its

mandate, for its meeting in October 2010.

recommendations that the Council may address to Member

States. These recommendations shall be fully in line with

relevant Treaty provisions and EU rules and shall not alter

Member States’ competences, for example in areas such as

education.

4. Member States must now act to implement these policy

priorities at their level. They should, in close dialogue with

the Commission, rapidly finalise their national targets, taking

account of their relative starting positions and national

circumstances, and according to their national decision-

making procedures. They should also identify the main

bottlenecks to growth and indicate, in their National Reform

Programmes, how they intend to tackle them. Progress

towards the headline targets will be regularly reviewed.

5. All common policies, including the common agricultural

policy and cohesion policy, will need to support the strategy.

A sustainable, productive and competitive agricultural

sector will make an important contribution to the new

strategy, considering the growth and employment potential

of rural areas while ensuring fair competition. The European

Council stresses the importance of promoting economic,

social and territorial cohesion as well as developing

infrastructure in order to contribute to the success of the

new strategy. Full use should be made of the strategy’s

external dimension, notably via the trade strategy that the

Commission will present by the end of the year. Efforts

should seek to address the main bottlenecks constraining

growth at EU level, including those related to the working

of the internal market and infrastructure, as well as the need

for a common energy policy and a new ambitious industrial

policy.

6. In particular, Europe’s Single Market needs be taken to

a new stage, through a comprehensive set of initiatives.

The European Council welcomes the report presented

by Mr Mario Monti on a new strategy for the Single Market

and the Commission’s intention to follow it up by presenting

concrete proposals. The European Council will revert to

this matter in December 2010.

7. Further to the presentation by the Commission of the

first flagship initiative on a ‘Digital Agenda for Europe’,

the European Council endorses the establishment of an

ambitious action agenda based on concrete proposals and

calls upon all institutions to engage in its full implementation,

including the creation of a fully functioning digital single

market by 2015. The Commission is invited to report on

progress achieved by the end of 2011.

8. The European Council looks forward to the presentation

of the other flagship initiatives before the end of the year.

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boost competitiveness, consolidate public finances and

reform its financial sector will enable it to put forward

strong positions for similar international action at the

forthcoming G20 Summit.

The EU should lead efforts to set a global approach for

introducing systems for levies and taxes on financial

institutions with a view to maintaining a world-wide level

playing field and will strongly defend this position with

its G20 partners. The introduction of a global financial

transaction tax should be explored and developed further

in that context.

18. With a view to the Toronto Summit, the European

Council confirms the orientations agreed by the Council

and reflected in the Terms of Reference prepared for the

Busan Ministerial Meeting. Given the major risks that late

exit from extraordinary fiscal stimulus would entail for

public accounts’ sustainability, the G20 should agree on

a coordinated and differentiated exit strategy to ensure

sustainable public finances. All major economies need to

do their part to achieve the agreed objective of a strong,

sustainable and balanced growth. The G20 must reaffirm

its commitment to the reform of the financial system and

make rapid progress in a consistent and coordinated manner

on the whole range of actions agreed upon in Pittsburgh, to

strengthen the resilience and transparency of our financial

system, including through better quality additional capital

and new liquidity buffer. In the IMF, quotas should be

reviewed as part of a wider package of IMF governance

issues, covering all elements agreed in Pittsburgh and

Istanbul, and be completed, as a single and comprehensive

package by November 2010.

III. MILLENNIUM DEVELOPMENT GOALS

19. The forthcoming UN High Level Plenary Meeting on

the Millennium Development Goals constitutes a unique

opportunity to strengthen our collective endeavours and

our partnerships with developing countries to eliminate

global poverty, hunger and inequality. The conclusions

adopted by the Council on 14 June provide the European

Union with a strong position for this meeting.

20. The European Union remains determined to support the

achievement of the MDGs globally by 2015. This is possible

if all partners demonstrate firm political commitment,

implement necessary policy changes and take concrete

action. The European Union calls on the High Level Plenary

Meeting to agree on concrete actions aimed at: increasing

ownership by developing countries; focusing efforts;

improving the impact of policies; mobilising more and

predictable financing for development, including innovative

Regulating financial services14. The necessary reforms to restore the soundness and stability

of the European financial system must be completed

urgently. The resilience and transparency of the banking

sector must be ensured. Progress in the next few months

is essential. The European Council agrees that the results of

ongoing stress tests by banking supervisors will be disclosed

at the latest in the second half of July. The Commission’s

communication on “Regulating Financial Services for

sustainable growth” of 2 June 2010 sets out a comprehensive

list of initiatives to be undertaken and completed before the

end of 2011. The EU must demonstrate its determination

to bring about a safer, sounder, more transparent and more

responsible financial system.

15. In particular, the European Council:

a) calls on the Council and the European Parliament to rapidly

adopt the legislative proposals on financial supervision to

ensure that the European Systemic Risk Board and the three

European Supervisory Authorities can begin working from

the beginning of 2011;

b) calls for agreement on the legislative proposal on alternative

investment fund managers before the summer and for

the swift examination of the Commission’s proposal on

the improvement of the EU’s supervision of credit rating

agencies;

c) looks forward to proposals announced by the Commission

on derivative markets and in particular appropriate measures

on short selling (including “naked” short selling) and credit

default swaps.

16. The European Council agrees that Member States should

introduce systems of levies and taxes on financial institutions

to ensure fair burden-sharing and to set incentives to contain

systemic risk.1 Such levies or taxes should be part of a

credible resolution framework. Further work is urgently

required on their main features and issues of level playing

field and cumulative impacts of various regulatory measures

should be carefully assessed. The European Council invites

the Council and the Commission to take this work forward

and report back in October 2010.

II. G 20 TORONTO SUMMIT

17. The Union’s response to the crisis must continue to be

coordinated at the global level to ensure that measures

are internationally consistent. The action it is taking to

1 The Czech Republic reserves its right not to introduce these measures.

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by the EFTA Surveillance Authority under the EEA

Agreement, and other areas of weakness identified in the

Commission’s Opinion, including in the area of financial

services. The European Council welcomes Iceland’s

commitment to address these issues and expresses its

confidence that Iceland will actively pursue its efforts

to resolve all outstanding issues. The European Council

confirms that the negotiations will be based on Iceland’s

own merits and that the pace will depend on Iceland’s

progress in meeting the requirements set out in the

negotiating framework, which will address i.a. the above

requirements.

26. The European Council congratulates Estonia on the

convergence it has achieved, based on sound economic

and financial policies, and welcomes its fulfilment of all the

convergence criteria as set out in the Treaty. It welcomes

the Commission’s proposal that Estonia adopt the euro

on 1 January 2011.

27. The European Council adopts a Declaration on Iran

(annex II).

28. Confirming its previous conclusions of December 2008 and

June 2009, and following on its decision of December 2009

to examine transitional measures regarding the addition

of 18 seats in the European Parliament until the end of

the present 2009-2014 parliamentary term, the European

Council adopts a decision (doc. EUCO 11/10) to pursue

the necessary procedure to adopt those measures.

ANNEXES

I. NEW EUROPEAN STRATEGY FOR JOBS

AND GROWTH EU HEADLINE TARGETS

− aiming to raise to 75% the employment rate for women and

men aged 20-64, including through the greater participation

of young people, older workers and low-skilled workers and

the better integration of legal migrants;

− improving the conditions for research and development,

in particular with the aim of raising combined public and

private investment levels in this sector to 3% of GDP; the

Commission will elaborate an indicator reflecting R&D

and innovation intensity;

− reducing greenhouse gas emissions by 20% compared

to 1990 levels; increasing the share of renewables in final

energy consumption to 20%; and moving towards a 20%

increase in energy efficiency;

sources of financing; and making more effective use of

development resources. The European Council reaffirms

its commitment to achieve development aid targets by

2015 as set out in its June 2005 conclusions. The European

Council agrees to return to this annually on the basis of a

report by the Council.

IV. CLIMATE CHANGE

21. The European Council takes note of the Commission’s

communication analysing options to move beyond 20%

greenhouse gas emission reductions and assessing the

risk of carbon leakage. In line with the conclusions of the

Council of 11 June, the Commission will undertake further

analyses, including consequences for each Member State,

and the Council will examine further the issues raised in

the communication. As shown in the ECOFIN report,

the EU and its Member States have advanced in the

implementation of their fast start commitments for 2010

and will report at the Cancun conference in a coordinated

manner on progress achieved. The European Council will

revert to climate change in the autumn, in advance of the

Cancun conference.

V. OTHER ISSUES

22. The European Council expresses its appreciation for the

work achieved by the Reflection Group. The Group’s report

on “Project Europe 2030 - Challenges and Opportunities”

will provide useful input for the European Union’s work in

the future.

23. The European Council welcomes the progress achieved

in implementing the European Pact on Immigration and

Asylum and endorses the conclusions of the Council of

3/4 June.

24. The European Council welcomes the Commission opinion

on Iceland’s application for membership of the EU and the

recommendation that accession negotiations should be

opened. Having considered the application on the basis

of the opinion and its December 2006 conclusions on the

renewed consensus for enlargement, it notes that Iceland

meets the political criteria set by the Copenhagen European

Council in 1993 and decides that accession negotiations

should be opened.

25. The European Council invites the Council to adopt a general

Negotiating Framework. It recalls that negotiations will

be aimed at Iceland integrally adopting the EU acquis

and ensuring its full implementation and enforcement,

addressing existing obligations such as those identified

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concerns. In this regard, the European Council notes the

last report of the IAEA of 31 May.

4. Under these circumstances, new restrictive measures

have become inevitable. The European Council, recalling

its declaration of 11 December 2009 and in the light

of the work undertaken by the Foreign Affairs Council

thereafter, invites the Foreign Affairs Council to adopt at

its next session measures implementing those contained

in the UN Security Council Resolution 1929 as well as

accompanying measures, with a view to supporting the

resolution of all outstanding concerns regarding Iran’s

development of sensitive technologies in support of its

nuclear and missile programmes, through negotiation.

These should focus on the areas of trade, especially dual

use goods and further restrictions on trade insurance; the

financial sector, including freeze of additional Iranian banks

and restrictions on banking and insurance;

the Iranian transport sector, in particular the Islamic

Republic of Iran Shipping Line (IRISL) and its subsidiaries

and air cargo; key sectors of the gas and oil industry with

prohibition of new investment, technical assistance and

transfers of technologies, equipment and services related

to these areas, in particular related to refining, liquefaction

and LNG technology; and new visa bans and asset freezes

especially on the Islamic Revolutionary Guard Corps

(IRGC).

5. The European Council confirms once again the commitment

of the European Union to work for a diplomatic solution

of the issue of Iran’s nuclear programme. The European

Council calls on Iran to demonstrate willingness to build

the confidence of the international community and to

respond to the invitation for resumption of negotiations,

and reaffirms the validity of the June 2008 proposals made

to Iran.

6. What is needed is a serious negotiation concerning Iran's

nuclear programme and other issues of mutual concern.

The European Council underlines that the EU High

Representative for Foreign Affairs and Security Policy is

ready to resume talks in this regard.

the EU is committed to taking a decision to move to a

30% reduction by 2020 compared to 1990 levels as its

conditional offer with a view to a global and comprehensive

agreement for the period beyond 2012, provided that other

developed countries commit themselves to comparable

emission reductions and that developing countries

contribute adequately according to their responsibilities

and respective capabilities;

− improving education levels, in particular by aiming to reduce

school drop-out rates to less than 10% and by increasing

the share of 30-34 years old having completed tertiary or

ent education to at least 40%;2

− promoting social inclusion, in particular through the

reduction of poverty, by aiming to lift at least 20 million

people out of the risk of poverty and exclusion.3

II. DECLARATION ON IRAN

1. The European Council underlines its deepening concerns

about Iran’s nuclear programme and welcomes the adoption

by the UN Security Council of Resolution 1929 introducing

new restrictive measures against Iran.

2. The European Council welcomes the recent efforts by Brazil

and Turkey to secure progress on the Tehran Research

Reactor agreement proposed to Iran by the IAEA in

October 2009. A satisfactory agreement with Iran on the

TRR could serve as a confidence building measure.

However, the European Council stresses that it would

not address the core of Iran’s nuclear issue. The European

Council urges Iran to engage in negotiations on its nuclear

programme.

3. The European Council reaffirms the rights and

responsibilities of Iran under the NPT. The European

Council deeply regrets that Iran has not taken the many

opportunities which have been offered to it to remove the

concerns of the international community over the nature

of the Iranian nuclear programme. The decision by Iran to

enrich uranium to the level of 20 per cent, contrary to its

international obligations under existing UNSC and IAEA

Board of Governors Resolutions has further increased these

2 The European Council emphasises the competence of Member States to define and implement quantitative targets in the field of education.

3 The population is defined as the number of persons who are at risk-of-poverty and exclusion according to three indicators (at-risk-of poverty; material deprivation; jobless household), leaving Member States free to set their national targets on the basis of the most appropriate indicators, taking into account their national circumstances and priorities.

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for enhanced coordination between institutional actors, for

better integration of all relevant instruments and policies, and

for summit meetings with third countries to be used more

effectively, as set out in more detail in Annex I.

4. The European Union’s strategic partnerships with key

players in the world provide a useful instrument for

pursuing European objectives and interests. This will only

work if these partnerships are two-way streets based on

mutual interests and benefits and on the recognition that

all actors have rights as well as duties. The full participation

of emerging economies in the international system should

allow its benefits to be spread in a balanced manner and

its responsibilities to be shared evenly. In this context,

enhancing trade with strategic partners constitutes a crucial

objective, contributing to economic recovery and job

creation. We must take concrete steps to secure ambitious

Free Trade Agreements, secure greater market access for

European businesses and deepen regulatory cooperation

with major trade partners.

Orientations for upcoming events5. The European Union will hold a number of important

international meetings in the coming weeks. The European

Council lays out initial orientations today with a view to

these meetings. It will in future regularly discuss external

relations in order to set strategic orientations in advance

of key events, in particular with a view to defining key

messages on our objectives and on the means to achieve

them. This requires clear strategic guidance by the European

Council on the basis of effective preparation by the High

Representative and by the Council.

6. October will see summits with China and the Republic of

Korea and the Asia-Europe Meeting (ASEM), followed

later in the year by a summit with India. They are a good

opportunity to engage with key partners in a very dynamic

part of the world. Issues such as our respective roles in

achieving a sustainable recovery from the economic crisis

I. RELATIONS WITH STRATEGIC PARTNERS

A changing world: a challenge for the EU1. Europe is facing many challenges in a rapidly changing world,

which all require a concerted international response. The

recent economic and financial crisis has dramatically shown

the extent to which the well-being, security and quality of

life of Europeans depend on external developments. The

emergence of new players with their own world views and

interests is also an important new feature in the international

environment.

2. The European Union must be an effective global actor,

ready to share in the responsibility for global security

and to take the lead in the definition of joint responses

to common challenges. A strong economy and internal

cohesion will strengthen the Union’s ability to project its

influence in the world. The Union can draw on its firmly-

rooted belief in effective multilateralism, especially the role

of the UN, universal values, an open world economy and

on its unique range of instruments. It remains the largest

donor to countries in need, it is the first trading power in

the world, and it has developed a common security and

defence policy supported by crisis management tools which

should be further reinforced. It also plays a major stabilizing

role in its neighbourhood. The Union has secured stability

in the Western Balkans particularly through the European

perspective given to that region; the European Council will

return to this at a subsequent meeting.

3. In accordance with the Lisbon Treaty, and in line with the

European Security Strategy, the European Union and its

Member States will act more strategically so as to bring

Europe’s true weight to bear internationally. This requires

a clear identification of its strategic interests and objectives

at a given moment and focused reflection on the means to

pursue them more assertively. The European Council calls

for improved synergies between the European Union and

national levels, consistent with the provisions of the Treaties,

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The European Council discussed how to give new momentum to the Union’s external relations, taking full advantage of the opportunities provided by the Lisbon Treaty. It agreed on the need for Europe to promote its interests and values more assertively and in a spirit of reciprocity and mutual benefit. As a first step, it set general orientations with a view to a number of important events over the coming weeks and months. It also decided on a number of concrete measures to more generally enhance the effectiveness of the Union’s external policy. The European Council took stock of progress achieved in the Task Force on economic governance.

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October 2010 European Council will agree on the key

political messages the European Union representatives will

bring to this major summit. Based on a good understanding

of our mutual interests and respective contributions, the

transatlantic partnership should concentrate on maximising

the potential benefits of our economic relationship, on

working more closely on major international issues and

on confronting global economic and security challenges

together in a concerted manner. In this connection,

the High Representative is invited to develop ideas on

how EU/NATO cooperation in crisis management, in

accordance with the United Nations Charter and with

the relevant United Nations Security Council resolutions,

could be further strengthened. This should be done in

a spirit of mutual reinforcement and with due respect

for their decision-making autonomy, further to the

recommendations on concrete measures transmitted by

the EU to NATO in February 2010.

c. The European Council will take stock of preparations for

the Cancun conference on climate change at its October

meeting and agree on the EU position. Cancun should be

a stepping stone in the international climate negotiations,

agreeing on concrete deliverables for all participants to

create momentum and stay on track for an ambitious final

agreement.

d. The upcoming reflection on the implementation of

the European Neighbourhood Policy will provide an

opportunity to deepen relations with the Union’s eastern

neighbours through the Eastern Partnership as well as with

its southern neighbours. The smooth implementation of

projects launched within the Eastern Partnership constitutes

an outreach of EU values and promotes the legal, economic

and social approximation of the countries concerned to the

EU. The second summit of the Union for the Mediterranean

will provide a timely opportunity to strengthen Euro-

Mediterranean cooperation and support the resumption

of direct negotiations between the parties in the Middle

East Peace Process.

e. EU/Africa relations have taken on a new dynamic in recent

years. The EU/South Africa Summit on 28 September 2010

and the EU/Africa Summit on 29/30 November 2010 should

serve to further deepen elations. The EU, in partnership with

African countries, will continue to pursue the objectives of

economic development, good governance, transparency

and accountability in the context of the joint EU/Africa

Strategy.

f. The 20-22 September UN High Level Plenary Meeting

on the Millennium Development Goals will be held in

New York. The European Union is firmly committed to

supporting the achievement of the MDG globally by 2015,

together with partners in the international community.

and in seeking global solutions to universal challenges

will be on the agenda. Concrete steps should be taken in

priority areas of cooperation between Europe and Asia,

such as cooperation on climate change, including on

the promotion of effective and verifiable reductions in

emissions, as well as on renewables and energy efficiency;

pressing security issues, such as proliferation, terrorism,

cybersecurity and piracy; cooperation on regional issues

such as Iran and North Korea as well as on global issues such

as migration, energy and access to raw materials; working

together on development policies and the promotion of

good governance, labour standards and human rights and

developing people-to-people relations.

In view of the EU/China summit in particular, the European

Union should actively pursue its strategic interests, including

as regards the promotion of bilateral trade, market access for

goods and services and investment conditions; the protection

of intellectual property rights and the opening up of public

procurement markets; stronger discipline in the field of export

subsidies; and the dialogue on exchange rate policies.

7. Over the coming months there will be a number of other

important external relations issues which will have to be

addressed by the European Council.

a. The G20 Summit in Seoul will allow a review of the global

economic recovery and the commitments made by G20

members. In particular, it will allow the Union to stress the

importance of maintaining strong momentum in the area

of financial reform; in this respect, the recent agreement

between the European Parliament and the Council on

the financial supervision package and the completion of

the reform of the regulatory framework by the end of 2011

strengthen the EU’s hand. It should also serve to send a clear

signal on the need to conclude the WTO DDA negotiations

and implement the Framework for Strong, Sustainable and

Balanced Growth. The European Council will discuss

the detailed preparation of Seoul at its October 2010

meeting and determine the Union’s position. The G8

and the G20 will remain important fora for the definition

of global responses to many of the challenges facing us, to

which the EU must actively contribute through coordinated

positions. The European Council therefore welcomes the

ambition of the incoming French chairmanship in 2011 to

fully use the G20 and G8 to that end.

b. The transatlantic relationship is based on common values

and constitutes a core element of the international system.

The present circumstances call for fresh impetus to be

given to this relationship and for renewed reflection on

ways of creating a true partnership based on our respective

strengths and specificities. The November 2010 summit

with President Obama will constitute a real opportunity

in this respect and will require careful preparation. The

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governance, and looks forward to receiving for its

October 2010 meeting the final report of the Task Force,

encompassing all aspects of the mandate given by the

European Council of March 2010 and presenting a

comprehensive package of measures which will guide

legislative work.

ANNEXES

I. INTERNAL ARRANGEMENTS TO

IMPROVE THE EUROPEAN UNION’S

EXTERNAL POLICY

a) Looking at concrete measures to more generally improve

the functioning of the European Union’s external policy,

the European Council calls for a more integrated approach,

ensuring that all relevant EU and national instruments and

policies are fully and coherently mobilised, consistent with

the provisions of the Treaties, in support of the European

Union’s strategic interests. The importance of issues like

climate change, energy policy, trade, development or

Justice and Home Affairs issues, including migration and

visa policy in dealings with partners and at a multilateral

level must be fully taken into account in preparations

for summits and international events. In this regard the

European Union should further enhance the coherence and

complementarity between its internal and external policies.

The practice of holding orientation debates well before

summits should be further developed, with a particular

emphasis on setting priorities and concrete tasking.

b) Synergies need to be developed between the European

Union’s external relations and Member States bilateral

relations with third countries, so that, where appropriate,

what is done at the level of the European Union

complements and reinforces what is done at the level of

the Member States and vice versa. There should be more

active and regular sharing of information and consultation

on developments at the respective levels, on the basis of a

running calendar of EU and Member States’ summits with

major strategic partners.

c) Close and regular coordination between all the different

institutional actors involved in the definition and

implementation of the European Union’s external relations

is necessary to ensure that EU representatives can defend

coherent positions on the whole range of the strategic

interests and objectives of the Union.

d) Much progress has been achieved in the preparation, at

the level of the European Union, for multilateral summits,

notably through the practical arrangements reached

g. The upcoming summits with Ukraine in November and

Russia in December should be used to deepen cooperation

on areas of mutual benefit, so as to bring more stability and

predictability to those two important relationships, as well

as to promote human rights.

In particular, the summit with Ukraine should bring progress

to the negotiations on the Association Agreement, including

the deep and comprehensive Free Trade Agreement, and

highlight the role of the EU in the economic and democratic

reforms of this important neighbour.

The summit with Russia will provide an opportunity

to enhance cooperation with Russia and to discuss in

particular its modernization agenda. Cooperation should

be enhanced on economic issues such as energy, investment

and innovation, on security issues, including frozen conflicts,

the combat against terrorism and organized crime, and on

environmental issues, including climate change.

The October European Council will come back to the key

messages of the European Union in these summits so as to

ensure a fruitful outcome.

h. Building on the successful summit held this year with

its Latin American and Caribbean partners, the EU is

committed to continuing to work closely together with the

countries of the region in response to the global challenges

facing us.

8. Pakistan’s development and stability is of strategic

importance to the European Union. In light of the

devastating floods, the European Union and its Member

States have responded with an increase in bilateral and

multilateral humanitarian aid. The European Council

adopted a declaration on Pakistan (Annex II).

9. The European Union will remain actively engaged and

involved, including through the Quartet, to support and

ensure the success of the negotiations between Israel and

the Palestinian Authority. The European Council adopted

a declaration on the Middle East Peace Process (Annex III).

II. TASK FORCE ON ECONOMIC

GOVERNANCE

10. On the basis of an interim report of the President of

the Task Force on economic governance, the European

Council welcomes the important progress made, notably

on the European semester, on the development of a new

macro-surveillance framework to monitor and correct

unsustainable competitiveness divergences and imbalances

in a timely manner and on the strengthening of national

fiscal frameworks.

11. The European Council underlines the need to maintain

momentum on the reform of European economic

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2. The European Council recalls the recent efforts of the EU

(Member States and the Commission) in response to the

crisis, notably the provision of significant humanitarian aid.

It recognises the importance of further support to Pakistan

to bring immediate relief and longer term assistance for

recovery and reconstruction.

3. To this end, the European Council resolves to mandate

Ministers to agree urgently a comprehensive package of

short, medium and longer term measures which will help

underpin Pakistan’s recovery and future development. These

should comprise significant additional humanitarian and

development assistance as well as ambitious trade measures

essential for economic recovery and growth. In this regard,

the European Council underlines its firm commitment to

grant exclusively to Pakistan increased market access to the

EU through the immediate and time limited reduction of

duties on key imports from Pakistan in conformity with

WTO rules, to be implemented as soon as possible, and to

commit to Pakistan’s eligibility for GSP+ for 2014, provided

it meets the necessary criteria. The Commission is invited

to explore options with WTO partners and to present its

finalised proposal in October taking account of industrial

sensitivities in the EU.

III. DECLARATION ON THE MIDDLE EAST

PEACE PROCESS

The European Union strongly welcomes the launch of direct

negotiations between Israel and the Palestinian Authority,

announced in Washington on 2nd September 2010, and commends

the Israelis, the Palestinians and the United States as well as the

Quartet and Arab partners for their efforts. The decision by the

parties to engage in substantive talks represents a major step on the

road towards a just, lasting and comprehensive peace in the region.

Recalling the Council conclusions of December 2009 on the

Middle East Peace Process, the European Union stresses that these

negotiations on all final status issues should lead to a two-state

solution with the State of Israel and an independent, democratic,

contiguous and viable State of Palestine living side by side in peace

and security.

In this context, the European Union deems it indispensable that

both parties observe calm and restraint and refrain from actions that

could affect negatively the progress of the negotiations. It calls on

both parties to uphold previous commitments and to strive to create

an environment conducive to a successful outcome. The European

Union recalls that settlements are illegal under international law

and calls for an extension of the moratorium decided by Israel. It

continues to call for a complete stop to all violence, in particular

rocket fire and terrorist attacks.

between the President of the European Council and the

President of the Commission on the EU representation in

the G8 and G20 structures. It invites them to continue to

work towards improving the way in which the European

Union projects its views in such fora.

e) The European Union needs a clear picture of the particular

issues arising from relations with the individual partner

States. It needs to develop medium-term planning that

sets out objectives to be reached over time, with each

summit concentrating on two or three core issues. The

European Council therefore asks the High Representative,

in coordination with the Commission and with the Foreign

Affairs Council, to evaluate the prospects of relations with all

strategic partners, and set out in particular our interests and

possible leverage to achieve them. The High Representative

is invited to present a first progress report on this work to

the December 2010 European Council. In this context,

there should be a reflection on the frequency, format and

output of those summits, which need to be better targeted

towards reaching EU objectives. The European Council

invites its President, in cooperation with the President of

the Commission and the High Representative, to take any

necessary initiatives with a view to improving the process.

f ) The European External Action Service will be a crucial tool

in support of the efforts towards enhancing the European

Union’s external policy. At service level, it will, under the

authority of the High Representative, provide support to

the European Council, the Council and the Commission

concerning the strategic overview and coordination

necessary to ensure the coherence of the European Union’s

external action as a whole.

II. DECLARATION ON PAKISTAN

1. The European Council is shocked at the devastating

impact of the floods in Pakistan which continue to destroy

livelihoods and communities throughout the country. The

scale of the disaster is unprecedented in Pakistan’s history.

The cost in humanitarian needs and to its already fragile

economy is immense. The severity of this crisis demands

an immediate and substantial response, taking also into

account the strategic importance of Pakistan’s development,

security and stability in the region. Following the second

EU-Pakistan Summit held last June, the European Council

reiterates its intention to strengthen cooperation on political

issues. A stable, democratic and prosperous Pakistan is key

to addressing global issues such as counter-terrorism, non-

proliferation or counter-narcotics. Good governance will

also be key to ensure swift reconstruction of the country.

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Recalling the Council conclusions of June 2010 on Gaza, the

European Union also stresses that for peace to be sustainable, a

durable solution needs to be found for Gaza. It welcomes the recent

measures announced by the Israeli government as an important

step forward. It calls for full implementation and complementary

measures in order to achieve a fundamental change of policy that

allows for the reconstruction and economic recovery of Gaza.

The EU has offered its assistance for achieving this objective. The

European Union calls for a solution addressing Israel’s legitimate

security concerns.

The European Union recalls that peace in the Middle East should

be comprehensive and reiterates the importance of negotiations

on the Israeli-Syria and Israeli-Lebanon tracks.

The European Union will spare no effort, along with its partners in

the Quartet as well as Arab partners, to support the US-led efforts

for successful negotiations that lead to a framework agreement

within one year, which is in the interest of Israelis and Palestinians,

the peoples of the region and the international community. The

European Union is the first donor to the Palestinians and a crucial

political and economic partner of both parties as well as their

neighbours. In this regard, it stresses that the European Union

will remain actively engaged and involved, including through the

Quartet, to support and ensure the success of the negotiations

and invites the High Representative to continue to fully associate

the European Union to the ongoing efforts. The European Union

stresses the need for the Quartet to continue to play an essential

role in the peace process. It also stresses the crucial importance of

the continuation of the Palestinian State building process which

the European Union will continue to actively support, including

the implementation of the Fayyad Plan.

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President of the European Council, preparatory work on

the general features of a future new mechanism, i.a. the

role of the private sector, the role of the IMF and the very

strong conditionality under which such programmes should

operate.

The European Council will revert to this matter at its

December meeting with a view to taking the final decision

both on the outline of a crisis mechanism and on a limited

treaty amendment so that any change can be ratified at the

latest by mid-2013.

The President of the European Council intends to

subsequently examine in consultation with the Member

States the issue of the right of euro area members to

participate in decision making in EMU-related procedures

in the case of a permanent threat to the stability of the euro

area as a whole.

3. Heads of State or Government stressed that, at the same

time as fiscal discipline is reinforced in the European Union,

it is essential that the European Union budget and the

forthcoming Multi-annual Financial Framework reflect the

consolidation efforts being made by Member States to bring

deficit and debt onto a more sustainable path. Respecting

the role of the different institutions and the need to meet

Europe’s objectives, the European Council will discuss at its

next meeting how to ensure that spending at the European

level can make an appropriate contribution to this work.

II. SEOUL G20 SUMMIT

4. The world economy is recovering from the crisis. However,

there remain a number of issues that require sustained

attention at the global level, including risks to financial

sustainability, incomplete financial sector repair, high

unemployment, the volatility of global commodity prices,

and re-emerging global macroeconomic imbalances. The

European Council confirmed the orientations agreed

by the Council and discussed the priorities which the

representatives of the EU and the EU Member States which

I. TASK FORCE ON ECONOMIC

GOVERNANCE

1. The European Council endorses the report of the Task Force

on economic governance. Its implementation will allow us

to increase fiscal discipline, broaden economic surveillance,

deepen coordination, and set up a robust framework for

crisis management and stronger institutions. The European

Council calls for a “fast track” approach to be followed

on the adoption of secondary legislation needed for the

implementation of many of the recommendations. The

objective is for the Council and the European Parliament

to reach agreement by summer 2011 on the Commission’s

legislative proposals, noting that the Task Force report does

not cover all issues addressed in these proposals and vice-

versa. This will ensure the effective implementation of the

new surveillance arrangements as soon as possible.

The result will be a substantial strengthening of the

economic pillar of EMU, enhancing confidence and thus

contributing to sustainable growth, employment and

competitiveness. The European Council invites the Council

to speed up work on how the impact of pension reform is

accounted for in the implementation of the Stability and

Growth Pact and report back to the European Council in

December. Acknowledging the importance of systemic

pension reforms, a level playing field within the SGP should

be ensured.

2. Further to the report of the Task Force, and in order to

ensure balanced and sustainable growth, Heads of State

or Government agree 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 invite

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, not

modifying article 125 TFEU (“no bail-out” clause).

The European Council welcomes the intention of the

Commission to undertake, in close consultation with the

���5#���� 5�� 61�—��)7�*�5 �59�������

5� 1�-65�-In order to address the challenges revealed by the recent financial crisis, a fundamental shift in European economic governance is required. To that end, the European Council endorsed the report of the Task Force on economic governance. Its implementation will constitute a major step forward in strengthening the economic pillar of EMU: it will increase fiscal discipline, broaden economic surveillance and deepen coordination. The report also sets out the guiding principles for a robust framework for crisis management and stronger institutions. The European Council agreed on the way forward concerning the follow-up to the Task Force. Further to its discussions of 16 September 2010, the European Council also exchanged views in preparation for the Seoul G20 Summit and the Cancún Conference on climate change as well as the summits with the United States, Russia, Ukraine, India and Africa.

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met. The European Union will submit a comprehensive

and transparent report on the implementation of its

commitment on fast-start financing in Cancún and yearly

thereafter and will underline the importance of further

increasing transparency of climate change financing. The

European Union will reassess the situation after the Cancún

Conference, including the examination of options to move

beyond 20% greenhouse gas emission reductions to be

prepared to react to the ongoing international climate

negotiations; the Council is invited to report back on this

issue by spring 2011. In parallel with seeking an international

agreement, the EU will also develop a more diversified

approach to engaging with key partners in areas of mutual

interest that help them reduce their emissions. In this

context, the EU encourages regional initiatives to tackle

climate change and promote green growth such as the

recent Mediterranean Initiative on Climate Change.

IV. SUMMITS WITH THIRD COUNTRIES

8. In line with its conclusions of September 2010, the European

Council discussed the key political messages which the

President of the European Council and the President of

the Commission will promote at the forthcoming summits

with the United States, Russia, Ukraine, India and Africa.

—

In the margins of the European Council a Social Summit was held,

focusing on economic governance following the final report of the

Task Force, in the light of the conclusions adopted by the Council

(EPSCO) on 21 October 2010.

—

are member of the G20 will promote at the Seoul summit.

The summit must send an ambitious signal as regards the

concrete and timely implementation of measures agreed

in the Framework for Strong, Sustainable and Balanced

Growth, notably concerning fiscal consolidation plans,

financial regulatory reform, social cohesion, job creation

and the need for further structural reforms. The issue of

the rebalancing of world growth also requires particular

attention. The European Union looks forward to the

confirmation by the G20 Summit of the Basel agreement,

which is an important step in strengthening global financial

stability. The European Union emphasises the need to

continue keeping markets open, to inject momentum

into the Doha negotiations and to adopt a growthoriented

development agenda. It stresses the need to avoid all forms

of protectionism and to avoid engaging in exchange-rate

moves aimed at gaining short-term competitive advantages.

5. The agreement reached at the G20 Ministerial Meeting

of 23 October 2010 on the reform of the International

Monetary Fund will help deliver a more effective, credible

and legitimate IMF and enable the IMF to play its role in

supporting the operation of the international monetary and

financial system. Quota as well as wider governance reforms

should be delivered together as a single, comprehensive

package and within the same time frame.

6. Further work is necessary on levies and taxes on financial

institutions, at both the international and internal levels.

In line with the Council’s report, there should be further

coordination between the different levy schemes in place

in order to avoid double-charging. The Council is invited

to report back to the European Council in December 2010.

The different options regarding the taxation of the financial

sector should also be examined, as well as good practices

aimed at impeding tax havens and tax evasion.

III. CANCÚN CONFERENCE ON CLIMATE

CHANGE

7. Making progress in tackling climate change is becoming

ever more urgent. It is therefore important that the Cancún

Conference deliver a significant intermediate step, building

on the Kyoto Protocol and paving the way towards a global

and comprehensive legally binding framework, integrating

the political guidance given in the Copenhagen Accord.

It is crucial that the European Union and its Member

States continue to play a constructive role and that they

deliver a single message. The European Council endorses

the conclusions of the Council of 14 October 2010 on

the preparation of the Cancún Conference and confirms

the willingness of the European Union to consider a

second commitment period under the Kyoto Protocol

provided the conditions set out in these conclusions are

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��

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.

6. 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.

7. 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.

8. The European Council welcomed the Statement by the

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

institutions (annex III).

II. OTHER ISSUES

9. 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.

I. ECONOMIC POLICY

1. 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.

2. 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.

3. 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.

4. 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.

5. The European Council called for the acceleration of

the work on the six legislative proposals on economic

���5#���� 5�� 61�—��"7�(�:� �49�������

5� 1�-65�-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.

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(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.

(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,

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.

ANNEXES

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,1]

[Having regard to the opinion of the European Commission,2]

[After obtaining the opinion of the European Central Bank,3]

Whereas:

1 Opinion of … (not yet published in the Official Journal).2 Opinion of … (not yet published in the Official Journal).3 Opinion of … (not yet published in the Official Journal).

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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.

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.

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.

HAS ADOPTED THIS DECISION:

Article 1The 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 2Member 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.

Article 3This Decision shall be published in the Official Journal of the

European Union.

Done at,

For the European Council The President

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.

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�

d) Strengthening the Stability and Growth Pact and

implementing a new macro-surveillance framework from

summer 2011.

e) 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.

f ) Further strengthening of the financial system both as regards

the regulatory and supervisory frameworks and conducting

new stress tests in the banking sector.

g) 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.

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."

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:

a) 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.

b) 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.

c) Stepping up growth enhancing structural reforms: we are

determined to accelerate structural reforms to enhance

growth.

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�"

Photo credits

© European Union

Page 171. Photo: G. Seibold

2. © Administraţia prezidenţială/autor Sorin Lupsa

3. Gabinete do Primeiro - Ministro

4. © Copyright RVD / foto: Richard van Elferen

5. Creative Commons (Some rights reserved)

6. © Grzegorz Rogiński/Chancellery of the Prime Minister

7. © 2009 SIP / Charles Caratini, tous droits réservés

8. Courtesy of the office of the Prime Minister

9. © UK Parliament

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This publication is produced by the General Secretariat of the Council.www.european-council.europa.eu

Luxembourg: Publications Office of the European Union, 2011

ISBN 978-92-824-2804-7doi:10.2860/64741

© European Union, 2011

Reproduction is authorised provided the source is acknowledged.

Printed in BelgiumPRINTED ON ECOLOGICAL PAPER

General Secretariat of the Council

The European Council in 2010

Luxembourg: Publications Office of the European Union

2011 — 46 pp. — 21.0 x 29.7 cm

ISBN 978-92-824-2804-7doi:10.2860/64741

© European Union, 2011

doi:10.2860/64741

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