On Thursday 13 and Friday 14 December, the European Council held its December Summit, attended by the Heads of State of the 27 EU Member States, along with President of the Council, Herman Van Rompuy; President of the Commission, José Manuel Barroso and the High Representative for Foreign Affairs and Security Policy, Catherine Ashton. The focus of the Summit was on the outcome of the Economic and Financial Affairs (ECOFIN) Council which had taken place the day before. This ECOFIN Council agreed on a proposal relating on the oversight of banks and credit institutions, which is to be known as the ‘Single Supervisory Mechanism’ (SSM).
Prior to the Council Summit, the Council released draft conclusions which it hoped would be acceptable to Member States. The most important issue in this related to the SSM, and also to another, related, proposal to establish a ‘Single Resolution Mechanism’ (SRM). This is to act as a financial “backstop” that ensures any bank losses in the future will not affect a country’s sovereignty.
Once these have been established, Europe will have a deeper Economic and Monetary Union (EMU), meaning that the European Stability Mechanism (ESM) will be free to re-capitalise banks directly, instead of via governments.
Overall, the December Summit was deemed a success. The Council urged the outgoing Cypriot Presidency to negotiate a final legislative draft on the SSM with the Parliament quickly. The Council were therefore able to adopt a ‘roadmap’ to completion of the EMU at this meeting; they determined that following completion of the SSM legislation, a definite, operational, framework for separating banks and sovereigns, must be determined by the Commission in 2013, under the Irish Presidency. Following this, the ESM can begin to refinance banks directly.
A related issue on the agenda was the SRM. The results of the draft conclusions remained unchanged, with the Council asking that a proposal regarding the financial guarantee ‘backstop’ SRM be drafted and presented by the Commission later in 2013, and legislation for the SRM must be formally adopted before the Parliamentary term ends in 2014. As the Commission may present the proposal during the Irish Presidency, it may become necessary for Ireland to mediate between the Council and the Parliament in the Conciliation procedure.
The draft conclusions focused very much on deepening the EU’s Economic and Monetary Union (EMU), and on the deadlines for establishment of the SSM and SRM as a prerequisite to this. In the draft conclusions, it was recommended that a framework mechanism to completion of the EMU must be completed by mid-2013, so that the ESM can be operational as soon as possible. The final outcome of the Summit did not change this. This will therefore become an important agenda item for the Irish Presidency.
Economic Governance in the Single Market
The draft conclusions addressed economic governance issues within individual Member States, which must be regulated more consistently as part of a deeper Economic and Monetary Union. The most important of these issues, relates to ‘contractual agreements’ between Member States and the Institutions, which will relate to structural reforms with in that particular country’s economic sector, leading to an overall more coordinated economic policy, in the EU. Furthermore, a related issue is the establishment of fiscal capacities at national level, to absorb future economic shocks.
In its final conclusions, the Council requested a time bound road map on this and related issues, to be presented towards the end of the Irish Presidency, at the June 2013 Summit. It is worth noting also, that when this comes about, it will require much greater cooperation and dialogue between policy-makers at national and European level. In other words, it will require greater cooperation between National Parliaments and the European Parliament.
Other Policy Outcomes
Without economic stability there can be no economic growth. With this in mind, the Council agreed to examine the Commission’s Annual Growth Survey for 2012, in light of the roadmap that had been presented by the incoming Irish Presidency, and to present them at the March Summit. This will address various economic and social issues such youth employment, normal economic lending, and modernising public administration. It also will address issues on deepening the Single Market, with the Council calling on the Commission to present all its proposals in this area by spring 2013. These should be adopted prior to the end of the Parliamentary cycle, in mid-2014.
Furthermore, significant foreign policy recommendations were adopted, in that the Summit concluded that EU co-operation must be improved with regional neighbours, and with other multilateral groups, particularly in the area of defence and of peace-building missions. It called on the EEAS, the High Representative for Foreign Affairs, and the Commission itself, to further proposals and actions to strengthen CSDP and improve the availability of civilian and military capabilities, and to report on such initiatives, with a view to adoption by the December 2013 European Council.
List of Abbreviations
CSDP: Common Security and Defence Policy
ECOFIN: Economic and Financial Affairs Council
EEAS: European External Action Service
EMU: Economic and Monetary Union
ESM: European Stability Mechanism
HRep: High Representative of the Union for Foreign Affairs and Security Policy
SSM: Single Supervisory Mechanism
SRM: Single Resolution Mechanism
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