EU leaders pledge reforms amid lingering fears

08:31, June 18, 2010      

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European Union (EU) leaders pledged to reinforce economic governance within the bloc on Thursday to ward off lingering fears over the future of the European economy after the Greek crisis broke out.

The 27 member states also formally adopted the new strategy for growth and jobs for the next ten years, the so-called "EU 2020" strategy, which aims to help "Europe recover from the crisis and come out stronger."

"Today, the European Council has rolled up its sleeves and shown we can act together when there is a joint political will by the Member States and the European Institutions. We are on the case and delivering," said Jose Manuel Barroso, the president of the European Commission.

As for economic governance, European Council President Herman Van Rompuy said at the news conference that as arguments persisted, leaders "have decided to be pragmatic and operational."

"For instance, we need to avoid creating dividing lines between the 27 EU-members and the 16 members of the Eurozone. Therefore the Eurozone will only meet at Summit level if necessary," he said.

EU leaders was briefed on the latest work of Task Force on economic governance led by Van Rompuy and reached agreement on "a first set of orientations," setting guidelines for tougher budget rules and closer economic policy coordination to avoid the repeat of Greek-style debt crisis in the future.

The Commission will presented more detailed proposals on June 30 and other proposals by September, Barroso said.

According to the conclusion adopted by the summit, the leaders said that members states that fails to meet budget and debt targets should face sanctions and from 2011 onwards, national budget plans should be presented to the Commission for review, " taking account of national budgetary procedures."

EU leaders didn't finalize specific ways of how to reinforce economic governance at Thursday's summit, but ask the Task Force to "make operational these orientations" and present a final report in October.

The leaders' agreement has been wildly seen as a signal of unity to the outside to shore up confidence in financial markets over the euro and the European economy, which has been badly battered by the Greek crisis.

In May, EU agreed on an unprecedented rescue mechanism worth up to 750 billion euros (956 billion U.S. dollars) to prevent spread of the Greek debt crisis. However, fears still lingers.


The leaders also agreed to publish results of ongoing bank stress tests in the second half of July at the latest, to ensure " the resilience and transparency of the banking sector."

"The EU must demonstrate its determination to bring about a safer, sounder, more transparent and more responsible financial system," the leaders said in the conclusion document.

At the news conference, Spanish Prime Minister Jose Luis Rodriguez Zapatero, whose country holds the rotating EU presidency, said that "there is nothing better than transparency to demonstrate confidence. We should do this on a reasonable timeline to promote confidence and trust in the European economy."

EU leaders also backed imposing levies on banks and taxes on financial institutions to "ensure fair burden-sharing and to set incentives to contain systemic risk."

At the upcoming G20 summit in Toronto, the EU leader said the " the introduction of a global financial transaction tax should be explored and developed."

Source: Xinhua


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