«Today is the 62nd anniversary of the Schuman Declaration.

Every year we celebrate Europe Day by looking back at the history of European integration and the things we have accomplished together.

But it should also be an opportunity to look forward.

We read a lot in the press about the financial crisis and the economic problems we are facing. But the basis of the European economy remains strong. And the common values that bring us together are more important than ever.

The coming year will be crucial for Europe's recovery – and for Europe's future. Not only the steps we take internally in the European Union on the economy and with Croatia joining in July.

But also how we engage globally.

Europe has always been outward looking and open. We have consistently influenced the way the world thinks – about trade, the environment, climate change, the death penalty, the International Criminal Court, and many other important issues.

I am convinced that Europe must remain actively engaged around the world. And equally that our international work can help to underpin our economic recovery.

There has been a lot of progress since we marked Schuman Day last year.

We are building up the European External Action Service, including a fully joined up Crisis management system so that we can deliver comprehensive solutions on the ground, be it in Libya or Somalia or Afghanistan.

I have travelled to many countries and regions – visiting every continent including a striking trip to the Arctic.

Everywhere I go, I take a message on behalf of Europe, about 27 countries working together to help solve problems.

Everywhere I go, I hear that others from outside Europe want to work with a Europe that is active and committed.

So that is what I intend to do next. 

In short, we will continue to do what the framers of the Lisbon Treaty -- and long before them, Robert Schuman -- intended; for Europe to play an active role in solving global problems.

There is much we have achieved in the past year; but even more to be done. »

On the 9th of May 1950 Robert Schumann presented his proposal and laid the foundation of the European Union, a unique project of united community based on shared values and principles.

The EU, as it evolved has allowed its peoples to enjoy an unprecedented period of peace and increasing prosperity - the EU is not a static body, it grows, it enlarges.

Enlargement is a DNA of Europe, Europe which despite all the recent difficulties is still a source of inspiration with its values, with its living standards and in case of enlargement also with a transformative power to bring the reform and changes needed to achieve European standards of life.

The EU continues to grow. Croatia will join us soon. Serbia has been granted a candidate status and negotiations with Montenegro should start next month. Other enlargement countries are also moving towards the European Union.

We are determined to maintain this progress despite the current challenges Europe is facing. There challenges are, however, related to globalization, not to the Enlargement.

Enlargement is not the cause for it. In fact, it is a part of solution. To succeed we need to work together and you will have an important role to play in this, particularly after you join the EU. Together we can shape the future of Europe in line with the vision expressed by its founding fathers.

It is European Day, enjoy it.

The joint Regional Housing Programme aims at ensuring voluntary return and reintegration, or local integration of refugees and displaced persons. It will provide durable and sustainable housing solutions to some 74,000 individuals. The programme demonstrates the countries' renewed commitment to regional cooperation, which yields concrete and positive results for the people in the region. Regional cooperation is a key element of EU's stabilisation and association process for the Western Balkans, and refugee return is one of the pillars in this cooperation. The new impetus for regional cooperation is a clear step forward in the EU integration process of the four countries.

"I very much welcome the renewed commitment to the Sarajevo Process by all participating states. It is a clear sign that the region wishes to leave the past behind, without forgetting it, and move on towards the future as good neighbours. I call upon the international donors to support the region in this important endeavour", said European Commissioner for Enlargement and Neighbourhood Policy Štefan Füle.

The overall EU pledge, about EUR 230 million will reach about half of the necessary amount EUR 501 million for the entire duration of the programme; which is expected to last for five years. This pledge remains subject to the pending decision on the overall EU budget for the period 2014-2020. The international donors have pledged an amount of EUR 31 million.

Background:

The Sarajevo Declaration process, initiated in 2005, aims to find long-lasting solutions for refugees and displaced persons following the 1991-1995 conflicts on the territory of the former Yugoslavia. The process involves four countries: Bosnia and Herzegovina, Croatia, Montenegro and Serbia (the “Partner Countries”).

The Regional Housing Programme (RHP) is an integral part of the Sarajevo Process. The process was in a stalemate until March 2010, when a ministerial meeting was held in Belgrade which brought together the four Partner Countries, the UNHCR, the EU and the OSCE. At this meeting, the countries committed themselves to work towards solutions of a number of outstanding issues, including data exchange and statistics, pensions and con-validation rights, housing and property issues.

Beneficiary population (according to the Framework Programme of 7 November 2011):

In November 2011, the four Ministers of Foreign Affairs of the Partner Countries signed a Joint Declaration bringing to a close the regional aspects of the Sarajevo process - the multilateral claims between the four countries - and committing them to jointly work towards achieving sustainable solutions for the refugees and displaced persons in the region. To that end, a Framework Programme was annexed to the Joint Declaration as a first step towards the establishment of a Regional Housing Programme (RHP). A donors conference was subsequently agreed to take place in Sarajevo, on 24 April 2012, in order to request international donor support for the funding of the RHP.

International organisations with the UNHCR in the lead, the EU, the OSCE as well as the United States have been closely involved in supporting the countries in addressing the issues.

The EU funds for 2012 and 2013 will be made available from pre-accession funds, through the IPA national envelopes for the four Partner Countries as well as from the IPA Multi-Beneficiary allocation. The balance is to be deployed in 2014 onwards and is therefore subject to decisions concerning the next EU financial framework. The funds from IPA national programmes will be earmarked and transferred to separate national accounts or "compartments" within the Regional Housing Programme Fund or Trust Mechanism.

"2011 was an important year for Serbia, a year of demanding challenges. 2012 will equally be paramount as Serbia is eager to open accession negotiations. Qualifying for that major step will be the first task of the incoming government after the 6 May elections," Füle said.

Füle remarked that Serbia can make further progress towards the next step in European integration – recommendation for opening accession negotiations, but its progress in fulfilling the political criteria and improving relations with Kosovo will be closely followed, and the EU will continue to follow the judicial reform, the fight against crime and corruption and the situation regarding human and minority rights.

Regarding the relations with Kosovo, Füle added that it was important to continue the dialogue and stick to all agreements reached to date, discuss the issues of telecommunications and energy and cooperate with EULEX, which must be able to operate in the whole territory of Kosovo.

Füle added that Serbia should abstain from organising the local elections in Kosovo.

European Commissioner for Enlargement reminded that the European Council granted candidate status to Serbia in March and pointed out that it was a major point in relations with Belgrade and a new positive momentum for further progress of European integration process.

Nicolai Wammen also addressed MEP’s on behalf of the Danish Presidency of the Council of the European Union. He said that candidate status for Serbia was an important achievement of Danish Presidency and remarked that the requirements which have to be fulfilled in order to be granted candidate status were "rigorous, but fair".

EP Rapporteur for Serbia Jelko Kacin believes that Serbia is already prepared for the start of accession negotiations and says that they should start as soon as the criteria related to Kosovo are fulfilled.

Our commitment takes many forms - legislation, awareness-raising campaigns and support to projects run by civil society. Global efforts to combat racism are based on the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD). We urge all states to ratify and implement the Convention as soon as possible." 

"Today we celebrate International Women’s Day. While we can be proud of the significant progress already made, this day reminds us that much work lies ahead to achieve true gender equality. 

While women are still underrepresented politically, the European Union has been encouraged by the leading role they played in the Arab Spring. We hope that women will maintain a central role as these countries continue their political transition. The EU will continue to provide support to women's groups in the southern Mediterranean, as it does across the world, through projects such as the one which allowed Libyan women to observe the elections in Tunisia. 

On this special day, the EU reaffirms its commitment to promoting gender equality and the advancement of women worldwide."

The main elements of the so-called fiscal compact include a requirement for national budgets to be in balance or in surplus, a criterion that would be met if the annual structural government deficit does not exceed 0.5% of GDP at market prices. 

This balanced budget rule must be incorporated into the member states' national legal systems, preferably at constitutional level, within one year after the entry into force of the treaty. In the event of deviation from this rule, an automatic correction mechanism will be triggered. It will be defined by each member state on the basis of principles proposed by the European Commission.

The EU Court of Justice will be able to verify national transposition of the balanced budget rule. Its decision is binding, and can be followed up with a penalty of up to 0.1% of GDP, payable to the European Stability Mechanism in the case of euro area member states.  

The treaty signed today also reinforces fiscal rules for the euro area by incorporating a commitment on the part of the contracting parties whose currency is the euro to adopt Council decisions in the framework of the excessive deficit procedure unless opposed by a qualified majority.

The treaty also contains provisions on the coordination and convergence of member states' economic policies and on governance of the euro area. In particular, Euro Summit meetings will take place at least twice a year. 

As of 1 March 2013, any granting of financial assistance under the European Stability Mechanism will be conditional on ratification of the treaty and transposition of the balanced budget rule into national legislation in due time. The provisions of the new treaty are to be incorporated into the legal framework of the EU within five years after the treaty's entry into force. 

The fiscal compact will be legally binding as an international agreement and will enter into force following ratification by at least 12 euro area member states. It will only apply to those contracting parties whose currency is the euro, while the others will be bound by its provisions once they adopt the euro, unless they declare their intention to be bound by certain provisions at an earlier date.

He has also chaired Euro Summit meetings since March 2010. In October 2011 Euro area heads of state and government agreed, as part of measures to improve governance of the euro area, to hold Euro Summit meetings regularly (at least twice a year). 

Acceptance speech by President Van Rompuy

Good afternoon ladies and gentlemen,

I will come to the European Council tomorrow with a message on growth – sustainable growth. It was this message that I was bringing already to the last informal European Council. Indeed, the answer on growth has been at the core of our agenda from the start, and I am pleased to say that we are starting to see a level of commitment by Heads of Government and Heads of State which I now hope will be translated into effective, concrete delivery.

We now need to invest as much in getting Europe back into growth as we are currently investing in getting Europe out of the crisis.

This spotlight on growth is justified because we have been making significant progress on other priorities.

First, on economic governance, the so called six-pack has been adopted and we are applying it vigorously. The Treaty on Stability, Coordination and Governance has been agreed and will be signed the day after tomorrow. The European Council will agree economic policy orientations for the European Union for this year.

Second, the financial markets and the banking sector are indeed recovering. The risk of a credit crunch is receding thanks also to the decisive action of the ECB.

Third, the financial firewalls are being strengthened. We have agreed on how to leverage the EFSF lending capacity and accelerated the establishment of the ESM by one year to July 2012. I'm confident that in the coming weeks we will see a decision that ensures the right level of firepowers of the ESM and the EFSF.

Fourth, on Greece we have made real progress in the last couple of weeks. The second Greek programme has been agreed in principle. The private sector bond exchange is on its way, and I will meet Prime Minister Papademos later this afternoon with several of my colleagues of the Commission and his team to discuss how we can work to support the reforms Greece is making and how we can work even harder to maximise the impact of European funds to return Greece to Growth.

So without being complacent, I think we can begin to be confident that we are laying the conditions to increase the growth potential for Greece, if we stay the course.

Regarding Europe in general, while our forecasts show mild recession for this year, the Interim Economic Forecast also points to the return to growth in the second half of the year. The figures released today - both in terms of our economic sentiment indicator and the business climate indicator - show an increasing confidence for the second month running. Industry is starting to believe. It is time to build on that possibility of confidence.

So as you understand, I am being extremely prudent with my words. I think we may have the conditions now to start changing the perspectives. Perspectives are very important because the key issues is precisely the issue of confidence, of trust.

That's why I want to make the discussion on growth to be as concrete as possible. What is needed now is not all the time new plans for growth but a firm commitment to delivering what has been agreed. We have a growth strategy. It is called Europe 2020. What we need is proper buy-in and ownership by Heads of State and Government and not only by the Heads of State and Government, not only by the European Council when Heads of State and Government come here to Brussels – but also by Member States themselves, by the social partners, the trade unions, the business community, the regions, the local authorities. This is the important issue, to avoid the disconnect that so often happens between the decisions taken here in Brussels and afterwards the implementation of those decisions. We have the economic priorities in the Annual Growth Survey which now will feed into the National Reform Programmes and the Commission's Country-Specific Recommendations. What we need is for these to be turned into action.

At the last informal European Council I called for priority to be given to two issues which are key to our growth drive: reducing youth unemployment and increasing support for small businesses. In the last couple of weeks Commission experts have visited the eight Member States with the highest levels of youth unemployment. I believe that these Member States will develop credible national job plans by mid April as agreed.

Tomorrow, I would like the European Council to focus on two other issues we need to boost the growth potential for Europe: funding for transport, energy and ICT infrastructure projects and secondly, the urgency of bringing down the cost of broadband roll out.

It is urgent to get investment flowing into these vital infrastructures so we can complete the single market. This is why it is so important that our pilot initiative on project bonds can be launched as soon as possible. With an allocation of €230 million from the EU budget we expect to be able to mobilise investments of up to €4.6 billion.

And we need to cut the cost of broadband roll-out. A study we released yesterday shows that €110 billion a year could be generated – more than 0.8% of GDP if the internal market for electronic communications were completed.

So this European Council should be – you never know but should be – with less drama that the last Summits. I'm sure you will agree, a little less drama will do no one any harm.

My thoughts go out to the families and friends who lost loved ones in this tragedy. I also wish the many injured a full and speedy recovery.  I hope an immediate and independent investigation will shed light on the causes of this tragic event."

In the present economic situation, we must continue our efforts to ensure financial stability and fiscal consolidation: this is necessary in itself, but it is also a condition needed for returning to structural economic growth. At the same time, we need to take active measures to enhance growth and competitiveness and above all create jobs. Whilst our March meeting will provide wider guidance to Member States' economic and employment policies, I want us this time to focus on immediate action to be taken in the specific areas of youth unemployment, the Single Market and SMEs. To that end I have circulated a draft statement which should help structure our discussion and communicate its outcome. 

My idea is to hold an interactive debate allowing us to share experiences of the different paths to promote jobs and growth. Thus, after general introductions by José Manuel Barroso on how the EU can support Member States' action, in particular as regards youth unemployment and support to SMEs, and by Helle Thorning-Schmidt, on the measures theCouncil needs to agree on rapidly, I will ask a number of lead speakers to introduce the three strands of our discussion (youth employment; the Single Market; and the financing of SMEs). 

We will also use this opportunity to endorse the ESM treaty and to register agreement on the new treaty on stability and convergence within the euro area. With the two treaties we will further strengthen the instruments at our disposal to ensure the consolidation and development of the euro area as a whole.

We congratulate Croatia and its people on their choice: EU membership will open up new opportunities for them and help secure the stability and prosperity of their nation.  

With this popular mandate, the Croatian government can now complete the remaining preparations for membership. We are looking forward to a smooth ratification process by the Croatian Parliament as well as by the Parliaments of all EU Member States, so that Croatia can become the Union's 28th member on 1 July 2013. 

The upcoming accession of Croatia sends a clear signal to the whole region of South Eastern Europe. It shows that through political courage and determined reforms, EU membership is within reach. Today's positive vote is therefore good news for Croatia, good news for the region, and good news for Europe." 

"The EU High Representative Catherine Ashton and Commissioner for Enlargement and European Neighbourhood Policy Štefan Füle welcome the political agreement by political leaders in Bosnia and Herzegovina on the formation of the state government - the Council of Ministers. 

They are encouraged by this development and look forward to further concrete steps to put Bosnia and Herzegovina firmly back on track towards the EU."

"It will be focused on jobs, and that is a big challenge in the context when zero growth is expected in most of our economies," said Van Rompuy, who will chair the meeting.

"We must take strong action on employment," he said. "Bringing financial stability to the euro zone remains absolutely key for our future."

Pointing to the reforms being made in individual EU countries, he said: "The path is long, longer than we expected. But let there be no doubt, there is a fundamental political will to move forward as a union. We have a moral duty to continue this mission."

Van Rompuy announced the date as a meeting took place in Brussels between EU diplomats, the European Parliament and the European Commission to start negotiations on an intergovernmental agreement to tighten fiscal controls and sanctions in the euro zone.

Speaking about the Accession Treaty which was signed with Croatia, Van Rompuy said this reconfirmed the European perspective of the Western Balkans, “making clear that our door will not close behind Croatia

This year, Human Rights Day focuses on the work of human rights defenders, and on how social media can be used to promote and underpin change. 

The Arab spring vividly reminds us that human rights are universal and that people everywhere aspire to live in dignity and freedom. In 2011, thousands of people decided that the time had come to claim their rights. Social media carried their message, and allowed activists and individuals to break free from their isolation, to disseminate ideas and to denounce oppression. 

Use of social media to promote human rights should not be restricted by governments. The EU has repeatedly and publicly condemned restrictions on freedom of expression and on access to the internet, as well as the arrest of bloggers, witnessed in many countries around the world.

The winning photo – showing a close-up of the hands of a dressmaker at work – was selected by an international jury of professional photographers and health and safety experts for its ’clean simplicity which captures risk prevention in its most basic form.’

Awarding the prizes, Dr Christa Sedlatschek, Director of EU-OSHA said: ’Nothing speaks louder than a photograph that stirs the imagination, evokes emotions and engages both the photographer and the viewer. With over 7 million accidents and 20 million cases of work-related disease annually in the EU-27 alone, this pan-European photo competition is helping to raise awareness of workplace safety and health across Europe, supporting our mission to make Europe’s workplaces safer, healthier and more productive.’

The jury panel was lead by occupational safety and health (OSH) communications expert Peter Rimmer who was joined by three professional photographers; Mertxe Alarcón of Spain, President elect of the Federation of European Photographers Jørgen Brandt and award-winning photojournalist Marco Di Lauro, alongside experienced OSH multimedia specialist Vincent Aubert-Jacquin. 

Commenting on his winning photo, Krzysztof Maksymowicz said: ’When taking this photograph I was trying to capture a universal occupational safety image, something that could apply to every person. And so I came up with the idea to photograph a sewing woman (dressmaker) with a needle and a thimble – a tool which is slowly becoming forgotten.’

Krzysztof Maksymowicz received the first prize of €3,000 while the second and third prizes of €2,000 and €1,000 were handed to Isa Kurtt of Turkey for his photo ‘Grow Up’ and Saša Kosanović of Croatia for ‘Gold panning’ respectively. For the first time, a youth prize of €1,000 was awarded to the best entrant aged under-21 which this year was presented to Paweł Ruda of Poland for his imaginative and provocative ‘Cold Sandwich.’

EU-OSHA closes record-breaking Safe Maintenance Campaign with a European occupational safety and health summit
The European Agency for Safety and Health at Work (EU-OSHA) is bringing its two-year campaign to a close through its Healthy Workplaces Summit on Safe Maintenance. The two-day summit in Bilbao brings together leading European experts and decision makers including the European Commissioner for Employment, Social Affairs and Inclusion, Lászlo Andor, the new Director of EU-OSHA, Dr Christa Sedlatschek and representatives of governments and social partners. 

The Safe Maintenance Campaign 2010–2011 drew record levels of involvement with EU-OSHA’s Europe-wide network of focal points and the 53 pan-European companies and organisations that joined as official campaign partners actively involved. Many of these are in attendance at the Bilbao summit (22 and 23 November) to discuss the results of the campaign, exchange good practice and explore future strategies on promoting workplace health and safety through plenary sessions, workshops and discussion. 

Opening the Healthy Workplaces Summit on Safe Maintenance in Bilbao László Andor, EU Commissioner for Employment, Social Affairs and Inclusion,  spoke about the importance of the campaigns saying  ‘EU-OSHA’s Europe-wide Healthy Workplaces Campaigns are playing an essential role in making Europe's occupational health and safety strategy a reality on the ground. This is especially important in the current economic climate where many Europeans are facing an increased workload and organisations try to do more with less. The Healthy Workplaces Campaign is a chance to get the message across that, even in difficult times, the safety of workers cannot be compromised and must remain a top priority. The fiscal constraints and difficult labour market situation in many countries must not obscure the bigger truth that a safe and healthy workplace is also good for business.’

EU-OSHA Director, Dr Christa Sedlatschek comments ‘through our Healthy Workplaces Campaign we reach out to millions of European workers, in their own workplaces, and in their own languages. And with each campaign, we manage to involve more campaign partners, and help to organise more awareness-raising events. Since its launch in April 2010, the Healthy Workplaces Campaign on Safe Maintenance has mobilised some 10,000 people through a series of over 300 partnership meetings, information sessions and awareness raising activities, all with the goal of bringing the importance of safe maintenance to the fore. I am confident that, through this campaign, we have helped to prevent significant numbers of people being hurt at work in Europe. Besides, with the development of a maintenance module for our Online interactive Risk Assessment tools (OiRA), we will give organisations of all sizes, easily and for free, the means to take a structured, step-by-step and effective approach to maintenance. The OiRA module on maintenance will be an important legacy of this campaign.’

They end up being exploited in the sex industry and forced into domestic servitude, surrogate motherhood or forced marriage. This form of slavery also affects hundreds of thousands of women within the EU.

The EU has already strengthened its legislation to combat human trafficking and will continue to provide a strong and unequivocal response to this fundamental violation of women's human rights.

In our foreign policy, we have been inspired this year by the role women played in the Arab Spring. They must remain at the heart of the changes that follow.

Elsewhere in the world, we have also made progress.

Next year, for example, a new programme to tackle sexual violence in the Democratic Republic of Congo will be launched.

But we can and will do more.

The EU will continue to work with partner countries and organisations in their efforts to tackle all forms of violence against women and girls. »

2. Further action is needed to restore confidence. That is why today we agree on a comprehensive set of additional measures reflecting our strong determination to do whatever is required to overcome the present difficulties and take the necessary steps for the completion of our economic and monetary union. We fully support the ECB in its action to maintain price
stability in the euro area.

Sustainable public finances and structural reforms for growth

3. The European Union must improve its growth and employment outlook, as outlined in the growth agenda agreed by the European Council on 23 October 2011. We reiterate our full commitment to implement the country specific recommendations made under the first European Semester and on focusing public spending on growth areas.

4. All Member States of the euro area are fully determined to continue their policy of fiscal consolidation and structural reforms. A particular effort will be required of those Member States who are experiencing tensions in sovereign debt markets.

5. We welcome the important steps taken by Spain to reduce its budget deficit, restructure its banking sector and reform product and labour markets, as well as the adoption of a constitutional balanced budget amendment. Strictly implementing budgetary adjustment as planned is key, including at regional level, to fulfil the commitments of the stability and growth Pact and the strengthening of the fiscal framework by developing lower level legislation to make the constitutional amendment fully operative. Further action is needed to increase growth so as to reduce the unacceptable high level of unemployment. Actions should include enhancing labour market changes to increase flexibility at firm level and  employability of the labour force and other reforms to improve competitiveness, specially extending the reforms in the service sector.

6. We welcome Italy's plans for growth enhancing structural reforms and the fiscal consolidation strategy, as set out in the letter sent to the Presidents of the European Council and the Commission and call on Italy to present as a matter of urgency an ambitious timetable for these reforms. We commend Italy's commitment to achieve a balanced budget by 2013 and a
structural budget surplus in 2014, bringing about a reduction in gross government debt to 113% of GDP in 2014, as well as the foreseen introduction of a balanced budget rule in the constitution by mid 2012.

Italy will now implement the proposed structural reforms to increase competitiveness by cutting red tape, abolishing minimum tariffs in professional services and further liberalising local public services and utilities. We note Italy's commitment to reform labour legislation and in particular the dismissal rules and procedures and to review the currently fragmented unemployment benefit system by the end of 2011, taking into account the budgetary constraints. We take note of the plan to increase the retirement age to 67 years by 2026 and recommend the definition by the end of the year of the process to achieve this objective.

We support Italy's intention to review structural funds programs by reprioritising projects and focussing on education, employment, digital agenda and railways/networks with the aim of improving the conditions to enhance growth and tackle the regional divide.

We invite the Commission to provide a detailed assessment of the measures and to monitor their implementation, and the Italian authorities to provide in a timely way all the information necessary for such an assessment.

Countries under adjustment programme

7. We reiterate our determination to continue providing support to all countries under programmes until they have regained market access, provided they fully implement those programmes.

8. Concerning the programme countries, we are pleased with the progress made by Ireland in the full implementation of its adjustment programme which is delivering positive results. Portugal is also making good progress with its programme and is determined to continue undertaking measures to underpin fiscal sustainability and improve competitiveness. We invite both
countries to keep up their efforts, to stick to the agreed targets and stand ready to take any additional measure required to reach those targets.

9. We welcome the decision by the Eurogroup on the disbursement of the 6th tranche of the EUIMF support programme for Greece. We look forward to the conclusion of a sustainable and credible new EU-IMF multiannual programme by the end of the year.

10. The mechanisms for the monitoring of implementation of the Greek programme must be strengthened, as requested by the Greek government. The ownership of the programme is Greek and its implementation is the responsibility of the Greek authorities. In the context of the new programme, the Commission, in cooperation with the other Troika partners, will
establish for the duration of the programme a monitoring capacity on the ground, including with the involvement of national experts, to work in close and continuous cooperation with the Greek government and the Troika to advise and offer assistance in order to ensure the timely and full implementation of the reforms. It will assist the Troika in assessing the
conformity of measures which will be taken by the Greek government within the commitments of the programme. This new role will be laid down in the Memorandum of Understanding. To facilitate the efficient use of the sizeable official loans for the
recapitalization of Greek banks, the governance of the Hellenic Financial Stability Fund (HFSF) will be strengthened in agreement with the Greek government and the Troika.

11. We fully support the Task Force on technical assistance set up by the Commission.

12. The Private Sector Involvement (PSI) has a vital role in establishing the sustainability of the Greek debt. Therefore we welcome the current discussion between Greece and its private investors to find a solution for a deeper PSI. Together with an ambitious reform programme for the Greek economy, the PSI should secure the decline of the Greek debt to GDP ratio with
an objective of reaching 120% by 2020. To this end we invite Greece, private investors and all parties concerned to develop a voluntary bond exchange with a nominal discount of 50% on notional Greek debt held by private investors. The Euro zone Member States would contribute to the PSI package up to 30 bn euro. On that basis, the official sector stands ready
to provide additional programme financing of up to 100 bn euro until 2014, including the required recapitalisation of Greek banks. The new programme should be agreed by the end of 2011 and the exchange of bonds should be implemented at the beginning of 2012. We call on the IMF to continue to contribute to the financing of the new Greek programme.

13. Greece commits future cash flows from project Helios or other privatisation revenue in excess of those already included in the adjustment programme to further reduce indebtedness of the Hellenic Republic by up to 15 billion euros with the aim of restoring the lending capacity of the EFSF.

14. Credit enhancement will be provided to underpin the quality of collateral so as to allow its continued use for access to Eurosystem liquidity operations by Greek banks.

15. As far as our general approach to private sector involvement in the euro area is concerned, we reiterate our decision taken on 21 July 2011 that Greece requires an exceptional and unique solution.

16. All other euro area Member States solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms. The euro area Heads of State or Government fully support this determination as the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the euro area as a whole.

Stabilisation mechanisms

17. The ratification process of the revised EFSF has now been completed in all euro area Member States and the Eurogroup has agreed on the implementing guidelines on primary and secondary market interventions, precautionary arrangements and bank recapitalisation. The decisions we took concerning the EFSF on 21 July are thus fully operational. All tools
available will be used in an effective way to ensure financial stability in the euro area. As stated in the implementing guidelines, strict conditionality will apply in case of new (precautionary) programmes in line with IMF practices. The Commission will carry out enhanced surveillance of the Member States concerned and report regularly to the Eurogroup.

18. We agree that the capacity of the extended EFSF shall be used with a view to maximizing the available resources in the following framework:

• the objective is to support market access for euro area Member States faced with market pressures and to ensure the proper functioning of the euro area sovereign debt market, while fully preserving the high credit standing of the EFSF. These measures are needed to ensure financial stability and provide sufficient ringfencing to fight contagion;

• this will be done without extending the guarantees underpinning the facility and within the rules of the Treaty and the terms and conditions of the current framework agreement, operating in the context of the agreed instruments, and entailing appropriate conditionality and surveillance.

19. We agree on two basic options to leverage the resources of the EFSF: • providing credit enhancement to new debt issued by Member States, thus reducing the funding cost. Purchasing this risk insurance would be offered to private investors as an
option when buying bonds in the primary market;

• maximising the funding arrangements of the EFSF with a combination of resources from private and public financial institutions and investors, which can be arranged through Special Purpose Vehicles. This will enlarge the amount of resources available to extend loans, for bank recapitalization and for buying bonds in the primary and secondary
markets.

20. The EFSF will have the flexibility to use these two options simultaneously, deploying them depending on the specific objective pursued and on market circumstances. The leverage effect of each option will vary, depending on their specific features and market conditions, but could be up to four or five.

21. We call on the Eurogroup to finalise the terms and conditions for the implementation of these modalities in November, in the form of guidelines and in line with the draft terms and conditions prepared by the EFSF.

22. In addition, further enhancement of the EFSF resources can be achieved by cooperating even more closely with the IMF. The Eurogroup, the Commission and the EFSF will work on all possible options.

Banking system

23. We welcome the agreement reached today by the members of the European Council on bank recapitalisation and funding (see Annex 2).

Economic and fiscal coordination and surveillance

24. The legislative package on economic governance strengthens economic and fiscal policy coordination and surveillance. After it enters into force in January 2012 it will be strictly implemented as part of the European Semester. We call for rigorous surveillance by the Commission and the Council, including through peer pressure, and the active use of the existing and new instruments available. We also recall our commitments made in the framework of the Euro Plus Pact.

25. Being part of a monetary union has far reaching implications and implies a much closer coordination and surveillance to ensure stability and sustainability of the whole area. The current crisis shows the need to address this much more effectively. Therefore, while strengthening our crisis tools within the euro area, we will make further progress in integrating economic and fiscal policies by reinforcing coordination, surveillance and discipline. We will develop the necessary policies to support the functioning of the single currency area.

26. More specifically, building on the legislative package just adopted, the European Semester and the Euro Plus Pact, we commit to implement the following additional measures at the national level:

a. adoption by each euro area Member State of rules on balanced budget in structural terms translating the Stability and Growth Pact into national legislation, preferably at constitutional level or equivalent, by the end of 2012;

b. reinforcement of national fiscal frameworks beyond the Directive on requirements for budgetary frameworks of the Member States. In particular, national budgets should be based on independent growth forecasts;

c. invitation to national parliaments to take into account recommendations adopted at the EU level on the conduct of economic and budgetary policies;

d. consultation of the Commission and other euro area Member States before the adoption of any major fiscal or economic policy reform plans with potential spillover effects, so as to give the possibility for an assessment of possible impact for the euro area as a whole;

e. commitment to stick to the recommendations of the Commission and the relevant Commissioner regarding the implementation of the Stability and Growth Pact.

27. We also agree that closer monitoring and additional enforcement are warranted along the following lines:

a. for euro area Member States in excessive deficit procedure, the Commission and the Council will be enabled to examine national draft budgets and adopt an opinion on them before their adoption by the relevant national parliaments. In addition, the Commission will monitor budget execution and, if necessary, suggest amendments in the course of the year;

b. in the case of slippages of an adjustment programme closer monitoring and coordination of programme implementation will take place.

28. We look forward to the Commission's forthcoming proposal on closer monitoring to the Council and the European Parliament under Article 136 of the TFEU. In this context, we welcome the intention of the Commission to strengthen, in the Commission, the role of the competent Commissioner for closer monitoring and additional enforcement.

29. We will further strengthen the economic pillar of the Economic and Monetary Union and better coordinate macro- and micro-economic policies. Building on the Euro Plus Pact, we will improve competitiveness, thereby achieving further convergence of policies to promote growth and employment. Pragmatic coordination of tax policies in the euro area is a necessary element of stronger economic policy coordination to support fiscal consolidation and economic growth. Legislative work on the Commission proposals for a Common Consolidated Corporate Tax Base and for a Financial Transaction Tax is ongoing.

Governance structure of the euro area

30. To deal more effectively with the challenges at hand and ensure closer integration, the governance structure for the euro area will be strengthened, while preserving the integrity of the European Union as a whole.

31. We will thus meet regularly - at least twice a year- at our level, in Euro Summits, to provide strategic orientations on the economic and fiscal policies in the euro area. This will allow to better take into account the euro area dimension in our domestic policies.

32. The Eurogroup will, together with the Commission and the ECB, remain at the core of the daily management of the euro area. It will play a central role in the implementation by the euro area Member States of the European Semester. It will rely on a stronger preparatory structure.

33. More detailed arrangements are presented in Annex 1 to this paper.

Further integration

34. The euro is at the core of our European project. We will strengthen the economic union to make it commensurate with the monetary union.

35. We ask the President of the European Council, in close collaboration with the President of the Commission and the President of the Eurogroup, to identify possible steps to reach this end. The focus will be on further strengthening economic convergence within the euro area, improving fiscal discipline and deepening economic union, including exploring the possibility of limited Treaty changes. An interim report will be presented in December 2011 so as to agree on first orientations. It will include a roadmap on how to proceed in full respect of the prerogatives of the institutions. A report on how to implement the agreed measures will be finalised by March 2012.

Annex 1

Ten measures to improve the governance of the euro area

There is a need to strengthen economic policy coordination and surveillance within the euro area, to improve the effectiveness of decision making and to ensure more consistent communication. To this end, the following ten measures will be taken, while fully respecting the integrity of the EU as a whole:

1. There will be regular Euro Summit meetings bringing together the Heads of State or government (HoSG) of the euro area and the President of the Commission. These meetings will take place at least twice a year, at key moments of the annual economic governance circle; they will if possible take place after European Council meetings. Additional meetings can be called by the President of the Euro Summit if necessary. Euro Summits will define strategic orientations for the conduct of economic policies and for improved competitiveness and increased convergence in the euro area. The President of the Euro Summit will ensure the preparation of the Euro Summit, in close cooperation with the President of the Commission.

2. The President of the Euro Summit will be designated by the HoSG of the euro area at the same time the European Council elects its President and for the same term of office. Pending the next such election, the current President of the European Council will chair the Euro

Summit meetings.

3. The President of the Euro Summit will keep the non euro area Member States closely informed of the preparation and outcome of the Summits. The President will also inform the European Parliament of the outcome of the Euro Summits.

4. As is presently the case, the Eurogroup will ensure ever closer coordination of the economic policies and promoting financial stability. Whilst respecting the powers of the EU institutions in that respect, it promotes strengthened surveillance of Member States' economic and fiscal policies as far as the euro area is concerned. It will also prepare the Euro Summit meetings and ensure their follow up.

5. The President of the Eurogroup is elected in line with Protocol n°14 annexed to the Treaties. A decision on whether he/she should be elected among Members of the Eurogroup or be a full-time President based in Brussels will be taken at the time of the expiry of the mandate of the current incumbent. The President of the Euro Summit will be consulted on the Eurogroup
work plan and may invite the President of the Eurogroup to convene a meeting of the Eurogroup, notably to prepare Euro Summits or to follow up on its orientations. Clear lines of responsibility and reporting between the Euro Summit, the Eurogroup and the preparatory bodies will be established.

6. The President of the Euro Summit, the President of the Commission and the President of the Eurogroup will meet regularly, at least once a month. The President of the ECB may be invited to participate. The Presidents of the supervisory agencies and the EFSF CEO / ESM Managing Director may be invited on an ad hoc basis.

7. Work at the preparatory level will continue to be carried out by the Eurogroup Working Group (EWG), drawing on expertise provided by the Commission. The EWG also prepares Eurogroup meetings. It should benefit from a more permanent sub-group consisting of alternates/officials representative of the Finance Ministers, meeting more frequently, working under the authority of the President of the EWG.

8. The EWG will be chaired by a full-time Brussels-based President. In principle, he/she will be elected at the same time as the chair of the Economic and Financial Committee.

9. The existing administrative structures (i.e. the Council General Secretariat and the EFC Secretariat) will be strengthened and co-operate in a well coordinated way to provide adequate support to the Euro Summit President and the President of the Eurogroup, under the guidance of the President of the EFC/EWG. External expertise will be drawn upon as appropriate, on an ad hoc basis.

10. Clear rules and mechanisms will be set up to improve communication and ensure more consistent messages. The President of the Euro Summit and the President of the Eurogroup shall have a special responsibility in this respect. The President of the Euro Summit together with the President of the Commission shall be responsible for communicating the decisions of the Euro Summit and the President of the Eurogroup together with the ECFIN Commissioner shall be responsible for communicating the decisions of the Eurogroup.

Annex 2

Consensus on banking package

1. Measures for restoring confidence in the banking sector (banking package) are urgently needed and are necessary in the context of strengthening prudential control of the EU banking sector. These measures should address:

a. The need to ensure the medium-term funding of banks, in order to avoid a credit crunch and to safeguard the flow of credit to the real economy, and to coordinate measures to achieve this.

b. The need to enhance the quality and quantity of capital if banks to withstand shocks and to demonstrate this enhancement in a reliable and harmonised way.

Term funding

2. Guarantees on bank liabilities would be required to provide more direct support for banks in accessing term funding (short-term funding being available at the ECB and relevant national central banks), where appropriate. This is also an essential part of the strategy to limit deleveraging actions.

3. A simple repetition of the 2008 experience with full national discretion in the setting-up of liquidity schemes may not provide a satisfactory solution under current market conditions. Therefore a truly coordinated approach at EU-level is needed regarding entry criteria, pricing and conditions. The Commission should urgently explore together with the EBA, EIB, ECB
the options for achieving this objective and report to the EFC.

Capitalisation of banks

4. Capital target: There is broad agreement on requiring a significantly higher capital ratio of 9 % of the highest quality capital and after accounting for market valuation of sovereign debt exposures, both as of 30 September 2011, to create a temporary buffer, which is justified by the exceptional circumstances. This quantitative capital target will have to be attained by 30 June 2012, based on plans agreed with national supervisors and coordinated by EBA. This prudent valuation would not affect the relevant financial reporting rules. National supervisory authorities, under the auspices of the EBA, must ensure that banks’ plans to strengthen capital do not lead to excessive deleveraging, including maintaining the credit flow to the real
economy and taking into account current exposure levels of the group including their subsidiaries in all Member States, cognisant of the need to avoid undue pressure on credit extension in host countries or on sovereign debt markets.
5. Financing of capital increase: Banks should first use private sources of capital, including through restructuring and conversion of debt to equity instruments. Banks should be subject to constraints regarding the distribution of dividends and bonus payments until the target has been attained. If necessary, national governments should provide support , and if this support is not available, recapitalisation should be funded via a loan from the EFSF in the case of
Eurozon countries.

State Aid

6. Any form of public support, whether at a national or EU-level, will be subject to the conditionality of the current special state aid crisis framework, which the Commission has indicated will be applied with the necessary proportionality in view of the systemic character of the crisis.