Europe agrees on fiscal stimulus, climate, Lisbon

EU leaders meeting at a summit last week agreed on a €200 billion stimulus package worth about 1.5 per cent of the EU's GDP and reached a deal on climate change, which sets out how the bloc will cut carbon emissions by 20 per cent by 2020. Equally important, it was announced that Ireland is to hold a second referendum on the Lisbon Treaty by the end of October next year. This was the final summit of the French presidency and one which, on the whole, ended on a positive note.

The news that Ireland is to hold another referendum on the Lisbon Treaty - after having rejected it last June - was perhaps not given the importance it deserved by various sections of the local and international press. A second vote, which is likely to be approved because of concessions given to Ireland, will almost certainly mean that the parliaments of the Czech Republic and Poland will follow suit and give the thumbs up to the treaty, which will then complete the ratification process.

The Lisbon Treaty is important because it improves the decision-making process of the EU and strengthens the institutions with innovations such as a full-time EU presidency. Furthermore, once the treaty takes effect, Malta will be given a sixth European Parliament seat - we will not acquire the seat in time for next June's European Parliament elections, but we will gain the seat well before the elections that are to be held in 2014.

What is particularly relevant for Malta is the fact that the concessions given to Ireland are in our interest. Dublin received assurances on issues such as taxation, abortion, neutrality and the right of each member state to appoint a member of the European Commission. So last June's 'No' vote on Lisbon by the Irish turned out to be a blessing in disguise for Malta.

The EU summit's approval of the €200 billion economic stimulus package - to be financed mainly by individual member states - first proposed by European Commission President Jose Manwel Barroso earlier this month was expected, even though it was initially somewhat overshadowed by criticism of British Prime Minister Gordon Brown's fiscal package worth £20 billion, including a cut in VAT, by German Finance Minister Peer Steinbruck, who had remarked that such a plan would burden the UK with a massive debt in the long run.

The EU leaders called on US President-elect Barack Obama to join them in a "transatlantic economic recovery plan" after taking office in January. They also stressed the need - on the insistence of Germany, Sweden and the Netherlands - for a quick return to fiscal discipline under the EU's stability and growth pact after the gloomy international economic situation improves. The leaders chose not to use €5 billion in unspent EU funds to expand trans-European energy links and broadband internet connections, and asked the European Commission to come up with precise proposals instead.

The agreement on climate change was perhaps the most important news from the summit, even though some environmentalists and Green politicians believed more could have been achieved. "This is a flagship EU policy with no captain, a mutinous crew and several gaping holes in it," said Sanjeev Kumar of the World Wildlife Fund.

As a 27-member bloc, however, the EU is always going to have to compromise to reach a consensus among its members, especially so during the difficult economic period the world is experiencing at the moment. At least a deal was struck, which is much better than no deal at all.

Under the climate agreement reached in Brussels, the EU committed itself to a 20 per cent cut in greenhouse gases by 2020, but pledged to increase the target to 30 per cent if a deal is reached at a conference in Copenhagen in a year's time on a replacement for the Kyoto protocol. The deal also aims at ensuring that 20 per cent of energy comes from wind, sun and other renewable sources by 2020.

In a significant U-turn on past policy - and as a direct result of the global economic crisis - industrial sectors such as cement, chemicals and steel will receive free carbon emission permits up to 2020 instead of having to buy them under an auction scheme proposed by the European Commission last January. This concession was mainly aimed at Germany, Europe's largest manufacturing economy, and the Eastern European member states, many of which still rely on fossil-fuel based industries. Poland's power stations, for example, are still 95 per cent reliant on coal.

On the whole, this summit was a success and French President Nicolas Sarkozy has been singled out for praise in helping to forge a consensus on three very important policy areas: the Lisbon Treaty, climate change and the economic recession. Barroso described the summit as "the most important European Council in which I have participated" and Sarkozy called the climate package "historic" and proclaimed the Lisbon Treaty process "re-launched".

All eyes will now be on the incoming Czech presidency which has a difficult act to follow.