BRUSSELS, June 19 (Xinhua) -- Britain's embattled prime minister looked surprisingly chipper at the EU summit.
UK Prime Minister Gordon Brown (L) talks with his Finnish counterpart Matti Vanhanen as German Chancellor Angela Merkel (C) passes by during the second day of the EU Summit in Brussels, capital of Belgium, June 19, 2009. The two-day EU Summit was concluded here on Friday. (Xinhua/Wu Wei) Photo Gallery>>>
Gordon Brown was no doubt buoyed by the news that Conservative opposition leader David Cameron was enduring some discomfort back in London over expense account revelations. In addition, Brown was able to cast himself as the plucky defender of British interests against European interference, a role that might earn him some rare positive press at home.
Even better, the battlefield on which he'd decided to take on his EU partners was one where Brown feels comfortable -- international banking regulations -- and he was pretty sure of coming away from Brussels with a measure of success.
In a deal struck in the small hours of Friday morning, the EU leaders agreed on the need for pan-European supervision of the banking sector in the wake of last year's financial meltdown, but they bowed to Brown's insistence that the new cross-border watchdogs won't be able to tell national authorities when and how they have to use taxpayers' money to shore up failing banks.
"Decisions taken by the European Supervisory Authorities should not impinge in any way on the fiscal responsibilities of member states," said the draft declaration due to be adopted by the 27 leaders.
The new supervisory framework was also called for at the LondonG-20 summit in April, where world leader decided to keep a closer eye on the banking sector, which left to their own devices managed to build up mountains of bad debt last year precipitating the global economic downturn.
EU leaders agreed to set up a European Systemic Risk Board to monitor potential threats to financial stability and issue warnings and recommendations for government action.
In a second step, the summit called for the creation of a European System of Financial Supervisors to oversee national supervision, set up a single set of rules for financial institutions working within the 27-nation bloc and boost oversight of cross-border banks.
The latter issue was the one which caused problems for Britain. Brown was concerned that could lead to undue EU interference in the City of London, Europe's biggest banking center, and in particular force the government to intervene to support troubled European subsidiaries of British banks.
"It is only logical that where a supervisory decision will have an impact on the taxpayer, that decision should be for the relevant national authorities," Brown insisted as he went into the summit on Thursday.
President of European Commission Jose Manuel Barroso (L) talks with British Prime Minister Gordon Brown (R) as Estonian Prime Minister Andrus Ansip stands by during the second day of the EU Summit in Brussels, capital of Belgium, June 19, 2009. (Xinhua/Wu Wei) Photo Gallery>>>
Diplomats said there was a common consensus to avoid a bust up with Britain over the issues given that summit was also focused on intense negotiations on a formula to persuade Ireland to hold a repeat referendum on the Lisbon Treaty which is designed to revamp the EU's decision making processes.
Irish voters rejected the treaty last year, and the government is planning to hold a second referendum in October if it gets guarantees that the country's neutrality, anti-abortion laws and tax regime will not be affected by the new EU rule book.
The compromise on financial regulation leaves open the question of whether responsibility to bail out sinking banks lies with the home nation of the financial group or the country hosting the subsidiary. The issue has been of particular concern for eastern European nations, whose financial sectors are dominated by Western banks -- mostly from Germany, Austria, Italy or Sweden.
Those nations were willing to go along with the plan, in the hope of receiving support from the EU if they are forced to bail out their banks. But Britain objected to the principle of EU intervention on how it spends public money.
Friday's declaration effectively postpones a debate on how to resolve the apparent contradiction between granting the European overseers binding legal powers to resolve disputes between home and host nations, without giving them the authority to order fiscal intervention.
The new European Systemic Risk Board will monitor the overall economic situation. There too, Britain scored some success in blocking a call from Germany and France for the board to be granted permanent, high-profile leadership by the president of the European Central Bank (ECB).
Instead the compromise calls for the head of the board to be elected by the ECB's General Council, which is made up of central bank governors of all 27 EU members, even those like Britain who are not in the euro-currency zone.
Europe's new moves came two days after U.S. President Barack Obama's announcement on Wednesday of what he called the most sweeping overhaul of U.S. banking regulations since the 1930s.
"If we had not taken this decision we could be accused of falling behind the Americans and not meeting our G20 commitments," said French President Nicolas Sarkozy, who said the EU had made "spectacular progress" in tightening financial sector regulation.
Despite the doubts of the effectiveness of the European measures given the compromise to please London, the moves reflect the recognition on both sides of the Atlantic that tougher regulations are needed to control the financial markets.
"The financial crisis has clearly demonstrated the need to improve the regulation and supervision of financial institutions, both in Europe and globally," said the summit statement. "Addressing the failures exposed by the present crisis will contribute to preventing future ones."
EU leaders warned that the impact of the crisis remains serious and the outcome uncertain. However, they were encouraged by tentative signs of recovery, saying there was no need for further stimulus spending to pump up the economy.
Indeed after committing to inject billions of taxpayers money to boost growth over the past few months, they stressed the need to develop a "credible exit strategy" that would start to cut budget deficits and start the long and painful process of moving back to fiscal balance.
BRUSSELS, June 19 (Xinhua) -- European Union (EU) leaders clinched a deal on Friday to introduce a new system of pan-European financial supervision to prevent recurrence of the current crisis.
"There was a consensus about the need for a real European approach for financial supervision," European Commission President Jose Manuel Barroso told reporters after a meeting with EU leaders, which concluded today.
BRUSSELS, June 19 (Xinhua) -- Leaders from the 27 member states of the European Union (EU) approved here Friday legally binding guarantees for Ireland on Lisbon Treaty.
In a press conference after a two-day summit, European Commission President Jose Manual Barroso said that the Irish people got "all the assurances they need." Full story
European Commission President Jose Manuel Barroso attends a press conference after the first day meeting of European Council meeting in Brussels, capital of Belgium, June 18, 2009. European Union (EU) leaders decided on Thursday to back Jose Manuel Barroso's bid for a second term as the European Commission chief. (Xinhua Photo) Photo Gallery>>>
BRUSSELS, June 19 (Xinhua) -- European Union (EU) leaders handed down their blessing on Thursday to Jose Manuel Barroso's bid for a second term as the European Commission chief. Full story
BRUSSELS, June 18 (Xinhua) -- European Union (EU) leaders agreed Thursday on the principles of how much financial contribution should be made to the global fight against climate change, setting stage for year-end talks in Copenhagen for new international deal. Full story
BRUSSELS, June 18 (Xinhua) -- Leaders from the 27 member states of the European Union (EU) are gathering here Thursday for a two-day summit to try to break the deadlock concerning the Lisbon Treaty, tackle rocketing unemployment and strengthen financial supervision.
Financial and economic issues are on top of the agenda of the summit, to be chaired by Czech Prime Minister and President of the European Council Jan Fischer. Full story
BRUSSELS, June 16 (Xinhua) -- President of the European Commission Jose Manuel Barroso wrote on Tuesday to heads of state and government, calling for progress to be made on a number of key issues at the European Council on June 18-19.
On the economic crisis, Barroso called for the preparation of exit strategies, focusing on sustainable public finances, for when recovery takes hold. Full story
