BRUSSELS, (Reuters) – European leaders pushed on Friday to finalise a 200-billion-euro ($264 billion) economic stimulus pact and a climate change plan amended to ease its impact on industry and poorer EU states.
A final draft text reflected a softening of positions by the second day of a summit which began with Germany’s finance minister publicly accusing Britain of abandoning caution and ‘tossing around billions’ to tackle a recession.
The text, obtained by Reuters before a final review by EU leaders, committed the bloc to cutting greenhouse gas emissions by 20 percent by 2020, despite concessions. However, diplomats say the final shape of the climate package was still uncertain, and ecology groups fear it could emerge from the talks in a much watered-down form. “This is a flagship EU policy with no captain, a mutinous crew and several gaping holes in it,” said Sanjeev Kumar of environment pressure group WWF.
EU foreign policy chief Javier Solana acknowledged there had been concessions, cushioning some industrial sectors and easing the burden of east European countries with highly-polluting Soviet-era power stations. But, with an eye to U.N. sponsored global environment talks in Poznan, Poland, he added: ‘The objectives, the dynamism the leadership of the EU is going to continue.” The draft approved the headline goal of an EU-wide programme of measures aimed at wrenching the 27-nation bloc’s economy out of recession, despite some differences between EU member states about how to handle the worst economic downturn in 80 years.
German Chancellor Angela Merkel has argued against large cash injections, especially purchase tax cuts, warning that billowing budgetary deficits can only burden future generations. “Europe will act in a united, strong, rapid and decisive manner to avoid a recessionary spiral and sustain economic activity and employment,’ the draft said of temporary support to the economy, including the auto and construction sectors.
The U.S Senate’s refusal overnight to back a rescue plan for the auto sector raised the spectre of collapse in the key sector and will have raised concern in European capitals. The crisis continued to eat into the banking sector, origin of the crisis now sweeping the globe. The bank JPMorgan predicted a ‘terrible’ fourth quarter.
In wording which appeared to reflect the reluctance of countries such as Germany to cut value added tax (VAT), the text raised the possibility of reducing VAT on labour-intensive services only in those states that wished to do so.
The climate discussions took on a special significance, six weeks before Barack Obama takes over the U.S. presidency holding out the prospect of closer transatlantic co-operation on global warming.
According to the draft text, poorer east European nations will be offered two tiers of funding worth billions of euros to win their support for measures to tackle climate change that will ramp up costs for their highly-polluting power sectors.
The nine former communist states are seen as the final blockage to a deal, having already threatened to veto the plan if nothing is done to temper measures aimed at making coal-fired power stations uneconomical and boosting cleaner alternatives. Their power sectors were also partially exempted from paying for emissions permits under the EU’s flagship emissions trading scheme (ETS) between 2013 and 2020. However it was not clear whether eastern capitals would back the new proposals in a final planned session of talks on Friday, despite positive noises voiced earlier by Poland and others.
Diplomats said leaders had agreed assurances to Ireland enabling Dublin to hold a second referendum by next November on the Lisbon treaty.
The Lisbon Treaty — successor to the defunct EU constitution — aims to give the bloc more weight in the world by creating a long-term president and its own foreign policy supremo and needs to be ratified by all 27 EU states.
Dublin will be offered guarantees that concerns such as military neutrality and national tax policy will not be touched, as long as it commits to ratifying it by November 2009 — paving the way for a new referendum which it is far from sure to win.