Western Balkans and Turkey : €2 billion to support reforms in 2014 !


EU Leaders Summit : 18 and 19 December in Brussels.

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Who Led Europe in 2014?

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IPA: €2 billion package to support reforms in the Western Balkans and Turkey in 2014

Brussels, 17 December 2014 – The European Commission has today finalised its 2014 package of pre-accession assistance programmes to support reforms in countries wishing to join the EU. The funding, totalling EUR 2 billion, comes under the Instrument for Pre-accession Assistance (IPA), and will be available to Albania, Bosnia and Herzegovina, the former Yugoslav Republic of Macedonia, Montenegro, Serbia, Kosovo and Turkey. The package also includes multi-annual programmes to support specific sectors over the next three years in Turkey and the former Yugoslav Republic of Macedonia.

« These funds will support concrete democratic and economic reforms: from modernisation of the judiciary and public administration, to investments in infrastructure and connectivity between the enlargement countries and with the EU Member States. This will further strengthen the region’s stability, its economy and its investment potential« , said Johannes Hahn, European Commissioner for European Neighbourhood Policy and Enlargement Negotiations.

This year’s funding will provide for a stronger ownership by the beneficiaries through integrating their own reform and development agendas.It will notably include a budget support programme to reform the system of public finance management in Albania, the first of its kind in the Western Balkans.

The programmes will focus on better governance, with projects aiming at reforming public administration, using EU assistance more efficiently, adopting and enforcing EU standards, as well as implementing more reforms in the judiciary and fundamental rights and further supporting the fight against organised crime and corruption.

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The European Council, the first one to be chaired by its new president, Donald Tusk, will start at 16.00 on Thursday afternoon. It will do so with the traditional exchange of views with European Parliament president Martin Schulz.
The European Council will then dedicate its first working session to a main theme of the summit: improving the investment climate in Europe.
Over dinner on Thursday evening, the heads of state or government will discuss the situation in Ukraine involving Russia as well as EU support for the reform process in Ukraine.
Friday morning, leaders will have an opportunity to reconvene to wrap-up the discussions economic issues and adopt the conclusions.

Ukraine

The European Council is expected to evaluate the situation in Ukraine and have a strategic discussion on the implications of the Ukraine crisis and how this relates, in terms of EU policy, visà-vis Russia and the Eastern Partnership.
Leaders are also expected congratulate Ukraine on its new government and welcome its determination to carry out political and economic reform.
Ahead of the summit, the Council is expected to adopt additional sanctions in view of the continued illegal annexation of Crimea and Sevastopol.
The EU continues to advocate full and swift implementation of the Minsk protocol as a step towards a sustainable political solution of the crisis, which needs to be based on respect for Ukraine’s independence, sovereignty and territorial integrity. The EU has repeatedly called on Russia to withdraw from eastern Ukraine, to stop supplying troops and equipment, to allow effective control of the border and to allow the OSCE to carry out its mission.
The EU supports the Ukrainian economy with a package including macro-financial assistance (up to € 1.6bn) and a state-building contract (up to € 355m).

    Investments

    The European Council will devote it first working session to investments. The leaders are expected to call for the setting-up of a European Fund for Strategic Investments and for a fast-track legislative procedure for its activation. The European Council is further expected call for measures to improve the regulatory environment for investments. Leaders are likely to underline the need to remove barriers in the internal market, especially in the field of services, to strengthen the multilateral trading system and to conclude bilateral trade agreement with important partners. The European Council should equally call on the Commission to present a proposal for an Energy Union, and on the Council and the European Parliament to step up work on proposals regarding the Digital Single Market. Efforts that should all have a positive effect on increasing investments in Europe.
    The European Council will stress that the new focus on investment should be seen in the context of the overall EU strategy for jobs and for a lasting economic recovery in Europe. This includes the equally important efforts to intensify structural reforms – both at national and European level, and sound public finances.
    For more information on the Commission proposal for the EU investment plan, see also the Commission website.

    Leaders are also expected to call for advances in discussions on tax avoidance and aggressive tax planning.
    The European Council is expected to agree a timeframe for the further work on closer coordination of economic policies in the Economic and Monetary Union.

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    Invitation letter by President Donald Tusk to the European Council

    It is with pleasure that I invite you to my first European Council meeting as President of the European Council. It will be held in Brussels on 18 and 19 December 2014.
    This meeting will be dedicated to two major issues: investment and the current situation in the Eastern neighbourhood.
    We will start at 16.00 with the traditional exchange of views with the President of the European Parliament, followed by a family photo. We will use the working session on Thursday to discuss how to foster investment in Europe. We will provide a clear direction for work in the coming months, through the establishment of a new European Fund for Strategic Investments and the improvement of the framework conditions for investment. I have invited the Presidents of the EIB and the ECB to join us in this discussion.
    Over dinner on Thursday, we will discuss external relations topics and in particular the situation on our Eastern borders. The crisis in Ukraine remains a serious concern and we need to keep the issue under close review. It is therefore important that we come out of this meeting with a clear political message.
    On Friday we will address any remaining business, if needed. I look forward to meeting you.

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    Statement by President Juncker ahead of the European Council on 18-19 December: Boosting Investment to create Jobs and Growth

    Strasbourg, 17 December 2014
    Two elements stand out when we look ahead to the European Council meeting:
    First, Europe needs a new approach to investment, and we will have to concentrate on improving the investment climate in Europe.
    And we will have to help our eastern neighbour, Ukraine, stabilise the situation in the East, master the challenges of the winter and pursue the path of reform.
    We will have to focus our efforts to successfully implement these objectives. Let me start by making a few remarks on our new approach to investment.

    On investments

    On 28 November, the Commission presented its 2015 Annual Growth Survey, which is part of a comprehensive jobs, growth and investment package. The Commission proposes an integrated approach, built around three main pillars, all of which must act together and must be pursued in joint action of EU-Institutions and Member States to be successful and deliver long-lasting benefits:
    o Boosting investment
    o Accelerating structural reforms
    o Promoting fiscal responsibility by pursuing a responsible growth-friendly fiscal consolidation

    Let me go through these points one by one:First, we need a coordinated boost to investment: generating the right conditions for more and sustainable investment is the first priority for this Commission. Weak investment slows down economic recovery in the short term and hurts growth and competitiveness in the longer run. Investments in Europe are today – on average – 15% below pre-crisis levels and we must take action to change this.
    As I mentioned when presenting our Investment Plan to you on 26 November, we will set up a European Fund for Strategic Investment together with the European Investment Bank. The aim is to kick-start a string of public and private investment projects in Europe that would not have happened otherwise.
    By its very nature, this new Fund will finance riskier investments, that would not have happened otherwise, and this is why it will particularly benefit countries that have been most hit by the crisis.
    The Fund will work in a wide range of areas and chose the financial instrument most suitable for the project in question: From energy interconnectors to broadband, from education infrastructure to innovative SMEs, from renewable energy to high-tech healthcare.
    As you will understand, I can certainly not commit to financing of specific projects here and now. All projects have to be screened in light of their economic viability. The list published by the Taskforce on Investments last week contains over 2000 examples. Obviously, not all of these are new, strategic and economically viable. Nevertheless, there are many interesting examples – like infrastructure for energy-connections in Finland, Poland and the Baltic States, reform of school infrastructure in Italy or modernisation of regional hospitals in Belgium, to just mention some examples.
    To set up the fund we need one legal act, to be adopted in co-decision. The Commission will put forward a proposal in January 2015 and we count on your support for swift adoption during the spring. The common aim is that the Fund is fully operational by mid next year.
    In order to start delivering on the ground as rapidly as possible, we count on the European Investment Bank to be able to start certain activities using its own funds already in the beginning of 2015 and the European Investment Bank has agreed with this idea.
    Much has been said about how Member States can contribute to the fund. The new Fund is self-standing. However, its impact would obviously be much greater if Member States contribute to it. Several Member States have signalled their potential interest in doing so and I am now awaiting concrete proposals to this end.
    I need not only paroli, I need money.
    For my part, I have signalled the Commission’s intention to take a favourable position towards such capital contributions in the context of the assessment of public finances under the Stability and Growth Pact. We will come forward with detailed guidance on this in January.
    Let me also assure you that in order to guarantee that projects are chosen on their merits, investment decisions should be based on an independent and expert analysis of the intrinsic merits and economic and social viability of each project.
    There will be no sectorial or geographic pre-allocations or ‘quotas’. However, technical assistance will be stepped up so that project promoters and relevant authorities in all countries will be able to present viable and investible projects. And a transparent pipeline of projects will allow all interested parties to access potential projects in a quick and efficient way.
    These efforts will be accompanied by concrete proposals to improve the investment environment by removing regulatory barriers in our single market.
    Second, we need a renewed commitment to structural reforms. Remember the virtuous triangle I presented to you when tabling the 315 billion EUR Investment Plan: we need to boosting investment, accelerating structural reforms and promoting fiscal responsibility.
    There is no contradiction between these. We need these three pillars. Reforms, both at European and national level, and fiscal responsibility are needed to unlock investment, growth and job creation.
    Third, despite the progress made, we still need to further pursue responsible growth-friendly fiscal consolidation: the significant adjustments in terms of fiscal consolidation undertaken in recent years have succeeded in reducing deficits and stabilising debt levels in the EU. High debt levels still exist.
    I expect the European Council to give the Commission full support for taking forward the implementation of all the elements of the Investment Plan, which I just referred to. I also expect the European Council to agree to double the over-all use of innovative financial instruments under the European Structural Funds for the next programming period. This means a more efficient and intelligent use of public funds and higher impact on the ground.
    And I am obviously also looking forward to the Parliament’s continued support.

    On Ukraine

    The new government in Ukraine was elected for its reform agenda.
    We have seen an ambitious Coalition Agreement and a bold Government Action Plan We should all welcome the Government’s determination to carry out political and economic reforms.
    The Union and its Member States must continue to facilitate and support the Government’s work. The challenges it faces are enormous.
    First, it must bring peace to Donetsk and Lugansk. Over the past week, we have seen less violence. But the lull must become a ceasefire. Weapons should be withdrawn from the mine of contact. The peace process should resume.
    We must continue to do everything in our power to stabilise the situation in Eastern Ukraine by insisting that all parties implement the Minsk agreement. Second, Ukraine is experiencing a deep recession. This is the result of long standing macroeconomic and structural problems.
    In this difficult context the European Union has provided unprecedented financial support. We are about to complete the implementation of our two Macro-Financial Assistance programmes.
    A total of EUR 760 million in long-term loans has been disbursed in just the last two months, following EUR 600 million already extended in the summer. Under these programmes, EUR 250 million more can be disbursed early in 2015 if the policy conditions are met.
    Ukraine will need more help. The assessment of Ukraine’s financing gap has been completed by the IMF. Ukraine will need USD 15 billion in addition to what is already planned.
    The EU can only help within its budget. The relevant EU budget line has been squeezed. There is only a small margin of flexibility for additional financing next year. And if we fully use our margin for Ukraine, we will have nothing to address other needs that may arise over the next two years.
    So, we need to be able to meet Ukraine’s request for EUR 2 billion as the government is not able to do it. Member States will have to contribute – as the EU is not able to do this – and to give us greater flexibility in the budget.
    Third, the Government must secure Ukraine’s energy supply. The « winter package » gas agreement reached on 30 October is being implemented. Ukraine has ordered a first consignment of 1 billion cubic meters of gas, which was prepaid on 5 December. Delivery has begun.
    The Commission will continue monitoring the implementation of the agreement and to encourage the Ukrainian Government to order sufficient gas from Russia in January and February.
    To deliver in the European Council will also depend on Member States’ readiness to assume responsibility.

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