$397b EU rescue Recession, global warming deal sealed

Sunday Times
Sunday 14/12/2008 Page: 43

BRUSSELS: EU leaders sealed an agreement for a $397 billion plan to dig Europe out of recession and a package to combat global warming on the final day of a summit. After persuading Ireland to submit a stalled EU reform treaty to a second referendum next year, the 27 leaders agreed to club together to fund an economic stimulus package and make major cuts in greenhouse gas emissions.

"We are starting to change the way we do things in Europe - talking less and doing more," French President Nicolas Sarkozy, who chaired the gathering, said after the conference. Though the climate-change deal was nailed down only after protracted negotiations, leaders said there had been overwhelming consensus on the need for a joint assault on the economic slowdown.

"Everybody was on the same line about the need for a recovery plan," Mr Sarkozy said. "Exceptional situations need exceptional measures." An eve-of-summit interview by German Finance Minister Peer Steinbrueck, who ridiculed the idea of "tossing around billions" to fend off recession, had indicated the rescue package would prove a major bone of contention.

But British Prime Minister Gordon Brown, whose "breathtaking" $45 billion stimulus package was singled out by Mr Steinbrueck, said the agreement was a riposte to those "who say you (should) do nothing". "What Europe has proved unanimously today is that it is ready to act in a united way to deal with the global downturn," Mr Brown said.

"We will continue to reject the do-nothing approach and we will not stand by and let the recession take its course." Under the stimulus plan, member countries would pump on average the equivalent of 1.5 per cent of gross domestic product into their economies to temper the impact of a global recession.

Before the summit, Germany expressed reservations about ploughing so much public money into the economy and resisted pressure to contribute more than what it judged necessary to get the German economy going again. Mr Sarkozy also said there had been unanimous agreement on the need for a "historic" climate package that he said should inspire the rest of the world. "No continent has given itself such binding rules that we have adopted with unanimity," he said.

The EU's climate-energy package, the "20-20-20" deal, seeks to decrease greenhouse gas emissions by 20 per cent by 2020, make 20 per cent energy savings and bring renewable energy sources up to 20 per cent of total energy use. Environmental groups, including Greenpeace and WWF, slammed the deal, saying it made too many concessions to industry and poorer eastern European nations with their highly polluting coal-fired power generators. "European heads of state and government have reneged on their promises and turned their backs on global efforts to fight climate change," they said in a joint statement.