EU summit – financial crisis dominates talks

The reform must be “all-encompassing” and should include more international supervision, a global “early warning” system for crisis and worldwide regulatory standards to ensure transparency and accountability, the leaders said.

The EU has called for an international summit on the crisis. Commission President Jose Manuel Barroso and French President Nicolas Sarkozy are meeting with US President George W. Bush this weekend to discuss the idea.

The European council meeting in Brussels followed a meeting of the 15 eurozone countries earlier in the week to map out a joint plan for restoring confidence in the banking industry. EU leaders urged all member countries to use the eurozone plan, seeing concerted action as more effective in calming markets than individual countries going it alone. To that end, they will set up a financial crisis taskforce to improve coordination among EU countries.

The rescue plan allows governments to guarantee bank lending, provide short-term liquidity and partly nationalise some banks. EU governments have committed more than €2tr toward the rescue effort.

Leaders also called for more oversight at the EU level. The council urged for quick action on commission proposals to strengthen rules for capital requirements and rating agencies and to protect bank deposits.

Concerning the widespread practices of giving executives large severance packages, the council said top managers should get paid according to their performance and should not take big risks to boost their earnings from stock options.

With a recession looming, the council said EU rules on budget deficits should be applied so as to reflect “exceptional circumstances”. The rules require governments to keep borrowing to less than 3% of GDP.

On energy and climate change , EU leaders reaffirmed their commitment to agree on legislative proposals by the end of the year. Mr Barroso has implored leaders not to let the financial crisis undermine efforts to cut back on greenhouse gases.

On immigration, leaders adopted the European Pact on Immigration and Asylum. The summit also heard from the Irish prime minister on Ireland’s plans after the vote against the Lisbon treaty. They also discussed relations with Russia, which have been strained since the conflict in Georgia.