15-16 December European Council, Madrid

Date: 21/12/1995

THE summit conclusions ended with an outline plan for the EU in the coming five years “to prepare Europe for the 21st century”. Proposals include carrying out treaty reforms, meeting the single currency timetable, conducting enlargement talks with eastern and southern European applicants, reforming the budget after 1999, and continuing friendly relations with the Union's big neighbours.

Single currency

HEADS of state and government agreed on how to introduce a European currency, to be named the Euro, between 1998 and 2002. “This name is meant as a full name, not as a prefix to be attached to the national currency names,” stated the presidency conclusions.

THE assessment over which countries can join the Euro bloc will be made “as early as possible” in 1998 and exchange rates will be irrevocably fixed from 1 January 1999. At the same time, a European Central Bank will be created to run a joint monetary policy and conduct its business in Euros. National currencies will have sole legal tender status until Euro banknotes and coins are introduced, at the latest, in July 2002.

DURING the transition, use of the Euro will be “encouraged” in foreign exchange markets and new tradeable public debt will be issued in Euros by member states. A Council regulation needs to be drafted setting out the exact legal status of the Euro, although the summit agreed all contracts should have legal continuity even if relating to national currency, while those referring to the Ecu basket currency will be swapped one-for-one into Euros.

THE summit instructed EU institutions to carry out further preparatory work on how the monetary union will work once the transition is complete. The European Commission will present its programme for ensuring budgetary discipline and coordination in a monetary union during 1996 “in accordance with the procedures and principles of the treaty”.

THE relationship between those Union currencies forming the Euro-bloc and those staying outside must be defined before the monetary union is formed. The summit urged finance ministers, as well as the Commission and the European Monetary Institute, to “study the range of issues” raised by the creation of the two-tier system and produce a report in time for the Florence summit in June. “Work on both questions should respect the treaty requirement that member states entering the Euro area after 1999 should be able to do so on the same terms and conditions as those applied in 1998 to the initial participating member states.”

Enlargement

NEGOTIATIONS with Central and Eastern European applicant countries may begin six months after the completion of the Intergovernmental Conference, but the summit made no written commitment. The Commission will begin work on its formal opinion on the ten applicants from Eastern and Central Europe during the Intergovernmental Conference (IGC) and publish the results soon afterwards. Following this, the summit “hopes that the preliminary stage” of the talks will begin in parallel with Malta and Cyprus six months later. On 16 December, EU presidents and prime ministers met their counterparts from Romania, Poland, Slovakia, the Czech Republic, the three Baltic states, Hungary, Bulgaria, Malta and Cyprus. The summit called on the Commission to report in detail on the effects of enlargement on agricultural and structural spending.

Intergovernmental Conference

THE report from the Reflection Group on the IGC is a “sound basis” for the work of the conference, the summit said. The conference will be officially opened in Turin on 29 March. It will meet at the level of foreign ministers every month and preparations will be conducted by a working party of representatives of the foreign ministers and the president of the Commission.

Employment

EMPLOYMENT policy was given a further impetus by the summit, which affirmed that “the fight against unemployment and for equal opportunities is the priority task of the Community and its member states”. In its conclusions, summiteers declared that the medium-term programme agreed at the Essen summit on how to ensure jobs growth was starting the bear fruit, with the record unemployment level of 11.4&percent; of the workforce in mid-1994 coming down to 10.5&percent; now. Nevertheless, this still accounts for 18 million people and is “unacceptably high”.

THE Essen strategy for monitoring member states' efforts in promoting jobs growth, through multiannual employment programmes and “innovative measures”, has worked. “For the first time, a convergence of views has been achieved on the approach to be followed to ensure that the current economic recovery is accompanied by a more thoroughgoing improvement in the employment situation.” This includes the conclusions of the social dialogue summit in Florence and the European Parliament resolution on employment growth, both of which have a “broad degree of convergence” on Council plans. “On the basis of the recommendations in the single report, the European Council expresses its resolve to make progress in the framing of measures and objectives to alleviate the problem of unemployment.”

THE summit urged member states to step up training programmes especially for the unemployed, keep down non-wage labour costs, ensure welfare is not so generous as to remove the incentive to work, convert “passive policies” to help the unemployed into active policies to slot them into work and make the job placement system more efficient. At the same time, these measures should not undermine member states' employment protection and welfare systems. Finance ministers and social affairs ministers, as well as the Commission, should monitor the application of the existing multi-annual programmes and submit another report to the Dublin summit in December 1996.

Single market

THE summit urged completion of the single market, particularly in the area of public services. However, this liberalisation should be completed bearing in mind the “general economic interest”, equal treatment for citizens, quality and continuity of services, and balanced regional development. Government heads welcomed a report on competitiveness from Carlo Ciampi and another on “excessive burdens” placed on business activity. A programme of simplification of laws and administration should be undertaken while preserving the acquis communautaire both at the Union and member state level. The Commission should table new proposals for consolidating texts so the Council of Ministers can act as soon as possible.

Small & Medium Enterprises

THE summit welcomed a report from the Commission into the development of SMEs, which are the fastest-growing sector in the European economy. Member states should: simplify administration in setting up a firm, ensure better access to information and training programmes, promote internationalisation of these SMEs, and increase access to capital markets. The Commission will be responsible for putting these aims into practice during the next integrated programme for SMEs.

Justice & Home Affairs

A CHAPTER on justice and home affairs was agreed under the heading “Citizen-Friendly Europe”. This includes a reference to the EU's programmes on sex equality, cultural diversity and public health, as well as

“progress” made in making the Council of Ministers more open. The summit called on the Council to implement the La Gomera declaration on fighting terrorism, drafting guidelines on defeating drugs abuse and trafficking. The summit backed a Franco-British plan to help Caribbean policing of drugs trafficking. The summit could not agree the joint action plan on racism and xenophobia.

External Relations

ON the former Yugoslavia, the summit confirmed the EU's determination to play a “substantial role” in implementing the Bosnia peace plan. The Union's financial contribution to the reconstruction effort will be “in the context of equitable burden-sharing”. It called on the Council to approve negotiating directives before the end of the year for a trade agreement with FYROM, and get the association agreement signed with Slovenia “as soon as possible”.

HEADS of state and government called for the following action as soon as possible: ratification throughout the EU of the Partnership and Cooperation Agreement with Russia, adoption of the TACIS regulation by the next meeting of foreign ministers, trade and cooperation accords with Egypt, Jordan and Lebanon, and early talks with Algeria and Syria on similar deals. The summit called for talks to begin soon on a new political, economic and trade agreement with Mexico and for a draft negotiating mandate for the Commission to sign a trade deal with Cuba.

EU leaders signed an inter-regional framework agreement on trade and economic cooperation with the four-nation Mercosur bloc.