Oct 28 (Reuters) - Following are extracts of a statement made by Herman Van Rompuy, the president of the European Council, after the first of a two-day summit of EU leaders.
Van Rompuy said the leaders had agreed to explore how to go about making a limited change to the EU’s main treaty to allow for the creation of a permanent mechanism to deal with financial crises and their impact.
“Today we took important decisions to strengthen the euro zone. We have endorsed the final report of the task force. We have also found an agreement about the procedure to decide on a crisis mechanism for the euro zone.
“This spring, we overcame a deep crisis of the Economic and Monetary Union. Our next political duty was to draw the lessons for the future to make the european economies more crisis-proof.”
“We recommend a robust and credible permanent crisis resolution mechanism to safeguard the financial stability of the euro zone as a whole.
“Today all heads of state and government agreed on that need. Why? Because even if all the right budgetary and economic measures are taken by everybody, one may never exclude surprises. Politics is not a zero-risk business.
“Under pressure, a temporary crisis mechanism was improvised. It will last for three years, until 2013. So we need to think beyond that date, starting now.
“The guiding principles are clear. A permanent crisis mechanism should be able to address financial distress and avoid contagion from one country to another. It should also avoid moral hazard. Now the question is whether such a robust crisis mechanism requires a change of the treaty. There are legal aspects and political considerations, both for individual member states and for the union as a whole.
“Tonight we have had a good exchange of views on this and we decided upon the following:
“Further to the report of the task force and in order to ensure balanced and sustainable growth, heads of state and government agree on the need for member states to establish a permanent crisis mechanism to safeguard the financial stability of the euro area as a whole and invite the president of the European Council to undertake consultations with the members of the European Council on a limited treaty change required to that effect not modifying Article 125 (of the Lisbon treaty) — the no bailout clause.
“The European Council welcomes the intention of the Commission to undertake in close consultation with the president of the European Council, preparatory work on the general features of a future new mechanism. It means the role of the private sector, the role of IMF, and the very strong conditionality under which such programmes should operate.
“The European Council will revert to this method at its December meeting with a view to taking the final decision both on the outline of a crisis mechanism and on a limited treaty amendment so that any change can be ratified at the latest by mid-2013.
“The president of the European Council intends to subsequently examine in consultation with the member states the issue of the right to participate in decision-making in the European Monetary Union-related procedures in case of a permanent threat to the stability of the euro zone as a whole.”