The Prime Minister's Address at the Opening of the Plenary Meeting of the European Parliament, 25 March in Strasbourg

Good day. My greetings to you all at the regular report of the Chairman of the European Council after the spring summit of the European Council.

First, I would like to apologise to you that I will not remain for the entire time of the meetings of the plenary, as is usual; Deputy Prime Minister Vondra will represent me in the second part after the appearances of the fraction leaders.

The main reason I must return to Prague is, as Hans Gert Pöttering has already said, unprecedented obstruction from the side of the socialists, which by the way we have faced for the entire period of the Czech presidency, and I have never made a secret of it. That the government will be in resignation will certainly not threaten the presidency; that the socialists did not take into account that the Czech Republic is chairing the European Council, that they deny a basic level of cooperation, this harms the Social Democrats the most.

The presidency should not suffer, because I am deeply convinced that we have undoubtedly managed to do what I said here in my introductory appearance before the European Parliament - that we will try to moderate discussion and achieve compromise - and the spring European Council is proof of this.

In the Czech Republic it is then the custom that when the speaker speaks, that others do not interrupt, but maybe the customs here are somewhat different. So this may be an introduction.

Allow me to switch over and I will adhere strictly to the conclusions of the European Council. Allow me to switch over to why I am actually here today, why we took certain steps at the European Council, and despite that, please allow me before that to comment on what occurred even before it, and that was the so-called tripartite – the summit with social partners.

It was a relatively strong cast; aside from myself and the Chairman of the European Commission, José Manuel Barroso, the two subsequent prime ministers, both Prime Minister Reinfeldt of the Kingdom of Sweden and Prime Minister Zapatero of the Kingdom of Spain. I was in a relatively positive mood after that meeting and was very surprised by the consensus of social partners; not only in the goals of the presidency but in general with the solutions to the situation in which employees, or possibly those unemployed as a result of the worldwide financial crisis and economic recession are earning and can receive.

I must say that if there is interest, I will say more about the tripartite, but we agree on three basic principles, which are to enable far greater flexibility on the labour market, labour force mobility, to work far more intensively on a higher extent of education and skill for labour forces so that they may bring this to bear on the labour market, etc.

The spring European Council was the second meeting of heads of state that we have led, but nonetheless it was the first full formal summit. Obviously the most watched topic was the issue of a solution to the current economic crisis. At the outset, I completely and absolutely refuse those voices who say we are doing too little, that we are doing too few deep things. I would present a single number: EUR 400 billion.

EUR 400 billion, which is 3.3 % of the EU's GDP, is an unprecedented step and in connection with the automatic stabilisers the EU has and which the USA, for example, does not. I think that the example that José Manuel Barroso presents is absolutely educative; a worker who is laid off from Saab in Sweden and a worker who is laid off from General Motors somewhere in Chicago have absolutely differing social standards, absolutely differing approaches from their governments. These automatic stabilisers are precisely what multiplies this EUR 400 billion amount to one that is fundamentally higher, giving us an undisputable advantage in this as compared to the USA.

The basic underpinning of the agreement of the entire EU-27 is the confirmation of the validity of the Lisbon Strategy, which is one of the four pillars on which this entire agreement stands. Yesterday we had Gordon Brown here, and he certainly had the ability to explain the approach of the entire EU-27, the mandate for the G20 summit. All the short-term measures - and we agreed on this – must be temporary, and have also been conceived of as temporary. The mid- and long-term priorities and directions of the Lisbon Strategy were confirmed, and the short-term ones must be consistent with them.

I must openly say that after the comments by Timothy Geithner, the Treasury Secretary of the USA, about "permanent action," there was more or less consternation at the European Council. Not only because America is repeating the mistakes of the 1930s, which are wide-ranging stimuli, the tendency and calls for protectionism, the Buy American campaign, etc. All of these steps, their combination and, what's worse, the initiative for their permanent establishment, are the road to hell.

It is necessary to read the historic textbooks, which have evidently become covered with dust. I consider the clear refusal of these roads and this short-sighted approach to be the greatest success of the meetings of the spring council.

I must clearly refuse the words of the chairman of the European Socialists, Poul Nyrup Rasmussen, who said that the European Council has done too little against the crisis, and that we are waiting for rescue from the the USA. Not only because the road chosen by the USA has already discredited itself historically, but also because, as I have said before, the level of social security and the securing of citizens' social needs overall is sharply different in the USA and at a sharply lower level.

For this reason the road is dangerous because the Americans will need cash to finance their social stimulus – they can easily get this, because there will always be someone to buy American bonds. But this threatens market liquidity, it draws down liquidity from the global financial market and other bonds, maybe European, but completely certainly Polish, Czech and possibly other countries, will have their sale threatened, and then there will be no cash in the system. This approach induces fears, and in my opinion it will also be a topic for discussion at the G20 summit.

The G20 summit will be one of the opportunities we will have to speak about it, then at the informal EU-27 summit with the American administration and with Barack Obama in Prague can be a continuation of this discussion. I believe we will find a common way out with the USA, because by no means do we want to set the USA and Europe against each other. At the present time, and this crisis has only shown us this again, there is no such thing as an isolated economy, and the extent of connectedness is very high, which means in times of crisis that we all have a problem and also that we can only resolve it together.

The second pillar of agreement in the area of the search for solutions against the current crisis are prepared for the G20 summit. The materials Gordon Brown has prepared with his administration are excellent, and you had the possibility to become acquainted with these yesterday. This three-pillar approach - which means solutions in the financial sector and fiscal stimulus, regulation and correction of the mistakes in the framework of this system and third pillar is the renewal and liberalization of world trade, meaning pressure to renew the Doha talks in the framework of the WTO – is precisely what in my opinion is a certain package of solutions which the European Council is offering and to which it unanimously agreed.

I would also like to highlight the agreement on that, that in the end we stated a specific number in increasing the available financial capacity of the international and currency fund and that we have defined this specific potential commitment to be EUR 75 billion. The EU-27 has a united position before the G20, one voice and a common goal. I have regarded this as absolutely the greatest success, because the entire European Council was a test of European unity, European solidarity and the unified European internal market. If any of these were to crash, then we would absolutely come out of this crisis weakened, but not in the event that we respect these basic attributes; I think we will be strengthened.

For this reason, there is no reason for pessimism before the G20 meeting, as Poul Nyrup Rasmussen fears. I think we have all understood that it is necessary to act in solidarity and to cooperate, which is confirmed by the words of Graham Watson of the Liberal fraction.

The current crisis, as we all say, is a crisis of confidence. The third area, which is key for resolving the crisis, is the renewal of confidence – it is not enough to only pour money into the system; we have tried this and despite it the banks do not lend - it is necessary that the banks loan this money, and banks will not do this if they will not have confidence. The liquidity they have available has not solved the problem.

Confidence can be neither decreed nor bought. As part of renewing confidence, we have therefore taken another step toward strengthening it - we have doubled the guarantee framework in case of need for countries outside the eurozone to EUR 50 billion.

We have agreed that it is necessary not to take a bloc approach to every bank in every country but to approach it individually, and at this time we consider the one-size-fits-all approach to be dangerous. The markets are nervous and they react immediately exaggeratedly and negatively. For this reason, better regulation is in order here. I emphasise better, or, in places where none existed, then implementation of those regulations.

This is where you, Members of the European Parliament, enter the game. We would like to come to an agreement, and I have signals that it is possible for legislative acts, which essentially complement our vision and concept of better regulation relating to rating agencies, the solvency of insurers, banks' capital requirements, cross-border payments and electronic funds, etc. I would be happy if, during your terms in office, these norms were approved, and that they come into validity, so that we can immediately put them into practice. Importantly, I welcome and we welcome all of the de Larosier report, which is brilliant in its analytical sections and very instructional in its realisation section, and in this regard the European Council has made clear conclusions.

Perhaps the most principal task of the spring European Council was the evaluation of the implementation of the Recovery Plan up to now, as the Council established it in December. It is here that there is the most noise and criticism - I think undeserved - and that this plan is allegedly insufficient, slow, unambitious… I would like to set this straight here. EU fiscal measures have reached EUR 400 billion, which is roughly 3.3 % of EUR GDP, where resources for bank recapitalisation, bank guarantees are not calculated, which is a value greater than 10 % of GDP.

It is simply a level that the European Union can allow at the given time, and despite this it will mean a very sharp interference with the Growth and Stability Pact, into the growth of public debt, into the correction of things in the "day after" period, meaning the day after the end of the crisis, if I would want to simplify it as such. I think that even for that EUR 5 billion, just a small part of the gigantic amount of EUR 400 billion, is and finally was approved, it was a very complicated negotiation, which a number of states attacked.

First because either the anti-crisis measures, if not drawn down in 2009 and 2010 - which is true, that it is not a transparent system of project evaluation, that it is not a good list of projects at all, etc., that something was missing there, or that there was a surplus there. In the end, after complicated talks, we found - and here the Czech presidency unequivocally played a dominant role that an agreement was found - that the EUR 5 billion would be approved and sent to you in the European Parliament for you to consider. I must say that the Renewal Plan has its community level, and today there is roughly EUR 30 billion available, and its national level, where every Member State as part of this plan will carry out their own fiscal stimulus. I believe it is key that what the European Council agreed upon is the validity of the Growth and Stability Pact.

If we as the entire EU want to go through the crisis unharmed and strengthened, then we must respect our own rules. We would be making the greatest mistake now if we were to set new packages without regard for the fact that all national and community actions have been initialised, without knowing their impact and without knowing whether or not additional fiscal stimulus was necessary, and even on this the European Council agreed. If it will be imperative, the European Council will take additional measures, but at this time we do not know whether it should or should not. Nobody knows where the bottom of this crisis is; nobody knows its end. It is absolutely unreasonable for us to take additional measures without knowing what the effects are of these steps of the EUR 400 billion fiscal stimulus. The plan is ambitious, diversified and comprehensive, and in individual countries, each a bit different according to the situation, it deals with growth as well as employment, and of course the problems that are associated with the economic situation.

The second major topic of the European Council was the situation or the issue of energy and the climate. As with energy security in this area, we have made meaningful progress in protection of the climate. The need for energy security, aside from it being one of the main priorities of our presidency, was shown in January. The gas crisis has still not been resolved. The gas crisis could begin tomorrow, the day after tomorrow, a month from now, next year, whenever. As evidence of what I am saying, one anti-crisis package of EUR 5 billion is also aimed primarily, even if not exclusively, at connecting European countries and the most varied mechanisms and projects which should decrease independence on a single supply route. We have agreed that the anti-crisis mechanism in the event of a loss of supply must be ready by next winter so that it can possibly react to the problems that come. It is more than apparent that we need it. This was shown in January, and it was shown most in Slovakia and Bulgaria and in certain other countries.

Discussion on climate.

Talks and preparations for the Copenhagen conference are beginning already. Denmark as the host country, Sweden, during whose presidency this affair will take place, as well as the Czech Republic are intensively working on this today. We are trying to find not only a common position on a European level, but we are starting to hold talks with the largest players, without whom the success of the Copenhagen conference is not secured. Those are the USA, and of course Japan, China, India, other major countries and major polluters.

The greatest discussion - and I would like to pause for a moment on this – was whether we should set not only mechanisms but also individual EU countries' share in this package of money we will provide for assistance to developing countries, third countries to fulfil their commitments as part of the fight to protect the climate. The decision we made is correct. In a situation when we are negotiating with all the major players, who thus far are talking more than they are doing, it would be very untactical and very bad if we ourselves were to set barriers and limits that the others would not respect.

The negotiating position is far better when we have we have these hands free, and the countries which in the end put the final proposal on the table - Sweden, Denmark, the Netherlands, Great Britain and Poland - agreed on this. Here, of course, the interests of countries that have a bit of fear of this mechanism are respected, as well as the interests of countries that are leaders on issues of climate protection. What remains before us is to find the specific mechanism, key and formulation far enough in advance before the Copenhagen conference; this was agreed upon by all countries as well as those who take this as their absolute priority.

To the third, the area of external relations.

The European Council formally approved the Eastern Partnership initiative as a complement to our foreign policy or the close neighborhood policy, where, if there are icebergs to the north, the Atlantic to the west, then our neighbours live to the south and west, and these are countries that could potentially threaten our economy, as well as the social and security situations.

The Eastern Partnership was a goal of the Czech presidency and I am very happy that it was approved, that the clear amount of EUR 600 million was provided and I will anticipate your question about the participation of Belarus; we are considering it, it is part of the project. Belarus has made certain progress, the validity of the ban on granting visas to the regime's leaders has been extended. At this moment the doors to Belarus are opening, but nevertheless a decision has not been made. If the Member States do not agree, and it will not be a decision of all 27, then we simply will not invite Lukashenko, despite both the opposition and neighbouring countries recommending that we do so. I think this is an issue which, if you will ask about at this time, I will not know how to answer, and for this reason I am anticipating it.

I have informed the European Council about the meeting and informal summit with President Obama on 5 April for the fulfilling of additional priorities and that is the trans-Atlantic bond. Organisational issues have not yet been completed. You will all be informed in detail. Thematically, the summit will be framed into three main blocs - the introductory discussion on the results of the G20 summit, cooperation on energy and climate, where the EU wants to remain a key player, just as the USA.

And the third point will be external relations.

Circumscribed, this is the geostrategic area from the Mediterranean to the Caspian. This means Afghanistan, Pakistan, the situation in Iran, the Middle East. The summit with the USA is important, but nevertheless it shows that we should not have exaggerated expectations. No messiah has come; the USA has a lot of domestic problems it must solve and for this reason it is good that Barack Obama will certainly give one of the important speeches of this year, where of course he will want to send a message to the citizens of the EU on the main positions and main goals of the new American administration. I think that there were a whole range of other details at the European Council which I am prepared to answer. If I left something out, I will fill it in in the discussion, which will follow after the appearance of the chairpersons of the fractions.

We will probably not meet again in this make-up, because you are leaving to start your campaigns, but I would be happy if you would not start to do this just today. I hope that the fight for individual seats in the European Parliament will be fair, and that after the elections you will meet again and continue with your work.

Thank you for your attention.