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Bank crisis to dominate EU meet Bank crisis to dominate EU talks
(about 17 hours later)
European Union leaders are to discuss multi-billion-euro rescue schemes for Europe's ailing banks as they begin gathering for a summit in Brussels. A multi-billion-euro rescue scheme for Europe's ailing banks is set to dominate an EU summit in Brussels.
The 27-member bloc is expected to rally behind plans agreed last week by officials from the 15-nation eurozone. The 27-member bloc is expected to rally behind plans agreed on Sunday by officials from the 15-nation eurozone.
British PM Gordon Brown will be warmly welcomed, after coming up with a rescue plan that other countries have copied, says BBC correspondent Jonny Dymond. Stocks markets have recovered some ground since then, but remain nervous because of worries over a recession in the US and Germany.
But leaders will also be aware that the signs of recession are mounting. Environmental groups are fearful that the economic crisis will derail EU plans to tackle climate change.
Germany, the continent's biggest economy, is on the verge of recession, a report said on Tuesday. Regulatory rethink?
But the leaders will try to keep the emphasis on joint action to unfreeze bank lending and restore confidence in the markets. Markets across Europe rallied after eurozone governments last Sunday pledged around $3 trillion (£1.7 trillion) to restore confidence in the banking system.
"I am sure... there will be a common position," said European Commission chief Jose Manuel Barroso. However, EU leaders have warned that it is too early to declare this crisis over.
"I have boundless faith in the sense of responsibility and common sense of our heads of government and states." "This is and remains work in progress. We see light at the end of the tunnel but we are not yet there," Mr Barroso said.
Talks get under way on Wednesday, and wrap up on Thursday. On Tuesday, recession fears pushed US share prices lower despite a $250bn (£143bn) government bank rescue plan.
Leaders will meet under the chair of the French, who hold the current presidency, and have a packed agenda that includes: Climate change does not disappear because of the financial crisis. Tackling climate change is central to Europe's future prosperity Jose Manuel BarrosoHead of European Commission class="" href="/1/hi/business/7669307.stm">Germany 'on brink of recession' class="" href="http://www.bbc.co.uk/blogs/thereporters/markmardell/">Euroblog: East left out?
  • Bank bail-outs
    		• Asian and European stock markets also lost ground following two days of dramatic rises, and a report suggested Germany, the EU's biggest economy, was on the verge of recession.
    Europe's largest economies have announced hundreds of billions of euros in state support for their struggling banks. France, Germany, the Netherlands, Spain and Austria are planning to guarantee bank lending, provide short-term liquidity and partly nationalise some banks, in schemes modelled on the UK's £500bn (640bn-euro) bail-out package. Speaking to reporters on Wednesday ahead of the meeting, UK Prime Minister Gordon Brown said the International Monetary Fund (IMF) should be "rebuilt" to help regulate the world's financial systems.
    Other members of the 15-nation eurozone are expected to brief their colleagues on similar rescue plans. French President Nicolas Sarkozy, chairing proceedings, has urged European governments to act together in the crisis, to avoid damaging splits. He also called for the creation of an early warning system for the international economy and for more cross-border supervision of multinational financial companies.
    In a departure from the norm, European Central Bank President Jean-Claude Trichet will address the summit on Wednesday. Mr Barroso said earlier that there was a need to rethink regulatory and supervision rules for the financial markets, as well as limits on executive pay.
    The commission now has the task of scrutinising each country's plan to ensure they do not disadvantage other EU member states or violate EU competition laws. Eurozone leaders, meeting under the chair of the French, who hold the current presidency, are expected to brief their EU colleagues on their rescue plans.
  • Immigration
    		• France, Germany, the Netherlands, Spain and Austria are planning to guarantee bank lending, provide short-term liquidity and partly nationalise some banks, in schemes modelled on the UK's £500bn (640bn-euro) bail-out package.
    Leaders are expected to sign an immigration pact, committing their countries to common principles for handling immigrants, and trying to achieve a better match between immigrants' skills and jobs in the EU labour market, which is facing certain skills shortages and an ageing workforce. However, the commission must scrutinising each country's plan to ensure they do not disadvantage other EU member states or violate EU competition laws.
    An EU "return directive" sets out common rules for processing illegal immigrants, while the EU also has plans a "Blue Card" scheme to attract more high-skilled immigrants. The packed agenda for the two-day talks also includes:
  • Energy
    		• • Leaders are expected to sign an immigration pact, committing their countries to common principles for handling immigrants.
    France is anxious to get agreement on a package of environmental measures before its EU presidency ends in December. President Sarkozy has stressed that, despite the economic strains caused by the credit crunch, the EU must become "a low-carbon economy". • A decision to revive the failed Lisbon treaty, meant to give the EU more stable institutions in difficult times, is expected to be put on the back-burner until December.
    Politicians in Germany, Italy and Poland have argued that existing targets for reducing greenhouse gas emissions would impose extra burdens on electricity generators and carmakers, as an economic recession looms. In the case of the UK, similar resistance has arisen over including aviation in the CO2 targets. • Talks on a new EU-Russia partnership treaty have been postponed, amid continuing concern about Russia's military presence in Georgia. There are divisions in the EU about when to resume them.
  • Lisbon treaty
    		• Climate shift
    EU leaders are waiting for the Irish government to come up with a "roadmap" - a way forward - after Irish voters rejected the Lisbon Treaty in June. The treaty, aimed at streamlining EU institutions to cope with enlargement, has to be ratified by all 27 member states to take effect. Most have now ratified it, but no big breakthrough is expected at this summit. The EU meeting was originally due to focus on climate change.
    Italy, Germany and Poland have argued that existing targets for reducing greenhouse gas emissions would impose extra burdens on electricity generators and carmakers, as an economic slowdown looms.
  • Relations with Russia
    		• Jose Manuel Barroso pays tribute to Gordon Brown
    The EU has postponed talks on a new EU-Russia partnership treaty, amid continuing concern about Russia's military presence in Georgia. EU monitors verified a Russian withdrawal from buffer zones around the breakaway regions of South Ossetia and Abkhazia, but the situation remains very tense. There are divisions in the EU about when to resume partnership talks. Environment Commissioner Stavros Dimas told the BBC's environment analyst Roger Harrabin that member states should be able to trade away more than half of their responsibilities for cutting greenhouse gas emissions by getting developing countries to install clean technologies on their behalf.
    The European Commission originally proposed that member states should be able to trade no more than a third of their responsibilities.
    The new proposal is highly controversial and will be resisted by the European Parliament because it has emerged that some of these clean technology projects would have been built anyway - in those cases, there is no carbon saving.
    Some member states will also resist any trading over 50% for fear that it will undermine Europe's credibility on climate change, our correspondent says.
    And the head of the European Commission, Jose Manuel Barroso, warned that the EU's ambitious plans should not be hijacked by concerns about economic costs.
    "Climate change does not disappear because of the financial crisis. Tackling climate change is central to Europe's future prosperity," he said.
    If Europe were to give up its leading role on climate change, "there will be less incentives of others to follow", he added.