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DE RUEHLJ #0142/01 0861535
ZNR UUUUU ZZH
R 261535Z MAR 08
FM AMEMBASSY LJUBLJANA
TO RUEHC/SECSTATE WASHDC 6552
INFO RUEHBS/USEU BRUSSELS
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS LJUBLJANA 000142 
 
SIPDIS 
 
DEPT FOR EUR/NCE 
VIENNA FOR CQUINLIVAN 
TREASURY FOR VIMAL ATUKORALA 
 
SENSITIVE 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETRD PREL PGOV SENV ENRG EUN SI
SUBJECT: EU COUNCIL CONCLUSIONS - LISBON STRATEGY, CLIMATE AND 
FINANCIAL STABILITY 
 
REF: A. BRUSSELS 392 
 
Summary 
------- 
 
¶1.  (U) The March 13-14 European Council resulted in the launch of 
the second cycle of the renewed Lisbon Strategy for Growth and Jobs, 
ratification of the EU's climate and energy package, and proposals 
to create greater stability in the financial markets.  Slovenian 
Prime Minister and EU Council President Janez Jansa and EU 
Commission President Jose Manuel Barroso both emphasized at a press 
conference following the Summit that the goals of economic growth, 
social improvements, and fighting climate change are all 
interconnected.  The majority of the discussions during the summit 
focused on climate and energy objectives.  Jansa and Barroso were 
optimistic that the climate and energy package goals were ambitious 
but achievable. 
 
¶2.  (U) In the opening press conference of the summit on March 13, 
Barroso emphasized that the EU "passed the test of reality," showed 
that the first cycle of the Lisbon Strategy worked, "kept the line" 
and moved forward on its commitments for economic growth and energy 
policies.  In his closing statement on March 14, when asked about 
Slovenia's handling of the summit, Barroso stated that success rests 
on outcomes.  On that basis, he said Slovenia ran a "successful and 
professional presidency," bringing about "real results" on tough 
subjects like establishing timelines and principles for the climate 
and energy package, and establishing a unified approach to 
stabilizing financial markets.  The Council's most important 
political decision during the traditionally economic Spring summit 
was to approve the principle of a "Union for the Mediterranean." 
(Ref A) End Summary. 
 
The Lisbon Strategy - Next Steps 
-------------------------------- 
 
¶3.  (U) At the opening press conference on March 13, Jansa described 
the 2005-2008 cycle of the renewed Lisbon strategy as a success, 
resulting in a halving of public deficits and the creation of 6.5 
million jobs across the EU.  He went on to say that the 2008-2010 
cycle will focus on implementation.  The Council reconfirmed the 
four priority areas from the first cycle but asked the EU for 
synergies among them to be exploited.  Jansa listed the Lisbon 
Strategy priorities areas as: 
- investing in knowledge and innovation.  Future growth for the EU 
requires innovation and investment in research and development. 
- unlocking business potential, especially for small and 
medium-sized enterprises (SMEs).  The EU needs to enact better 
regulations to reduce bureaucratic burdens on SMEs and improve the 
competitiveness of SMEs. 
- investing in people and modernizing labor markets.  The EU needs 
to strengthen the knowledge triangle of 
"research-innovation-education" in order to foster a 
"knowledge-based economy."  It needs to decrease student drop-out 
rates and facilitate higher levels of education for its citizens. 
In realizing these goals, Jansa emphasized: 
- the role of local and regional involvement in delivering growth 
and jobs; 
 
- the need for economic, social and territorial cohesion in Lisbon 
Strategy objectives; 
 
- the importance of macro-economic stability in addressing 
longer-term challenges ahead; and 
 
- the importance of the social dimension and the need to integrate 
economic, employment and social policies. 
 
Finally, Jansa invited the European Commission, the Council, and 
National Lisbon coordinators to start reflecting on post-2010 
objectives in order to maintain and extend the success of the Lisbon 
Strategy. 
 
Climate and Energy Policy in Place by 2008 
------------------------------------------ 
¶4.  (U) Jansa stressed that climate and energy policy development 
was a necessary and integral component of the Lisbon Strategy and 
should be addressed in conjunction with the implementation of the 
Lisbon strategy.  Jansa also emphasized the importance for the EU to 
maintain its international leadership on climate change and energy 
issues in a safe and sustainable way.  Jansa and Barroso highlighted 
the need to "deliver" on the targets set by the EU in 2007.  The EU 
has committed to political agreement on principles by the end of 
 
2008 and to propose an "ambitious, global and comprehensive" 
post-2012 agreement on climate change at the UN meeting on climate 
change in Copenhagen in 2009.  Barroso stated that an international 
agreement was the best solution for Europe.  However, he explained, 
even without an international agreement the EU would move forward 
with internal goals. 
Economic Concerns Addressed 
--------------------------- 
¶5.  (U) Jansa told the media that member states held intense 
discussions on the economic impact of the climate and energy package 
goals.  All participants agreed that leadership in fighting climate 
change can not come at the expense of economic competitiveness. 
Jansa explained that climate change offers both economic challenges 
and opportunities for the EU.  He went on to say that new 
technologies could spur economic growth in Europe.  Jansa and 
Barroso acknowledged the risk of carbon leakage and assured member 
states that measures would be taken to keep industries in Europe. 
They explained that any binding directives would include language 
safeguarding the economic competitiveness of energy-intensive 
companies, in case an international agreement on climate change 
goals is not reached. 
Energy Security is a Priority 
----------------------------- 
 
¶6.  Jansa highlighted the need for enhanced energy security within 
the EU and more cooperation between the EU and third countries.  He 
stressed that the EU and its member states must "speak with one 
voice" on energy issues with third parties.  Jansa invited the 
Council to conduct a comprehensive review of progress in promoting 
energy security in light of the Strategic Energy Review to take 
place in November 2008.  Based on the joint report from High 
Representative Javier Solana and the Council on the impact of 
climate change on international security, the Council was invited to 
provide recommendations by December 2008, at the latest, on how to 
intensify cooperation with third countries and regions regarding the 
impact of climate change and international security. 
 
Strategy for Stability of Financial Markets Needed 
--------------------------------------------- ----- 
 
¶7.  (U) Jansa said that the EU needs to consider four areas 
regarding financial markets:  transparency, standards, prudential 
framework, and financial management.  He explained that the Council 
would conduct a major review of progress made at the informal ECOFIN 
meeting taking place in Ljubljana April 4-5 and would revisit the 
issues, as needed, in Autumn 2008.  Jansa presented some of the 
Council's key conclusions on financial market stability: 
 
- Prompt and full disclosure of risk by banks and financial 
institutions is essential. 
 
- In responding to turmoil, the Council agreed that the primary 
responsibility is with the private sector but that authorities in 
the EU stand ready to take regulatory and supervisory action where 
and when necessary. 
 
- The Council highlighted the need for further strengthening of the 
financial stability framework and asked ECOFIN to implement stronger 
financial supervision and management of cross-border financial 
crisis situations. 
 
- The EU should enhance the role of the IMF in oversight of 
macro-financial stability.  Also, the EU should work in close 
cooperation with its international partners to combat instability in 
the financial markets. 
 
- The Council believes that sovereign wealth funds (SWFs) have 
played a useful role as capital and liquid providers thus far, but 
the Council raised concerns that the new players emerging have 
limited transparency -- the goals and objectives of these SWFs and 
their non-commercial practices are unclear.  The Council called for 
an international voluntary code of conduct for SWFs and defining 
principles for recipient countries. 
 
 
Comment 
------- 
 
¶8.  (SBU) The tone of the summit press conferences was upbeat, and 
in all the issues discussed, there was a "call to action."  Jansa 
and Barroso focused on past successes and the need to implement and 
"deliver" on political commitments.  The Council stressed many times 
that there should be an internationally-agreed commitment to 
 
 
fighting climate change and that the EU would take the lead and 
establish internal targets which it would propose for global 
consideration.  The economic impact of climate change targets was 
the most hotly debated, with Germany's Chancellor Angela Merkel 
stressing the need to implement targets in a way that avoids harming 
energy-intensive industries, such as Germany's auto-making industry. 
 The concern over carbon leakage loomed large, and Barroso and Jansa 
were both adamant that the EU would not work against its own 
economic interests in addressing climate change. 
 
¶9. USEU cleared on this cable. 
 
COLEMAN