EU agrees €1.7bn deal but split on climate change

EU leaders agreed a €1.7 trillion rescue package for Europe’s banking and financial sector at their summit last night, but were split over the cost of climate change proposals.

All 27 countries adopted the package accepted by the eurozone nations, including Ireland, in Paris last weekend that allows countries to shore up banks by buying shares or their toxic assets and guaranteeing deposits and interbank loans.

They agreed to move on to the next stage — setting up a system of regulation and supervision of financial markets to ensure against the kind of reckless lending and borrowing that led to the current crisis.

Britain’s prime minister Gordon Brown outlined a five-point plan that would see the world’s top companies, including some of the biggest financial institutions, placed under international supervision, and an early warning system to prevent future financial crisis from escalating. He wants to push this at global level having the US and other world economies adopt new rules also.

When it came to the energy and climate change package, eight of the newer member states and Italy had objections because of the costs.

There have been fears that the member states were preparing to water down the ambitious targets they set themselves of reducing green house gas emissions by 20% by 2020 based on 1990 levels, to replace 20% of fossil fuel with renewables and with individual member states being given targets to achieve.

Ireland too has reservations and wants the scheme changed to allow agricultural emissions to be traded to help get over the problem that a third of Ireland’s green house gases are generated from the large cattle population.

They also want forestry taken into account.

While Commission President Jose Manuel Barroso warned that if the EU wavered now on their targets Europe would be unable to give the lead globally in setting a new worldwide plan to tackle global warming, he reminded countries they now had about eight years to reduce greenhouse gases according to scientists.

No decision was expected on the package last night and negotiations continue in the European Parliament and between member states on the details, but the French presidency hopes to have a conclusion by December.