President of the European Council Herman Van Rompuy visited Cyprus. He met with President Demetris Christofias, President of the House of Representatives Yiannakis Omirou and government ministers to discuss the upcoming Cyprus EU Presidency.

During his visit, Van Rompuy addressed the Parliament of Cyprus yesterday. He, inter alia said:

“President Christofias and myself have had a very fruitful meeting today. A working meeting. We discussed two main topics: the outlook for the Cypriot Presidency, and the preparations of the June European Council. Let me say a few words about the key points of our discussion.

A few days ago, on the 23rd May, President Christofias, other European leaders, as well as myself have reached a common understanding on how to boost growth and jobs in Europe.

The discussion about growth is not new. We already share a growth strategy and it has been a constant concern. However, our ongoing work on growth has been overshadowed by our vital efforts to ensure financial stability in the Eurozone. But it is no less important.

And there should be no misunderstanding: it is obvious that opposing “deficit reduction” and “growth” is a false debate. They are two sides of the same coin. Without sound public finances there can be no sustainable growth; but without sustainable growth, the measures to bring our debt levels under control do not attain their full impact.

In the short term we all agreed that we should structure our work around three pillars based on the Europe 2020 strategy.

First, we will mobilise EU policies to fully support growth. For example, rapid progress is needed on important legislative proposals, such as the Single Market Act or the Energy Efficiency Directive. We should also finalise the European patent before the end of the Danish Presidency. The European institutions need to pursue their work on how to better use international trade as engine for growth – several major trade agreements are under way.

Second, we will step up our efforts to finance the economy through investments and better access of SMEs to credit, to complement reforms. We invited the European Investment Bank Board to consider an increase of capital by June to be used in supporting projects across the EU. We welcome the agreement on the pilot on project bonds. And we look forward to the report from the Commission on reprogramming of the current structural funds to support growth and jobs.

Third, we will strengthen job creation. We need reforms and measures to support the labour demand and job-creation. National Job Plans should be given high prominence and be fully used, to exploit synergies between the EU and national level instruments, in particular to combat youth unemployment.

At the end of June, just before the change of rotating Presidencies, the European leaders will meet in Brussels and will discuss the EU’s future Multiannual Financial Framework 2014-2020 for the very first time at the summit level, in the context of the growth agenda in all its forms.

This discussion will set the stage for the high-level negotiations, which will continue during the Cypriot Presidency. Our goal is to conclude them by the end of this year to equip the EU with a growth and job-enhancing tool, which will support – both directly and indirectly – thousands of investments in different areas, from research and development, to enterprises, to transport or energy infrastructure, as well as people seeking jobs or upgrading qualifications.

To achieve best possible results, we, the Cypriot Presidency and myself, need to cooperate very closely and harmoniously, and we will. This is also the topic of our discussion today.

We have also discussed other important initiatives, which will need to be concluded under the Cypriot Presidency, such as levers of the Single Market Act, the completion of the Asylum Package and the proposals from the financial services package.”

Rompuy stressed: “It has also called for unprecedented solidarity from the other Eurozone countries. Since 2010, Europe, together with the International Monetary Fund, contributed almost EUR 150 billion of support. Sometimes people ask for a “Marshall Plan for Greece”. Well, Europe’s support amounts to much more than the Marshall Plan! Our solidarity is there!

We are driven by a clear common determination: Greece must remain in the euro area while respecting its commitments. We expect that after the elections, the next Greek government will make that choice. The stakes are high… for all of us in the Eurozone. But unlike two years ago when the Greek crisis started, we now have the tools in place – the European Financial Stability Facility and, soon, the European Stability Mechanism – to guarantee the financial stability of the Eurozone as a whole and help our Member States in overcoming the crisis.

But there is more to be said. It would be a mistake to reduce the financial and debt crisis to such exceptional risks only. It has also brought to light structural challenges that predate it.

– Systemic challenges for the Economic and Monetary Union as such: we must now strengthen its economic policy dimension, alongside its monetary dimension.

– And structural challenges for all our economies. Overcoming them will require tough decisions and decisive actions. To bring down public debts and deficits, restore competitiveness, finance our future.

…Sound public finances and growth are two sides of the same coin. In the long run, you cannot have one without the other. This is why European leaders have worked on both fronts simultaneously. We have tamed the debt crisis, but we have also developed a common strategy for growth and employment…”

President Van Rompuy said that growth must not be opposed to deficit reduction, as “both are two sides of the same coin”.

Leaders discussed a growth strategy “still based on the EU 2020 strategy” which “is the basis for our growth initiatives”. The three main pillars aim at mobilising EU policies to fully support growth; stepping up efforts to finance the economy through investments; strengthening job creation.

The heads or state or government also held an in-depth discussion of the latest developments in the euro area. In addition to noting that considerable progress has been made on various aspects, the commitment to safeguarding both financial stability in the euro area and its integrity was reaffirmed, and a general consensus was reached that the economic union has to be strengthened in order to make it commensurate with the monetary union.

President Van Rompuy added that in June he will report on the main building blocks and on a working method to achieve the latter objective.

An exchange of views on the political and economic situation in Greece showed that leaders wanted Greece “to remain in the euro area while respecting its commitments”. They expect that, after the elections, the new Greek government will choose to continue the vital reforms, as this is the best guarantee for a more prosperous future in the euro area.

We are fully aware of the significant efforts already made by the Greek citizens. The eurozone has shown considerable solidarity, having already disbursed together with the IMF nearly 150 billion euro in support of Greece since 2010. We will ensure that European structural funds and instruments are mobilised to bring Greece on a path towards growth and job creation.

Continuing the vital reforms to restore debt sustainability, foster private investment and reinforce its institutions is the best guarantee for a more prosperous future in the euro area. We expect that after the elections, the new Greek Government will make that choice.”

As regards the general conclusions of the European Council, Van Rompuy noted: “I called this meeting for colleagues to discuss how to boost growth in Europe. Tonight’s meeting was about putting pressure, focusing minds and clearing the air.”

He stressed: “The discussion about growth is not new. We already share a growth strategy and it has been a constant concern. However, our ongoing work on growth has been overshadowed by our vital efforts to ensure financial stability in the Eurozone. But it is no less important.

And there should be no misunderstanding: it is obvious that opposing “deficit reduction” and “growth” is a false debate. They are two sides of the same coin. Without sound public finances there can be no sustainable growth; but without sustainable growth, the measures to bring our debt levels under control will be done in vain…”

“First of all we discussed the three main pillars of a growth strategy that is still based on the EU 2020 strategy. The EU 2020 strategy is the basis for our growth initiatives. In the short term, we will structure our work around the following three pillars.

First, we need to mobilise EU policies to fully support growth; second, we need to step up our efforts to finance the economy through investments and thirdly we need to strengthen job-creation…”

Rompuy referred to four basic needs for businesses: ideas, an innovative environment, especially in industry, people, with all sorts of skills and abilities, capital, to finance investments and markets, to sell and to source. These are “at the heart of Europe’s growth strategy. Innovation and research, bank credit and venture capital, labour markets, international trade…” he said, adding a fifth key need: stability. “Political, social, economic and financial stability. It is a precondition for the four others, the basis of confidence and a core function of Government.”

Rompuy stressed: “…fiscal consolidation is not an objective in itself, it is a prerequisite for sustainable growth. Structural reforms remain the main lever at our disposal. Their effects are not immediate nor can they be, but they will make a difference over time, and create jobs in due course. We must tell the truth. There are no magic formulas. Reforms take time and so does their impact on growth and jobs.”

“…Europe needs structural economic growth, and we can deliver it… This is the highest priority for European leaders, and we are working in close contact to make it happen. We will be meeting again in June within the European Council to take important decisions and I do not exclude convening an informal Leaders’ dinner at an earlier date for an open exchange of views on how best to prepare matters for June,” Rompuy noted.

“We have to engage in the battle of ideas. Fiscal consolidation does not just equal momentary austerity. It also means investing in the future. It is an exercise in making the right, future-oriented choices. Cuts and taxes need to be fair. Even a growth policy needs choices and sacrifices, but these should not be borne by one social group or generation. Some create the impression (or the illusion) that a growth policy is easy. This is not at all the case. It is a moment of truth. We have to shape change, otherwise it will be imposed on us.”