Press conference by President of the Government following European Council meeting

European Council , Brussels (Belgium)

President of the Government.- Ladies and gentlemen, a very good evening.

I appear here before you to take stock of the conclusions of this December European Council, the last under the Italian Presidency, who I would like to congratulate for its management, and the first held under the presidency of Donald Tusk.

As you are aware, the central issue of this Council was the analysis of the so-called "Juncker Investment Plan", which seeks to drive investment in Europe as a catalyst for growth and job creation. As I have said on many occasions, job creation is this government's priority.

The Heads of State and Government have supported the plan presented by the President of the Commission, which seeks to mobilise up to 315 billion euros in investment over three years. To this end, the European Strategic Investment Fund will be set up with an allocation of 21 billion euros of public funds: 16 billion from the EU Budget and 5 billion from the European Investment Bank. The aim is to enhance the ability of the European Investment Bank to take on risk and primarily mobilise private investment.

The fund has two parts: first, infrastructure projects of a European scope, principally in digital networks and energy, although other aspects are envisaged such as transport, education, research and development, renewable energies and energy efficiency. Support for the Juncker Plan will come via risk coverage and capital provisions. There will be no direct public financing, rather the projects will need to demonstrate a sufficient return and meaningful participation from the private sector to become eligible for selection. It is not a question of increasing the present Structural Funds, but rather of finding cheaper sources of financing.

The other component of the fund is the financing of risks for SMEs and mid-cap companies, which constitute the backbone of our business fabric and are the main creators of jobs.

As well as backing the plan in the terms proposed by the European Commission, the Heads of State and Government, at this European Council, have provided the Commission with a mandate to present a draft Regulation in January. The goal is to reach an agreement with the European Parliament and the Council in June so that the investments can be mobilised by mid-2015. This Regulation will establish the selection criteria to be applied to the projects, in other words, how the fund will be governed.

The Plan is also an essential step in achieving progress on creating the internal market and, in particular, in removing the physical barriers that prevent its full operation. This is the case with energy interconnections, particularly electricity connections, that could be financed under the Juncker Plan, an issue on which we are already working. This very afternoon, prior to the Council meeting, I met with the French President, Mr Hollande, the Prime Minister of Portugal, Mr Passos Coelho and the President of the European Commission, at which we decided to call a meeting in Spain to tackle these issues in February.

Furthermore, we identified other key sectors such as the environment and water management, with major wastewater treatment and irrigation infrastructure projects, as well as projects for energy efficiency, innovation and training, and the digital economy. At any event, the process for identifying projects is under way, it is dynamic and we are working on this while progress is being made on approving the European legislation to enact the plan, which, as I said, we want to be ready in June.

But, moreover, at this European Council two other very important issues for Spain have also been tackled. Firstly, upon an initiative from Spain, the Conclusions from this Council have included a paragraph relating to the fight against tax evasion and fraud. This is a key issue for Spain and, for that reason, before the Council, I sent a letter on this matter to the President of the European Council, Mr Tusk, in which I remarked on the need to act effectively against harmful tax practices and tax havens.

In particular, I believe that we should push through measures aimed at combating the erosion of the tax bases of multinational companies and the artificial transfer of corporate profits from one country to another.

Furthermore, I believe that progress should be made on increasing transparency in tax practices and more work should be done on the exchange of tax information. It will only be through decisive joint action at an EU level that we will find a way to combat these practices that go against the principles of equity and of aligning taxation with economic activity while improving the efficiency and collection capacity of our systems.

Secondly, we have called an Informal Council meeting for the month of February to continue working on economic and monetary union. As you are aware, this issue has been very important for the government over the last three years and we will continue to work towards completing the economic and monetary union along the lines of the proposals we have been making.

Finally, at this European Council, within the scope of strengthening the multilateral trade system, I highlighted the importance of reaching an ambitious agreement in the talks taking place on the treaty with the United States. This was the spirit of the meeting I took part in this morning with the Heads of Government of the United Kingdom, Italy, Finland, Denmark and Poland.

We also analysed the current situation in Ukraine at this European Council. Now that a government exists which has been fully legitimised through the ballot box, it should undertake the much-needed structural reforms in the country without delay. The Member States and the EU itself are prepared to support Ukraine, but it must apply urgent reforms so that the country can make progress and for our support to be effective. The situation in eastern Ukraine remains a cause for concern although there is evidence that the situation on the ground over the last few days has improved.

As I have said on other occasions, the only solution to this crisis is a political one that should be based on respect for and compliance with the Minsk Accords, thus ensuring Ukrainian regional integrity and sovereignty.

Last but not least, I gave my assessment of the re-establishment of relations between Cuba and the United States. This is undoubtedly an event of historic importance which the European Union sought to highlight, as demonstrated by the other Heads of State and Government, which agreed with Spain on underlining the encouraging nature of the new situation arising from this. We agreed that the future of the Cuban people should be built up based on democracy and human rights, and that this is the spirit that inspired the opening up of talks on a new agreement for political dialogue and cooperation between the European Union and Cuba.

In short, the first European Council under the presidency of Donald Tusk has been fruitful and closes off a positive year for European affairs. I would like to remind you of some of the progress made during the course of the year.

Spain, Portugal and Ireland have all successfully concluded their financial assistance programmes. In our case, as you are aware, only for the banking sector which, by the way, we have started to repay, whereas in the case of the other two countries there were comprehensive aid programmes.

Spain has met its objectives in terms of the excessive deficit procedure and this has been acknowledged by the European institutions. Spain also is no longer viewed as a country with excessive macro-economic imbalances at the review of the European Semester.

We have started up the banking union with the entry into force of the Single Supervisory Mechanism and the approval and start-up of the Single Resolution Mechanism. As part of this process, I would like to remind you that the Spanish banks have successfully passed the stress tests and the review of the quality of their assets by the European Central Bank and the European Banking Authority.

We have agreed on a common and ambitious position in terms of climate change which will be shored up at the upcoming Paris Summit. We have made significant progress on the development of the Internal Energy Market, particularly with new EU instruments to implement the interconnections that Spain has historically called for.

Progress has also been made in the fight against tax fraud, with improved directives on savings, administrative cooperation and parent-subsidiary relations.

All of this in the midst of a model institutional renewal process, following the European elections in May, with the election of a new European Commission which has resulted in Spain being awarded the portfolio for energy and climate change which, as you can see, is the object of close scrutiny from the European Council.

That is all. Thank you very much and I will now take any questions.

Q.- President of the Government, I wanted to ask you whether, in light of this agreement between the United States and Cuba, at this time, you are in favour of speeding up the process to establish the common position of the European Union on Cuba without the need to take more steps on the issues of human rights and democratic progress.

Secondly, I wanted to ask you if you can explain to us what the Free Trade Treaty with the United States could bring for Spain.

President of the Government.- In relation to your first question, what I said in my speech is what took place at this European Council, where the issue of Cuba was not even on the agenda, which as you are aware was drafted a few days previously and contained the issues to be dealt with there, principally the Juncker investment plan, and international issues, mainly the situation in Ukraine and in Russia…

I brought up this issue because I felt that the European Council could not remain isolated from an event of such fundamental importance because this has taken place more than 50 years after diplomatic relations were broken-off. This news is very encouraging. The two parties want to take steps forward, with the final goal for where we believe that all this should lead being improved living conditions in all aspects for the people of Cuba in terms of progress, well-being, quality of life and also, as you would expect, in terms of democracy and human rights.

I have asked the High Representative for her maximum efforts on this issue. I said that Spain was at her disposal to help in any way in this process. She said to me that she had spoken yesterday with the Secretary of State of the United States and that the first European Union meetings have already taken place; there have been two already.

For the time being, we will continue to see how events unfold without getting ahead of ourselves. What is important is that this is encouraging news, after many years, and this is an important fact in itself, and I believe that we should all do whatever is in our hands to the benefit, I repeat - this must be the basis on which we act - of the people of Cuba as a whole.

As regards the second question, we are facing one of the most important issues I have seen raised during the course of this legislature - the legislature, at least, of the Government of Spain, here, at the European Council. As you know, the objective, in the end is that of everyone. At this time, it is with much greater intensity because in Europe we are still in a period of sluggish growth and low inflation. The main goal of all concerned is to grow and create jobs. So, the Free Trade Treaty between Europe and the United States has one main goal, which is to catalyse growth and job creation.

There are certain figures which are certainly dramatic: we are talking about 50% of world trade, we are talking about some major investments from the United States in Europe and vice versa.

We are thus looking at a major opportunity to increase exports. If you just look at the figures for this year, for 2014, and I believe they date back to 31 October, exports from Spain to the United States have increased by 18.5% on last year, on 2013. Logically, this Free Trade Treaty would be very good for Spain because our companies, both large companies and SMEs, will have a very important market to export to, that of the United States, with 25% of global GDP, and hence, they will have to produce and that means generating jobs.

Hence, we believe that this will fundamentally serve for our companies to have much more accessible markets and so that they can produce more and create jobs. For that reason, I attended this morning's meeting.

Q.- It would seem that during the debate some countries, specifically Germany, were not very keen, let's say, on the idea that the contributions to the Juncker fund should be neutral in respect of the Stability Pact. I would like to know if this is true and if you can explain a little how the debate unfolded.

My second question. Would Spain be prepared to take part in the investment fund? Would this depend on the contributions being neutral in respect of the Stability Pact?

President of the Government.- We did indeed speak about this issue. It was one of the issues which, as you very well know, remain pending. It has not been definitively resolved because it will not be resolved until the regulations are approved, but a clear indication was given. The European Council has taken note - I can't remember the literal words, only the meaning - of the Commission's intention to consider the contributions to the fund as an instrument designed to make the Stability and Growth Pact more flexible in the terms provided for in this pact. In other words, I believe that there is an intention on the part of the Commission regarding the contributions that make up the fund, not regarding other different contributions.

You asked me, secondly, about the contributions to be made by our country to the fund. We haven't decided on this, neither has anyone else. No-one said today, it didn't even come up in the debate, about how much each one will contribute to the fund, but obviously, we will all wait and see how things unfold. Every country believes that what Europe needs at this time is a commitment to investment and to continue with the reforms and with fiscal consolidation, but the major change is that we are going to commit to investment.

In principle, just look at the plan we have: in January, the Commission must present a draft regulation, in which it resolves all the outstanding matters; in other words, what type of works can be financed, the amount of the participation, all the governing rules, the party to decide which projects will be financed in the end. To decide on these questions we must wait for the regulation to be presented by the Commission in January, which must then be approved by the ECOFIN and by the European Parliament. The idea is that by mid-June everything is up and running and we will be able, as quickly as possible, because these are truly urgent issues, to start to work on these matters.

Q.- In light of the sluggish European recovery and the risk of deflation hanging over Europe at this time, at the meeting did you ask the President of the ECB to do anything else, and in general for the rest of the Member States to do anything more than we are already doing?

President of the Government.- That is indeed an important question. We have spoken here about three types of action that I have just pointed out to you: firstly, continuing with fiscal consolidation; secondly, structural reforms and, thirdly, we are going to set up an investment plan, known as the Juncker Plan. Now, what you say is true. That is, at a European level, the recovery is not going how we would have liked. It is true that there are some countries that are doing better than others, but they were doing worse at other times. What we need to do is look at things with a European perspective; things are not going as well as we would have liked.

Inflation is a long way off reaching 2%, or from 1.5% to 2%, which is where it should be. I can't guarantee it but I think that the latest figure was that of 0.3% in Europe and 0.4% in Spain. There is no danger at this time of deflation, but it would be better if inflation were a little higher. So, what I raised was trying to achieve the inflation target and, hence, those responsible for achieving this should think about that. I simply respect the independence of others in the same way as I like mine to be respected. But yes, I did raise this issue.

Q.- Could you go into this last matter a little more? Within the independence enshrined in the statute of the European Central Bank, do you have any suggestions regarding what could be done even though you haven't directly said this to Mr Draghi?

My second question, regarding the meeting you held with France and Portugal, could you give us some details about exactly what you discussed; whether, apart from what will happen in February, a common position has been set on some of the projects, presenting joint projects that will be subsequently financed? What are the details of this agreement with these two countries?

President of the Government.- In relation to your first question, you were right to ask this; but you must understand that I will be prudent because it is my obligation to be so. At any event, I think that you understand me.

In relation to the second question, both gas and electricity interconnections are issues that have been pending since time immemorial. I believe that this is an issue that we can all benefit from, or at least the vast majority. Just look, we are presently debating the situation that could arise following the problems in Russia with the supply of gas to many European countries that depend 100% on this supply.

I believe that the European Union should have the possibility of having various alternatives. Spain, for example, receives gas from neither Russia nor Norway; it mainly receives its gas from Algeria. This would be good for Algeria and those countries in Africa that want to sell their gas. There would be competition which would be good for the rest of the countries in the European Union and it would be very good for Spain which has a great supply of renewable energies and which also has a lot of gas and many combined cycle power stations. Obviously interconnections would help reduce prices; there would be more competition which would be very useful.

What is the objective? The objective is for the operators to get down to work, which is being done; of making progress on deciding which projects can be presented under the Juncker Plan, and then, it is a question in March, when a European Council will be held to tackle the issue of energy, of presenting these projects that will be presented by these three EU countries in the annexes. In other words, this is the classic project that could - I'm not saying it will definitely be presented, but it could be - come under the Juncker Plan, because it is a European project that affects the whole of the continent. That is, this is not a matter for just one country, for just one people, but rather it is for the whole of the European Union.

Hence, what we intend to do is the following: firstly, the collaborators of the Presidents will get to work, but above all, the operators; then there will be a meeting in February, although no date has been set yet, and then, we will try to present some specific proposals in the month of March.

Q.- As regards Cuba, taking into account the leading role Spain had when setting a common position, should it not now take on a similar leading role in pulling down the barriers, of overcoming them and entering in a new phase?

President of the Government.- Yes, we have been working on this issue for some time now. The Minister for Foreign Affairs has been in Cuba, I seem to remember, less than a month ago, I'm sure. I don't know exactly when, but certainly less than a month ago.

I raised an issue here today. This issue was dealt with at the Council because I raised it as President of the Government of Spain because, for all the reasons that you are perfectly aware of, for us the people of Cuba are much loved and we would like that...Everything that seems to us to be good news and which generates hope for them is important to us and of course Spain will be involved in this. But let's wait and see how events unfold and how things develop.

Q.- President of the Government, speaking about the energy interconnections, which we, at least, have spoken a great deal about today, as I imagine you have as well, could you give us some examples, some figures, some data on the savings, for example, that this will have for the people of Spain?

And today we have heard many accusations made against your government regarding pressure applied to the State's Attorney General. I wanted to ask you whether you or your government have applied pressure on him in some way, and whether at the Council of Ministers you will start the process for renewing the position.

President of the Government.- In answer to the second question, not at all. I, of course, have not spoken to him and nor has anyone else in my government, as I pointed out this morning. Absolutely not, I want to make that perfectly clear.

Aside from that, whether the renewal process starts tomorrow, quite frankly I don't know whether the government has to make a note tomorrow of the resignation of the State's Attorney General, I imagine we will. In truth, I cannot answer that at this time. I could answer that tomorrow morning or perhaps in a little while but I cannot answer it at the moment.

Savings? It is very difficult to determine this, but what I can tell you is that the price of energy is a decisive factor in the competitiveness of companies. Energy is not only a problem that very directly affects the life of our people, of course, as is perfectly understandable; for companies this is a decisive factor because it affects their competitiveness.

During this term of office we have had to take some extremely difficult decisions throughout the energy sector because, as you are aware, we had a tariff deficit of more than 20 billion euros. And we have managed to reduce the price of electricity following many consecutive years of increases. But the purpose of this is quite simply - it is impossible at this time to determine how much - to improve the competitiveness of companies and to significantly reduce the cost of energy for the end consumer.

I believe that this is one of the most important operations which is why we will fight for it to go ahead.

Q.- President of the Government, I wanted to know what criteria will be adopted at the Council of Ministers in nominating the new State's Attorney General; I don't know whether tomorrow, whether in a week's time, but, at any rate, what criteria will be used to seek the profile you are looking for at the Council of Ministers?

On another note, the Leader of the Opposition has accused you directly of having forced this resignation and of not respecting the separation of powers. I wanted your assessment of this new criticism from the Leader of the Opposition and if you can tell us whether dialogue between the government and the opposition at this time has broken down.

President of the Government.- I am prepared to talk with anyone, but every time something happens in Spain, in Europe or anywhere else, the Leader of the Opposition makes no contribution to public opinion except to lay the blame at my door. You will appreciate that in a situation like this it is not easy to reach an understanding with him, but, at any event, I am willing to talk with him, if he has anything to contribute. Of course that is a different matter that we will not go into now.

As regards your first question, what we want is a capable, independent person, that seeks to ensure that the law is upheld. That is the sole criteria.

Q.- On the matter of the fight against tax evasion, is Spain prepared to provide the European Commission with the information it has requested on the agreements the Spanish Tax Authorities reach with companies on tax matters, which in Spain take the form of preliminary assessment agreements?

Then, another question about inflation. Was your position shared by other countries at the meeting?

President of the Government.- Do you mean by the European Central Bank? There was not a debate on this issue because, although Mr Draghi gave a speech on the matter, the debate mainly focused on the Juncker issue. What happened is that, of course, as I explained earlier to your colleagues, here there are issues of fiscal consolidation, structural reforms and investment, but there are also other issues. In fact, I should mention that the European Central Bank has done some important things in recent times. It has done some major things. 4-year loans stand at 0.15%, I seem to recall, and mortgage-backed bonds and SME securities are undoubtedly noteworthy advances.

In relation to your first question, we are absolutely in favour of this. Today's Conclusions from this European Council contain something resulting from a letter that I sent the President of the European Council; but obviously there are certain issues that need resolving, such as the exchange of information. Then what we need to do is try and avoid those multinational companies that make a profit in various countries from inventing formulas so that all this profit appears in the country that has the lowest corporate tax rate. That, in the end, harms countries and what seems reasonable is that, if you make a profit in Spain, you should pay tax on this in Spain and not in another country. And if you make a profit in Germany, the same principle should apply.

This is one of the issues that most concerns me together with the issue of the exchange of information. On this matter, one of the agreements reached at this Council is that it will be debated in June at the European Council. I don't know if before, I don't think so, I believe it will be at the European Council in the month of June. This is an issue we give great importance to.

Thank you very much. And Merry Christmas if we don't see each other before.