Brussels, 11/03/2011 (Agence Europe) - Two days after the eurozone summit (see other articles and special publication) European finance ministers will meet on 14-15 March for two days of intense negotiations for formulating an exhaustive response to the sovereign debt crisis, in view of definitive decisions to be made at the European Council on the 24-25 March. Hostilities will commence on Monday morning, with a meeting of the Eurogroup. These will continue at an EU27 level in the afternoon in discussions regarding the question of the future European Stability Mechanism (ESM). On Tuesday, the Ecofin Council is expected to ratify a political agreement on the package containing six legislative texts aimed at enhancing economic governance in Europe and which could be subject to informal scrutiny on the previous day during the ministers' working lunch.
Questions still pending in the economic governance package do not rule out a political agreement (EUROPE 10328). Italy will certainly still harbour misgivings about the introduction, after a transition period, of a numerical benchmark compelling member states to reduce their excessive debt by 5% a year (part of the debt which is above 60% of national GDP). It will request that private debt should be admitted as a relevant factor for evaluating the level of public debt. Spain, Slovenia and Slovakia will suggest but not insist that any reference to relevant factors should be removed.
The question of allocating European rescue funds (EFSF and ESM facilities) and fines imposed for infringing revised Stability and Growth Pact rules will be discussed. On the question of micro-economic imbalances, Germany is highlighting the need to differentiate the approach when a country is experiencing excessive debt or is in surplus. Benelux countries are demanding a more automatic response with regard to decisions emanating from the preventive section of the Pact and the procedure for excessive micro-economic imbalances.
Short selling. If the Hungarian Presidency finds it impossible to obtain a political agreement on Tuesday, it will, nonetheless, examine discussions on the draft regulation on short selling and transactions involving certain financial derivatives (EUROPE 10125). Council positions vary considerably. One group of countries led by the United Kingdom, the Netherlands and Italy oppose restrictions on short selling sovereign debt shares. Another group of countries led by Germany, France and Portugal considers that it is of crucial importance that there are rules in this domain, explained the Hungarian document. Another stumbling block involves the powers allocated to the European Securities and Markets Authority (ESMA). The United Kingdom does not want ESMA to play any role at all on the sovereign debt markets. Other delegations want ESMA intervention to be conditional upon requests from the national supervisor. Germany and France consider that the European authority should take action when it considers it beneficial, in compliance with what the European Commission proposed. The European Parliament committee responsible for this issue held a vote last Monday on the draft “Canfin” report, which bans sovereign CDS used exclusively for speculative purposes (EUROPE 10331).
Ministers will examine excessive debt procedures opened against Hungary and Poland. They will also adopt conclusions on funding for climate change challenges. (M.B./transl.fl)