Brussels, 13/01/2012 (Agence Europe) - Agreement in principle among the 26 EU member states is emerging over the draft treaty on stability, coordination and governance in the economic and monetary area (otherwise known as the budget pact - see EUROPE 10529). Various budget measures and the exact nature of the European Commission's powers remain to be decided. The ECOFIN Council of Tuesday 24 January will be asked to take a stand on the new draft deal ahead of agreement in principle by heads of state at the European Council at the end of January. Given the time taken to translate and check over the legislation, it will be officially signed early in March 2012.
In the evening of Thursday 12 January, Italy's permanent representative to the EU, Ferdinando Nelli Feroci, said the talks were proceedings in a satisfactory manner and there was an excellent chance that the talks would be completed on schedule.
Italy has the highest level of debt as a proportion of economic activity anywhere in the EU after Greece, and is therefore one of the countries calling the loudest for a relaxation of the budget rules, particularly the speed of reduction of public debt. It has managed to ensure that the virtually automatic penalties for breaking the rules will only apply to breaching the upper limit on public deficits, but not to debt. The required speed in the new treaty for reducing public debt (by a twentieth a year of the portion of the debt exceeding 60% of GDP) is exactly the same as the speed required under the revised stability and growth pact, which came into force last month.
Our sources suggest, however, that countries like the Netherlands (and also the ECB) want debt to be dealt with in the same way as public deficits and therefore want the reverse qualified majority voting system at the Council of Ministers to apply to both debt and deficits, but this goes beyond what is set out by the stability and growth pact and what was agreed at the December European Council.
Role of the European Commission. Nelli Feroci said the Commission was happy with the solution reached over the question of the powers of the European Court of Justice, but was aware that the exact role of the European Commission still needs to be decided. In the third draft treaty, only countries that have signed up to the deal can take other member states to the European Court of Justice for failing to properly introduce the golden rule into its legislation to put upper limits on public debt. Countries wishing to do so would be required to ask the European Commission to draw up a report on the country in question and if the report confirms their view, then the country would automatically be sent to the Court of Justice.
Germany and France are not happy about the idea of it no longer being compulsory for the golden rule to be included in member states' constitutions or equivalent legislation. This would be enormously difficult for Denmark because general elections have to be called in Denmark in order to change the constitution. Adding the golden rule to Italy's constitution, a process begun under the previous prime minister, Silvio Berlusconi, is advancing well because there is cross-bench agreement among all political parties and the Italian Senate has already given the go-ahead.
There are political issues to be decided upon regarding the attendance of non-euro countries (all ten of them, minus the United Kingdom) at eurozone summits - likewise for whether the European Parliament president should attend the summits.
Ratification. The number of countries that have to ratify before the new treaty comes into force (hopefully in January 2013) has not yet been decided and is currently hovering between 9 and 15. The most recent draft deal suggests 12. A close source said that a balance had to be struck between two obligations - the number of countries must be low enough to prevent a number of countries vetoing the deal and large enough to prevent countries facing general elections in the near future from refusing to take action and letting other member states do the ratification. (MB/transl.fl)