Friday

4th Dec 2020

More power for EU commission in new draft of fiscal treaty

  • The EU commission in Brussels: will the UK agree? (Photo: ec.europa.eu)

EU member states are on Friday (6 January) to discuss the latest draft of a new pact on the financial crisis, focusing on how the European Commission can sanction debt-sinners and how to merge the new treaty with EU law despite a UK veto.

According to the latest draft version of the new pact sent to national governments on Thursday, the commission "may, on behalf of contracting parties" bring a legal case before the European Court of Justice if the countries subscribing to the pact break the so-called golden rule of keeping balanced budgets which are to be enshrined in national constitutions.

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In a first version of the text drafted last month, only member states could take fellow countries to court for breaching the debt-brake rule.

But getting the commission - which represents all 27 member states and is bound by the EU treaties - involved in an intergovernmental arrangement at 26-level poses legal challenges which could be attacked in the EU court.

The problem arises after the UK in December vetoed writing the new measures into the EU Treaty directly because it was unhappy over upcoming legislation which might affect the City of London.

The legal trick to get around the issue could be mandating the commission to act "on behalf" of member states, one EU diplomat said.

The contact noted that the cabinet of EU Council chief Herman Van Rompuy has done little to explain how the change on the commission's role in the new draft came about. "Member states will discuss it today and we'll see where we go from there," the source said.

Another contact said the new idea is likely to die an early death because it goes beyond the 9 December summit agreement to have the EU court rule only on whether a given country has properly enshrined the "golden rule" into national law or not.

Less controversial - at least among the 26 countries who agreed to negotiate the new treaty - is the idea of merging the new document with existing EU treaties "within five years."

The proposal was put forward by the three EU parliament members who are included in the discussions, ostensibly as observers only. The time period may change to "as soon as possible", one source said.

For its part, the UK, whose veto is causing the legal disorganisation, may be less keen to do a u-turn on the subject even though it has also been invited to the intergovernmental meetings as an observer.

A further change to the original draft tabled in December raises the threshold of countries necessary to ratify the treaty from nine to 15.

The switch reflects Germany's desire to have all southern eurozone countries sign up to the "golden rule" of a balanced budget before committing further bail-out money.

Further talks of the working group comprising state secretaries from EU countries' foreign and finance ministries, as well as ambassadors or special envoys of the prime ministers are scheduled for next week and the following week.

EU leaders meeting in Brussels on 30 January will have a first look at a more complete draft with the aim of adopting it at a following summit starting 1 March.

Doubts increase over usefulness of new fiscal treaty

Just a few days into the making of a new intergovernmental treaty on fiscal discipline, serious questions are being raised about whether the slight draft offered to date is either useful or necessary.

New treaty in force when 9 countries have ratified

The first draft of a new treaty meant to tighten economic governance in eurozone countries was circulated Friday with the aim to have the text finalised by January and coming into force once nine countries have ratified it.

Softer draft of fiscal treaty opens door for UK

Less stringent constitutional demands, a weaker role for the EU commission and a provision allowing the UK to join at a later stage are among the most recent changes to the draft treaty on fiscal discipline.

British deputy PM: EU veto is 'temporary'

British deputy leader Nick Clegg has predicted the UK will drop its veto on the EU fiscal compact, but urged Brussels not to go too far with reforms.

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