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25th Oct 2021

Softer draft of fiscal treaty opens door for UK

  • The Danish EU Presidency is being launched with a series of press events in Copenhagen (Photo: Valentina Pop)

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 intergovernmental treaty on fiscal discipline, to be signed by leaders in March.

The third draft - distributed to EU member states' negotiators on Tuesday (10 January) evening and seen by EUobserver - has softened the obligation to enshrine a "golden rule" on balanced budgets into the constitutions of the 26 member states taking part in the new pact.

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The move comes after indications that several countries - notably euro-members Ireland and Finland, but also non-euro states wanting to sign up, such as Denmark and Romania - would have to hold referendums in order to change their constitutions.

Instead of asking for the golden rule to be introduced "in national binding provisions of a constitutional or equivalent nature" as in the second draft penned earlier this month, the latest text asks for "provisions of binding force and permanent character, preferably constitutional, that are guaranteed to be respected throughout the national budgetary processes."

The role of the EU commission in taking debt sinners to court for not properly transposing the golden rule into national law, an idea introduced in the second draft at the demand of the European Parliament, has also been watered down to the commission "issuing a report" at the demand of another country adhering to the pact.

The power of taking countries to court is instead to reside with countries - a u-turn going back to the first draft - after French worries the commission risks becoming too powerful.

"If the European Commission, after having given the contracting party concerned the opportunity to submit its observations, confirms non compliance in its report, the matter will be brought to the Court of Justice by the contracting parties," the latest text says, adding that the court ruling shall be binding on the country in question.

Another watering down of earlier drafts rules out introducing new sanctions for countries that break rules on overall public debt, opting instead to limit such penalties to ballooning budget deficits.

Italy, whose debt level is around 120 percent of the gross domestic product, fiercely opposed the original idea.

Another new paragraph leaves open the possibility for the UK to join the pact at a later stage, after Britain in December vetoed an EU Treaty change on the reforms, creating the intergovernmental arrangement at 26-level.

"This treaty shall be open to accession by member states of the European Union other than the contracting parties upon application that any such member state may file," Tuesday's draft says. Other countries are to approve the newcomer "by common agreement."

The 'working group' which is pumping out the texts - a mixed bag of member states' officials led by a Luxemburger - kept another EU parliament demand, to enshrine the intergovernmental pact in EU Treaty law in the next five years.

But it also changed the threshold of countries needed to ratify the pact for it to come into force from 15 to 12. In the first draft, the threshold was even lower, at nine countries.

Ireland plans referendum body on possible EU treaty poll

Irish Prime Minister Enda Kenny has said he intends to establish a permanent referendum commission so that the public is fully prepared for a possible poll on the fiscal discipline treaty currently being drawn up by member states.

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