Saturday

27th Aug 2016

Future EU bail-outs only for treaty signatories, new draft says

The latest version of the treaty on EU fiscal discipline says countries cannot get bail-outs unless they sign and apply the pact. It also makes concessions to non-euro countries who want to take part in eurozone summits.

Giving in to a German demand on the issue, the text - seen by EUobserver - says: "Granting of assistance in the framework of new programmes under the European Stability Mechanism [ESM] will be conditional, as of 1 March 2013, on the ratification of this treaty by the contracting party concerned and as soon as the transposition period ... has expired, on compliance with the requirements of this article."

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

  • The quid-pro-quo on bail-outs was a German demand (Photo: ec.europa.eu)

The article in question calls for binding legislation - "preferably constitutional" - enshrining a "balanced budget rule" which obliges governments not to go beyond an annual "structural" deficit of 0.5 percent of GDP. A structural deficit is one which does not include temporary or one-off budget items.

The balanced budget rule can be set aside under "exceptional circumstances" however, such as an "unusual event outside the control" of the respective government or "severe economic downturn."

Failure to comply with the rule means the country can be taken to the European Court of Justice by one of the other signatories.

The EU commission, which in one of the previous drafts was granted the power to do this "on behalf" of other states, has been downgraded to a reporting function.

"If the European Commission, after having given the contracting party concerned the opportunity to submit its observations, concludes in its report that a contracting party has failed to comply with Article 3(2), the matter will be brought to the Court of Justice of the European Union by one or more of the contracting parties," the draft - the fourth one so far - says.

In one novel idea, it adds the €500-billion-strong ESM should be the recipient of any fines imposed by the EU court on deficit sinners.

The latest text also puts some numbers on how big the fines might be: "If the court finds that the contracting party concerned has not complied with its judgement, it may impose on it a lump sum or a penalty payment appropriate in the circumstances and that shall not exceed 0.1% of its gross domestic product."

'Outs' invited in

One point of contention - likely to sour discussions on Monday and Tuesday when finance ministers discuss the text in Brussels - is participation of non-euro countries in eurozone summits.

Last week's draft said only that they should be "informed" of what happens in the regular meetings, just like the European Parliament.

In the meantime, the Polish Prime Minister has threatened not to sign the treaty unless his country is allowed to take part and the Swedish government saw parliamentary support for the pact drain away for the same reason.

A new compromise wording - which, according to one EU official, is still not up to Poland's demands - allows the president of the euro summit to invite non-euro signatories "in order to discuss specific issues concerning the implementation of this treaty."

It adds that the president of the European Parliament "may be invited to be heard" at the events and that the summit chair should present a report to the EU assembly after each leaders' meeting.

National parliaments are also mentioned in the form of a new "conference of the chairs of the [national] budget committees." But the format and function of the new body is left up in the air.

The treaty is to enter into force on 1 January 2013, provided 12 euro-countries have ratified it or whenever the 12th one does so.

Another request of the European Parliament has also been kept - to merge the fiscal pact, which is being made by 26 EU countries at intergovernmental level, with the EU-27 Treaty within five years.

The text reminds the UK, whose veto on EU Treaty change created the mess, that other countries can circumvent its ban under so-called enhanced co-operation - an EU Treaty provision that lets sub-groups of states adopt new laws when there is no consensus.

EU leaders meeting on 30 January will seek political agreement on the text, with the aim of signing it in March.

News in Brief

  1. Hungary plans to reinforce border fence against migrants
  2. France's highest court suspends burkini ban
  3. Greeks paid €1bn more in taxes in June
  4. Greek minister denounces EU letter on former statistics chief
  5. Turks seeking asylum in Greece may cause diplomatic row
  6. Merkel becomes digital resident of Estonia
  7. Report: VW will compensate US dealers with €1bln
  8. EU mulls making Google pay news media for content

Stakeholders' Highlights

  1. GoogleBrussels - home of beer, fries, chocolate and Google’s Public Policy Team - follow @GoogleBrussels
  2. HuaweiSeeds for the Future Programme to Bring Students from 50 countries to China for Much-Needed ICT Training
  3. EFASpain is not a democratic state. EFA expresses its solidarity to Arnaldo Otegi and EH Bildu
  4. UNICEFBoko Haram Violence in Lake Chad Region Leaves Children Displaced and Trapped
  5. HuaweiMaking Cities Smarter and Safer
  6. GoogleHow Google Makes Connections More Secure For Users
  7. EGBAThe EU Court of Justice Confirms the Application of Proportionality in Assessing Gambling Laws
  8. World VisionThe EU and Member States Must Not Use Overseas Aid for Promoting EU Interests
  9. Dialogue PlatformInterview: "There is a witch hunt against the Gulen Movement in Turkey"
  10. ACCAACCA Calls for ‘Future Looking’ Integrated Reporting Culture With IIRC and IAAER
  11. EURidNominate Your Favourite .eu or .ею Website for the .EU Web Awards 2016 Today!
  12. Dialogue PlatformAn Interview on Gulen Movement & Recent Coup Attempt in Turkey