THE EU authorities have set a testing timetable for the conclusion of talks on a new international treaty to toughen Europe’s budget rules, with officials pursuing agreement on the basic text of the pact by January 20th.
By seeking a deal on the essential thrust of the new treaty by the third week of 2012, they aim to leave any lingering questions to be settled by EU leaders at an emergency summit on January 30th.
The governments are developing an intergovernmental treaty operating outside the ambit of EU law to enforce EU budget rules because Britain vetoed moves towards a new European treaty.
In spite of the many difficulties associated with the approach, the authorities aim to sign off on the final text by March.
Under discussion now is a draft treaty text prepared for European Council president Herman van Rompuy. The eight-page document seeks to incorporate the leaders’ pledge to create an intrusive new “fiscal union” at their summit on December 9th.
This includes quasi-automatic sanctions against rule-breakers. It also includes a commitment by governments to adopt a “golden rule” in constitutions or secondary legislation binding them to run balanced or surplus budgets and to keep their national debt within the EU limit of 60 per cent of gross domestic product.
Countries whose debt exceeds this threshold must undertake to reduce it at an average rate of one-twentieth per year.
The Government believes it will be sufficient to enshrine the golden rule in legislation. Dublin will not be required to run a balanced budget immediately, as obligations under the EU-IMF bailout supersede the rule.
Still, the draft text compels governments to put in place “a correction mechanism to be triggered automatically” in the event of significant deviations from debt or deficit limits or the adjustment path towards limits.
“This mechanism shall be defined at national level, on the basis of commonly agreed principles. It shall include the obligation of the contracting parties [member states] to present a programme to correct the deviations over a defined period of time.” A role for national courts to review the correction mechanism is also proposed, something which raises the prospect of judicial oversight of economic policy.
Member states would have the right to take action in the European Court of Justice against countries which do not fulfil the obligation to enact a golden rule.
The draft suggests the new pact would come into force once ratified by nine euro zone countries and the treaty would be binding only on the countries which have ratified it. Diplomats say this raises questions about the simultaneous operation of two separate legal procedures.
The draft also obliges governments to take “all necessary actions” to achieve economic growth including via the Euro Plus Pact, under which Dublin has pledged to “constructively engage” in discussions on the creation of a common consolidated corporate tax base in Europe.
Full draft treaty text available on: irishtimes.com
