* New proposal on voting method raises hope fordeal in Sept * New budget rules entail more automatic sanctions * Parliament wants equal scrutiny of C/A deficit and surplus BRUSSELS, Sept 8 (Reuters) - The European Union is on the brink of a deal to toughen its budget rules, which could help to restore some market confidence in euro zone public finances and prevent another sovereign debt crisis. The new rules would apply mainly to the 17 countries sharing the euro, whose debt is in the sights of the markets after Greece, Ireland and Portugal had to seek emergency funding from international lenders because of bloated accounts. The EU began a review of the current rules aimed at limiting budget deficits at 3 percent of GDP and public debt at 60 percent in the first half of 2010, and the European Commission presented legislative proposals last September. But haggling over how easily financial sanctions should be imposed on euro zone countries breaking the rules has led to the debate dragging on since then. The European Parliament's Alliance of Liberals and Democrats said a draft proposal this week from Poland, which holds the rotating EU presidency, offered a breakthrough on the reform. "We are not completely out of the tunnel yet but the end is in sight," said the leader of the liberals, Guy Verhofstadt. Parliamentary sources said that if accepted by euro zone member states, the compromise proposed by Poland could lead to a deal and a formal vote in favour by the European Parliament later this month. The new rules would give the 27-nation bloc, and especially the euro zone, a new, powerful tool for discipline in public finances in the single currencyarea. The existing -- but toothless -- EU rule that countries should seek budget balance or surpluses would be backed by financial sanctions for those who ignore it despite economic growth. Similarly, financial sanctions would be imposed on those who did not try to reduce their public debt to the EU-accepted limit of 60 percent of GDP. More financial penalties would swiftly await those who run budget deficits higher than 3 percent of GDP and those who fail to address major imbalances in their economies despite warnings from the Commission and other euro zone members. The Commission would monitor the economies of euro zone countries to detect any macroeconomic imbalances that could become a problem for the wider euro zone. The delay in adopting these rules was caused mainly by a Franco-German deal in October 2010 to insert more political discretion into imposing sanctions on rule breakers. The Commission's idea was to make sanctions almost automatic, by changing the rule that they can only be imposed by a qualified majority vote to a rule that they can only be stopped by such a vote once the Commission recommends sanctions. In qualified majority voting until the end of October 2014, each EU country has a number of votes assigned by the Treaty of Nice. To pass, a motion has to get 74 percent of votes. Poland has proposed that to start the whole sanctions process with a country that does not strive towards budget balance, a Commission proposal for a warning to the country from EU financeministers would first have to be passed by a qualified majority. But if the ministers ignore the Commission recommendation or vote it down by qualified majority, the Commission could repeat its recommendation three months later. The second time it would be considered adopted unless a simple majority turned it down. Despite the simple majority required the second time to scrap the motion, parliamentary sources believe it would be very difficult politically for the ministers to turn down a recommendation from the Commission twice. Parliament also wants to shorten the time between the two recommendations to one month from three. It would also like the rules to include a declaration by finance ministers that if they turn down a Commission proposal for action against a rule breaker, they will explain their decision in writing and disclose how each country voted. Lastly, before a deal is reached, parliament would like the new rules to treat equally in the assessment of macroeconomic imbalances both those countries that have large current account deficits and those that have large current account surpluses. While export powerhouse Germany opposes this, parliamentary sources say they do not think the issue will wreck the deal. (Reporting by Jan Strupczewski, editing by Rex Merrifield)EU sees chance of deal on tougher budget rules soon Related News
Thursday, 8 September 2011
Posts
