The European Commission will vote on Tuesday on whether to challenge the member states' decision to bend EU budget rules for France and Germany, and may have to take the step despite the likely political fallout.
Some of the executive's 20 members feel nothing will be gained by aggravating a row that blew up after finance ministers in November suspended the budget rules for France and Germany - not least as work is already under way on improving these rules.
But Commission President Romano Prodi and Monetary Affairs Commissioner Pedro Solbes see no way out given an obligation to uphold EU law and legal advice saying they have grounds to ask the European Court of Justice to annul the ministers' decision.
"Even though he (Prodi) is not keen on it, it will be very difficult not to go to court," said a source close to Prodi.
"It's highly probable. The Commission is not unanimous but even those who don't want to go to court haven't identified other options that are able to avoid it."
A second EU source said more Commissioners might be persuaded to back a legal challenge if the issue was to be presented as one of principle rather than a tussle over the Stability and Growth pact on budget discipline.
"My guess is that there will more sympathy for going to court if the issue is presented as an issue of principle and of defending the EU treaty and less sympathy if it is presented as trying to enforce the Stability Pact at all costs," he said.
Prodi is said to be keenly aware that a legal challenge would set the Commission on a collision course with the EU's most powerful member states in its last months in office and in the run-up to European Parliament elections in June.
There is also a risk it could lose the case given states' own legal service in the EU Council argues that ministers had the discretionary power to reject Commission recommendations, although their subsequent political decision was procedurally flawed.
Still, Solbes, who is said to be leading the drive for a legal challenge, argues a court ruling could be useful to create legal certainty and clarify the framework for EU budget surveillance.
EU Enlargement Commissioner Guenter Verheugen said Prodi's recent comments indicated he would press for a legal challenge and predicted that the Commission would not cave in to external pressure to avoid such a move.
"The President of the Commission Prodi and the Commissioner responsible (Pedro) Solbes have already made it clear that they consider a challenge warranted," he said in an interview published at the weekend in Germany's Stuttgarter Zeitung.
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