Haggling over how to reform the European Union's budget discipline rules begins in earnest next week, when finance ministers will battle to cut the number of options on the table. Consensus that the Stability and Growth Pact needed a revamp was easy to build after repeated breaches of its deficit cap by Germany and France, but it has been harder to find common ground on exactly how to change the rulebook underpinning the euro.
Countries are split on issues such as how to treat high-debt states, ensure budgets improve during economic upswings, improve the implementation of the disciplinary procedures and whether to change the circumstances under which the rules can be broken.
While they have so far taken trenchant positions, European finance minister gatherings in Brussels on Monday and Tuesday will try to narrow their differences to keep hopes alive of a final accord in March, the date set by Luxembourg Prime Minister Jean-Claude Juncker, who will chair their meeting.
"The grand tradition of the EU is that nothing is ever done until the last minute and this is likely to be one of those issues," said one EU diplomat.
"There is no consensus yet and ministers need to give a political steer where the reform might proceed. But a deal is still possible by March."
Failure to reach a compromise could be damaging.
"It is very important for the whole euro project. Otherwise we will see political effects that would harm the euro as such," Swedish Finance Minister Par Nuder told reporters in Stockholm.
Austria wants rewards for countries with sound budgets and changes to the way in which states are punished for breaking the pact's deficit cap of 3 percent of gross domestic product.
"We suggested that the sanctions system, which today evidently is not working ... should be changed and we should create an incremental system of sanctions," Austrian Finance Minister Karl-Heinz Grasser told Reuters.
This would include three or four different sanctions that could start by removing a country's access to European Investment Bank loans, though details had yet to be discussed. Grasser also said he would like to see a rule that would force countries to cut their deficit by half a percentage point of GDP per year during economic upturns, but admitted there was not enough political support for such a measure.
Sweden, like many other countries, is backing the European Commission's proposal to take more account of debt.
The EU executive wants the type of disciplinary action that is currently reserved for countries that break the EU deficit limit to be extended also against those EU states that don't cut their debt fast enough.
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