European Union finance ministers sought on Monday to make sanctions for EU budget rule breakers more automatic, but put off potentially difficult talks on a permanent mechanism to resolve eurozone crises.
The ministers from the 27-nation bloc met under the guise of the Task Force established to discuss changes to EU budget rules, the Stability and Growth Pact, to prevent another sovereign debt crisis like the one triggered by Greece.
Under current rules a eurozone country that repeatedly ignores budget consolidation targets set by EU ministers can be fined up to 0.5 percent of its gross domestic product, but the procedure has many stages and could take almost two years.
Fines can be imposed only at the last stage, when a country's public finances would probably be in poor shape, and depend on a discretionary decision taken by the ministers. "Sanctions should be a normal consequence, a quasi automatic consequence if the rules are broken," Economic and Monetary Affairs Commissioner Olli Rehn told reporters as he arrived for the meeting in Brussels.
"It's a bit like a football game. It won't work if the players start to argue and discuss the rules of the game with the referee every time they call a foul." Despite several meetings since talks began in May on toughening the budget rules, there have been few concrete details on progress and frustration is growing.
Jean-Claude Juncker, Luxembourg's prime minister and the chairman of eurozone finance ministers, said last week there had been no progress "on the gist of the matter". The deadline for changes is the end of October, and the reform is to be approved at a summit of EU leaders.
The ministers were likely in Monday's talks to steer clear of any changes that would require a change to the EU's highest law, the EU treaty. Diplomats say a renegotiations of the treaty would entail long negotiations in many areas not necessarily linked to economic governance, or policy co-ordination, and there was no guarantee it would secure the approval of all EU member states.
Ministers said discussion of a permanent mechanism for crisis management in the eurozone, initially envisaged for September, had been pushed back because both the eurozone and the EU now had a temporary mechanism up and running - the European Financial Stability Facility (EFSF).
They made clear that a more permanent crisis resolution mechanism was now a medium- rather than short-term goal. "It would require, in the perception of some of us, a basic treaty change. I don't think we are ready for amending the treaty. The mechanism could be discussed in the coming weeks or it could be wiser to postpone the question to a later stage," Juncker said on his arrival for Monday's meeting.
A suspension of the voting rights of finance ministers from countries that violate the rules, as proposed by Germany, was impractical without a treaty change, he said. The ministers were also expected to discuss a request by nine EU countries for pension reform costs to be excluded from deficit and debt calculations to avoid penalising countries that undertake reforms to put public finances on a sounder footing. Eurozone sources said the proposal was not backed by some big EU countries, so pension reform costs were likely to be taken into account only indirectly when the executive European Commission assesses deficit and debt developments.
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