Confidential paper from European Council president Herman Van Rompuy proposes empowering Brussels to impose austerity
The European commission could be empowered to impose austerity measures on eurozone countries being bailed out, usurping the functions of government in countries such as Greece, Ireland, or Portugal. Bailed-out countries could also be stripped of their voting rights in the EU, under radical proposals being discussed at the highest level in Brussels before this week's crucial EU summit on the sovereign debt crisis.
A confidential paper circulated to EU leaders on Tuesday by Herman Van Rompuy, the EU council president who will chair the summit on Thursday and Friday, says that eurobonds or the pooling of eurozone debt would be a powerful tool in resolving the crisis, despite fierce German resistance to the idea.
It calls for "more intrusive control of national budgetary policies by the EU" and lays out various options for enforcing fiscal discipline supra-nationally.
The two-page paper, obtained by the Guardian, is to be discussed on Wednesday among senior officials in an attempt to build a consensus ahead of the summit. It may instead set off an explosive rebellion by eurozone countries balking at the options outlined by Van Rompuy, who heavily emphasises the need for a new punitive regime overseen by EU institutions that would be given new powers of intervention.
The proposals and policy options, if agreed, will be seen as seriously curbing the sovereignty of member states in setting budgetary, economic, and fiscal policy.
For countries deemed to be insolvent and in receipt of eurozone and International Monetary Fund bailouts but failing to meet the terms, Van Rompuy raises the prospect of drastic action: "The granting of exceptional powers to the [European] commission (or another body) to take enforceable measures in the country concerned so as to ensure the stability of the euro area."
It adds: "In case of consistent non-compliance, political sanctions such as the temporary suspension of voting rights [in EU councils]" might be imposed.
As part of a German-led drive for a eurozone "fiscal union", Van Rompuy highlights the potential for harmonising pension reforms, social security systems, labour market policy, and financial regulation: "Consideration could be given to use legislation to define minimum common features."
Other "possible further steps" generating a "higher degree of economic convergence" in the eurozone could include reinforcing the commission's and the eurogroup's rights of prior scrutiny "of all major economic reform plans" and sanctions if the commission's recommendations to individual countries are ignored.
Van Rompuy also raises the possibility of using the EU budget to reward sound fiscal conduct within the eurozone – and to punish recalcitrants.
On the two most important rules governing the single currency – that budget deficits do not exceed 3% of gross domestic product and that national debt ceilings stay within 60% of GDP – Van Rompuy calls for "stricter rules" and "extended capacity of the EU institutions to enforce them".
Countries in breach of the euro rulebook could have to submit draft budgets "for approval" to the eurogroup and the commission. The document says "a budget adopted not in line with the stability and growth pact [euro rulebook] could be considered in breach of EU obligations".
While most of the options listed might appeal to Chancellor Angela Merkel and her campaign to entrench a new era of rigour in the eurozone, Van Rompuy breaks ranks with Berlin's objection to eurobonds, though he is careful to stress that any mutualisation of eurozone debt would need to be gradual. "A staged criteria-based process could be envisaged and be a powerful incentive for fiscal discipline."
The eurozone reform blueprint agreed on Monday between Merkel and President Nicolas Sarkozy is focused on the medium-term. But Van Rompuy argues that "the current situation calls for immediate action. Beyond stabilisation tools, some structural steps for deepening the economic union can be implemented rapidly."
--
Source: http://www.guardian.co.uk/business/2011/dec/06/eurozone-shakeup-voting-rights-confidential-paper
~
Manage subscription | Powered by rssforward.com
Belum ada komentar untuk "Radical eurozone shakeup could see countries stripped of voting rights"
Posting Komentar