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EU to tighten euro rules

world Updated: Oct 30, 2010 00:05 IST
Stephen Castle

The European Union approved plans to tighten the rules governing the euro early Friday, and said it would seek more changes and a limited alteration to the bloc’s main treaty in December.

At a meeting in Brussels, the leaders of the 27-nation bloc approved a set of tougher budget rules, crafted by their finance ministers, which included new sanctions against eurozone states that fail to keep deficits and debt in check, and earlier warnings over asset bubbles and declining competitiveness.

Its declaration also said the union will consider ways to change its governing treaty in December to set up a permanent fund to help eurozone nations in times of crisis.

But moves by the German Chancellor, Angela Merkel, for a more radical alteration to the treaty were rebuffed, as the leaders emphasised a more limited and technical set of changes. That effectively tabled Merkel’s ideas of a more significant amendment of the treaty, aiming to deprive spendthrift nations of their EU voting rights.

In their declaration, the EU leaders said Merkel's idea would be considered “subsequently,” suggesting it wasn’t a priority.

“Most member countries, including us, are against the idea that voting rights can be withdrawn, also those related to the economic and monetary union,” said Jean-Claude Juncker, prime minister of Luxembourg.

Most governments are alarmed at the prospect of a full-scale treaty change, which might trigger referenda in some nations.

Less than a year after the Lisbon Treaty went into force — a process that took eight years to bring to fruition — few nations feel ready for another lengthy and difficult exercise in institutional change requiring voter approval.

Earlier Merkel had pressed the case for changes that would curb voting rights for spendthrift nations.

But Jose Manuel Barroso, President of the European Commission, sought to limit the scope of any treaty change.

“If treaty change is to reduce the rights of member states on voting, I find it unacceptable, and frankly speaking it is not realistic,” said. GNS