EUROPEAN GOVERNMENTS remain divided over key elements of their new fiscal treaty as they face into the final phase of talks on the pact.
Although a new draft treaty reflects a degree of progress in the talks, officials working on the text say big questions remain outstanding.
These are technical disputes mainly and will have little bearing on the essential thrust of the new pact, the core aim of which is to enforce fiscal discipline within and beyond the euro zone.
However, uncertainty still surrounds the extent to which Germany continues to press for the inclusion of binding constitutional limits on debt and deficits in the treaty.
That would necessitate a referendum in Ireland, something Dublin is resisting because it fears a defeat. The Government and an overwhelming majority of its counterparts believe it should be sufficient to introduce a “golden rule” in secondary legislation under which it would be required to run a balanced budget. A new draft of the treaty leaves open that possibility but well-placed officials say Berlin may still push for the rule to be adopted on a constitutional footing.
Also at issue is the exact nature of measures which will prevent countries which do not adopt the treaty from entering a rescue programme with the European Stability Mechanism permanent bailout fund.
While EU leaders want to enact the treaty at the start of next year, uncertainty still surrounds the minimum number of countries required to ratify it before it enters into force.
A further lack of clarity centres on the arrangements to be made for the leaders of non-euro countries to participate in summit meetings for euro zone leaders.
“Very significant progress has been made over the last weeks on the main elements of the new treaty and quite a number of technical issues have been settled,” says a note by the officials who are writing the pact. The officials, who are from member states in the main, go on to say that “a further exchange of view amongst ministers” is required before EU leaders push for a final deal at a summit in Brussels on Monday week.
Their note was circulated to EU governments in anticipation of talks between finance ministers on Monday night.
The latest draft says rescue aid under any ESM programme will be conditional on the government concerned ratifying the treaty and complying with its requirements.
However, the officials’ note says that for a number of governments this two-step approach would be “too complicated” and a single cut-off date would be favoured. While the new draft says the treaty should enter force once ratified by 12 euro zone governments, the officials say there is still no agreement on that.
“Some delegations expressed a concern that the entry into force before all euro area member states ratify the treaty might not contribute to reinforcing fiscal discipline within the euro area by opening the possibility for some member states not to participate, or to participate only at a later stage,” they say.
“Other delegations were of the opinion that the figure of 12 represents a reasonable compromise and some even argued in favour of a lower threshold in order to allow for an earlier entry into force.”
On the participation of the leaders of non-euro zone countries in a new twice-yearly euro zone summit, the new text says the president of the summit shall keep them “closely informed” of the preparation and outcome. However, the leaders non-euro countries which adopt the treaty and comply with its obligations may be invited to at least one of the two summits. According to official sources, further work is required to achieve clarity on this.
Some governments continue to push for an explicit reference in the new treaty to the obligations of member states under the EuroPlus competitiveness pact.
When signing the pact last year, Dublin pledged to engage constructively in talks on the creation of a common consolidated corporate tax base in the EU.
