Ministers meeting on 7-8 June put the final legal touches to the eurozone's 440-billion 'Special Purpose Vehicle' (SPV) to bail out seriously indebted countries before discussing with EU President Herman van Rompuy ways to strengthen the euro zone's rules to tighten up national budgets.
The loan package was agreed in late May after EU finance ministers backed German calls for tougher sanctions against states that flout the bloc's budget rules, dubbed the Stability and Growth Pact (EurActiv 24/05/10).
Under the pact, economies are expected to keep national debt below 3% of GDP or face sanctions such as a suspension of voting rights.
As most EU member states were in breach of the 3% ceiling, sanctioning voting rights became an unrealistic option.
Last night's meeting of eurozone ministers – the Eurogroup – primarily discussed the finer points of the 440-billion-euro fund – or Special Purpose Vehicle (SPV) – such as where it should be based.
Ministers agreed late last night that the fund should be registered in Luxembourg given that the European Investment Bank (EIB), which had helped to set up the SPV, is also based there.
In a second meeting with Van Rompuy's 'taskforce' on economic surveillance, ministers last night discussed possible sanctions to get member states to pare down their excessive deficits.
After the meeting with other ministers, German Finance Minister Wolfgang Schaeuble repeated calls for tougher sanctions of countries out of step with the EU's budget discipline rules.
"Markets don't want just explanations but actions," the minister added, citing the latest drop of the euro currency to a four-year low.
Tuesday's talks, which kick off at 10:30 am, will focus on the EU's new strategy for growth and jobs, the Europe 2020 strategy, which has recently faced stinging criticism from MEPs who want a greater say in the policy's implementation.
The leader of the liberal group in the European Parliament, Guy Verhofstadt, last week advocated a 'Community' approach to implementing the strategy, which would see all three institutions bear equal responsibility for the policy (EurActiv 07/06/10).
Treaty change
Leaks in the German press have spurred speculation that ministers will dicuss tougher sanctions to enforce budgetary discipline.
According to rumours, a draft proposal would give the European Commission a mandate to approve national budgets before they get the approval of their national parliaments and pave the way for "a semi-automated sanctions mechanism".
Previously Germany's Chancellor, Angela Merkel, had argued that tougher sanctions would require a change to the EU's legal backbone, the Lisbon Treaty.
But with three years of EU soul-searching over whether or not to approve the Lisbon Treaty, member states are reluctant to launch yet another overhaul, even a small one, argue diplomats.
"It is very clear that, before inventing sanctions such as the suspension of voting rights, there have to be progressive sanctions that are applied effectively. And for this, you don't necessarily have to change the treaties," a diplomat from a large member state argued ahead of the talks.
The proposal has already seen early resistance from German liberal MEP Silvana Koch-Mehrin, who argued that it was unacceptable for other countries to influence Germany's economic policies.
At the last minute, German Chancellor Angela Merkel and French President Nicolas Sarkozy had to move a planned dinner to iron out their differences on budgetary discipline to 17 June.
