EU leaders are meeting in Brussels on 28-29 October to endorse proposals by a special task force to reform the bloc's economic governance, according to draft summit conclusions obtained by EurActiv.
The task force, chaired by European Council President Herman Van Rompuy, who will host the two-day summit, gave its final report on 21 October, including measures to tighten surveillance on countries breaching the EU's budget discipline.
But Germany wants to continue the discussion and introduce a procedure for orderly debt default, believing market pressure will force discipline on profligate governments.
The draft summit conclusions include an empty paragraph on "post-Task Force work," which EU leaders will be invited to complete at the summit on Thursday and Friday.
Earlier this month, France and Germany called for a permanent system to handle crises in the euro zone by suspending EU voting rights for countries found to repeatedly breach EU budget rules.
The proposed changes would require changing the EU treaties, a perspective that found little traction among sceptical member states' foreign ministers meeting in Luxembourg on Monday (25 October).
Van Rompuy Task Force to go into extra time?
"We want to have two things," said a diplomat from a large EU country, who was speaking to EurActiv on condition of anonymity.
"First, we are very happy with the Task Force report. And secondly, we would like to see work continuing on a permanent crisis resolution mechanism. From the German point of view, this is one package: both have to be there, not one without the other."
Faced with an uphill battle to secure backing for its plans, Berlin is confident that a solution can be found.
The diplomat admitted that some member states are still "adamantly against" the idea of suspending a country's EU voting rights and that those supporting the reforms were in a minority. However, "the largest part of member states didn't say anything on it," he said.
"In the Council, I didn't hear one single objection to the idea of working on a permanent crisis resolution mechanism," the diplomat said, adding that the only concerns raised related to the precise wording and focus of the scheme.
It remains to be seen whether the mandate of the Van Rompuy Task Force will be continued or whether another body will be formed.
The 18 October Franco-German declaration invites EU leaders to give European Council President Herman Van Rompuy a mandate to present "concrete options" for a permanent crisis resolution mechanism "before March 2011".
2011 EU budget freeze in return for Britain's backing
Meanwhile, British Prime Minister David Cameron has signalled he could back French and German calls for EU treaty changes limited to the euro zone, without holding a referendum in the UK, in return for a cap on the 2011 EU budget.
"We need an alliance to block increases," Cameron told the Daily Mail newspaper. "I think the French will also be keen on budget restraint and we should push this extremely hard. It should be a freeze or a cut."
But Cameron's backing for treaty change may also backfire as hardliners in his Conservative Party want to re-open the Pandora's Box of EU integration, an issue which has divided the Tories in the past and could hurt their coalition agreement with the pro-European Lib Dems.
Open Europe, a Eurosceptic think-tank close to Conservative circles, said the prospect of a new treaty represented "a once-in-a-generation opportunity to renegotiate the UK's relationship with the EU" and "repatriate" some powers back from Brussels.
