The paper, obtained by EurActiv, will form the basis for discussion when EU leaders meet in Brussels on 8-9 December and will seek to draw a line under the euro zone's debilitating debt crisis.
It will be discussed alongside joint Franco-German proposals to reform the EU treaties and strengthen fiscal discipline, which Nicolas Sarkozy and Angela Merkel presented earlier this week.
The Van Rompuy paper follows up on those calls and proposes several options, some of which can be implemented without changing the treaties.
Any solution to the debt crisis will start with a "determined" implementation of already agreed measures, Van Rompuy stressed, such as the reinforcement of the bailout fund, the European Financial Stability Facility.
But additional measures are necessary to introduce "qualitative changes towards a real 'fiscal union'" and convince markets that future failures will not happen, Van Rompuy states in the paper. "Transforming the euro area into a true economic union requires further progress in terms of integration, in order to achieve a 'new fiscal pact'."
The paper lays down two options for moving towards a fiscal union:
- Introducing a "golden rule" in the member states' constitutions to keep countries within the limits of the Stability and Growth Pact, which caps public debt and deficits at 60% and 3% of GDP respectively. "The Court of Justice would be competent to supervise the implementation of this rule into national law."
- A straight modification of the treaty provisions on fiscal discipline in the eurozone (article 136). Such a revision could, for example, allow the European Commission to examine and possibly reject draft budgets before they are voted in the national parliaments, a measure that the current treaties do not allow.
The second option does not seem to attract Van Rompuy's favour as it "would take longer and would require ratification by all member states," including those outside the eurozone.
The former Belgian prime minister therefore seems to lean for the first option, which would only require a change in Protocol 12, an addendum to the EU treaty, which can be modified more easily.
"Such a decision does not require ratification at national level," Van Rompuy writes. "This procedure could therefore lead to rapid and significant changes."
Falling short of Franco-German demands
Although pragmatic, Van Rompuy's solutions seem to fall short of what Angela Merkel and Nicolas Sarkozy have been calling for.
Speaking at a joint press conference on Monday, the French and German leaders specifically asked for a new treaty to be agreed by March 2012 so that it can be ratified at national level by the end of the year.
Merkel insisted that the new treaty pushed by France and Germany would introduce provisions on fiscal discipline that cannot be implemented in the current treaties.
"Let me take one example: in the Lisbon Treaty as it stands, it is anticipated that a procedure for excessive deficit can only be launched if a qualified majority of [member states] consent to it. We want just the opposite and this requires a modification of the Treaty."
The Franco-German couple are adamant that they will pursue those changes forcefully and will not hesitate to sideline countries that do not want to follow.
"Our preference goes for a treaty of 27 so that no one feels excluded from the Franco-German process," Sarkozy said. "But we are quite prepared to go through a treaty at 17, open to all states that would like to join," he added, suggesting the 17 eurozone countries could go ahead on their own.
Will all eurozone countries sign up?
However, not all eurozone countries might be willing to ratify such an accord.
Slovakia, which adopted the single currency in 2009, was the last to ratify an expansion of the EFSF in September, bowing down only after considerable pressure was applied by Germany and other eurozone members.
In Finland, ratification of the fund's expanded remit also stirred much public debate, with Helsinki asking for "collateral guarantees" in return for supporting the second Greek bailout plan.