Speaking to a small group of journalists on Wednesday (27 October), Verhofstadt supported the Commission's 29 September proposals on economic governance, describing them as "coherent" and "bold".
He warned, however, that the Task Force of EU finance ministers led by Council President Herman Van Rompuy had watered down those proposals significantly, leaving the Stability and Growth Pact "without teeth".
EU leaders are broadly expected to endorse the Task Force's proposals at their summit in Brussels, which opens today, and may perhaps introduce a few new elements.
Parliament warnings
But Verhofstadt, who leads the Parliament's Liberal group, warned that such backroom deals were now over.
The European Parliament, he said, would have full co-decision powers on legislative proposals that will come out later in the year to flesh out the EU's new economic governance.
His warnings were echoed by other political groups in Parliament, including the centre-right European People's Party (EPP), which commands the largest number of seats in the Strasbourg assembly.
Iñigo Mendez De Vigo, a Spanish MEP in charge of institutional issues at the EPP, said he welcomed the Task Force's proposals. But he added that "they should take into account that the European Parliament is now co-legislator and will play its full part in defining the reforms to come".
"I regret that the French-German proposal does not even mention the European Commission, which also has a say on this issue," De Vigo said, adding the Parliament should also be more involved.
The Greens, the fourth largest group in Parliament, also backed the Liberals and the EPP, in a move which could herald a long battle with member states over the economic reform plans.
The Parliament "will be a co-legislator on four of the six legislative proposals" on economic governance, said Belgian MEP Philippe Lamberts, saying his group was "in favour of a more ambitious and broader economic framework than the Commission and Council".
Verhofstadt said he hoped this new battle would not take nine months, referring to the time it took to pass a recent package of financial supervision laws through the assembly.
Three steps back
In a statement, Verhofstadt detailed the three key areas where the Task Force had diluted the Commission's initial proposal and on which he said Parliament was ready to pick a fight.
First, the Commission had proposed to impose sanctions on member countries with excessive deficits or severe imbalances at an earlier stage, without delay. By contrast, the Task Force argues that a political decision should be taken on the proposed sanctions, meaning that they could be blocked by a country capable of putting together a blocking minority. The result is that there will be no preventive procedure and therefore no sanctions, the liberal group leader warned.
Second, the Task Force foresees a "double filter" for decision-making, involving a political recommendation by the Council before the Commission can take action. In practice, this means the Commission will be allowed to take sanctions only after a certain period, Verhofstadt said.
Finally, while the EU executive had proposed that corrective action or sanctions be initiated directly by its own services, the Task Force called instead for a recommendation that would need subsequent backing by the bloc's 27 finance ministers.
"It's easy to change a recommendation, and far more difficult to change a proposal by the Commission, because in that case you need unanimity," Verhofstadt explained.
No need for treaty change
Verhofstadt said Parliament was willing to go further than the Commission proposals and called for a European Monetary Fund (EMF) to be put in place on the model of the Bretton-Woods IMF.
He also lobbied in favour of the issuance of common euro bonds, backed by the EU budget, in which member countries could participate only if their debt levels did not exceed 60% of GDP.
Last but not least, he said an emergency mechansim should be put in place specifically for large EU countries, as these will often be able to mobilise a blocking minority to shelter them from sanctions should their finances run out of control. In that case, an emergency intervention by the Commission should be made possible, he said.
Verhofstadt said he saw no need for treaty change to introduce the economic governance package.
"As everybody knows, last time [when the Lisbon Treaty was negotiated and adopted], it took us a decade," he recalled. He said German Chancellor Angela Merkel had been speaking about the need for treaty change in an attempt to kill the idea of a European Monetary Fund.
